For immediate release
December 22, 2015
Hotel Workers Union: Wealthy Investors Get Green Cards, Developers Get Massive Subsidy – But There’s Nothing on Good Quality Jobs for Workers
Last week, Congress reauthorized the controversial EB-5 Regional Center Program as part of its massive 2016 spending bill. In the months leading up to reauthorization, the program—through which wealthy foreign citizens can secure US green cards in exchange for investing $500,000 each in businesses that create 10 direct, indirect, or induced jobs in designated “high unemployment” areas— came under increased scrutiny from lawmakers, federal agencies, labor unions, immigrant rights organizations, and the media.
UNITE HERE, a union that represents over 250,000 hotel, gaming and food service workers across the US and Canada, has been actively monitoring and profiling hotel and gaming development projects seeking and using EB-5 financing. UNITE HERE has been outspoken in calling attention to the unfairness of the EB-5 program moving forward while comprehensive immigration reform is stalled.
“This program sends a terrible message to regular immigrant workers in the US,” says union leader Maria Elena Durazo, the UNITE HERE General Vice President who spearheads the hotel workers union’s work on immigration. “With EB-5, the US government essentially says to immigrant workers: ‘While you or your friends or loved ones wait for years in limbo to emigrate to the US or to get a green card, rich immigrants are more than welcome to buy a place toward the front of the green card line. And while real estate developers can greatly increase their profits via EB-5 funding, you will have no promise of a good job in one of these projects.’”
UNITE HERE points out several specific problems with the EB-5 program. While the inexpensive EB-5 funding represents an extremely lucrative subsidy for developers, there is usually no requirement that projects using EB-5 money prove creation of real jobs—or “direct” jobs. Instead, most EB-5 projects can use econometric projections, and can count so-called indirect and induced jobs. In addition, there is no mechanism to help ensure that jobs created are quality jobs with decent wages, benefits, working conditions, and protections.
As part of the massive Consolidated Appropriations Act, the EB-5 regional center program has been reauthorized for one year, with no changes to the current program.
Lee Strieb, the UNITE HERE Vice-President who coordinates the union’s work on hotel development in the Western United States, had this reaction to the reauthorization: “The Omnibus spending bill reauthorized the EB-5 regional center program without even a single additional reform to address problems associated with EB-5. We remain very concerned that many EB5-funded projects will continue using this subsidy in a way that does not benefit the communities where they are being built. Even in key hotel markets where a quality jobs standards has often been respected by developers opening new hotels, we are concerned that some hotel developers who are using EB-5 financing will take actions which undermine that standard.” UNITE HERE cites several EB-5 funded hotel projects which reflect key problems with the program:
- Most jobs counted are “indirect” or “induced,” not “direct” – The Renoir Hotel Renovation, San Francisco. In San Francisco, developer the Kor Group plans to reopen the 135 room Renoir Hotel as the boutique Proper Hotel San Francisco. Kor, working with EB-5 Global, raised $42 million in EB-5 financing for the project from 84 EB-5 investors. To support 84 EB-5 investors, the developer will have demonstrate at least 840 jobs related to the project. In 2013, the developer reported to a local agency that the hotel will directly employ only 155 people. That suggests that Kor and EB-5 Global will have to help investors to demonstrate that a 135 room hotel has added at least 685 indirect or induced jobs to meet the 840 job goal.
- Political intervention to win regional center approval – Yareton in the Seattle/Tacoma area. In the greater Seattle Area, developer Yareton is seeking an expansion of its existing regional center to finance a convention center hotel in downtown Tacoma. Yareton’s original regional center designation, for a project in Des Moines, WA, was based on questionable assumptions regarding projected job creation. USCIS issued notice that it intended to deny Yareton’s application in 2013, but the application was approved later that year after political intervention.
- The Lucky Dragon Hotel-Casino, Las Vegas. The $139-million Lucky Dragon hotel-casino in Las Vegas was supposed to be funded primarily by EB-5 investors. The project’s regional center was approved in 2012, and its EB-5 fundraising target was $115 million. Three years later, the company has raised only $60 million from EB-5 investors. The developer applied for $25 million in subsidies from the redevelopment agency of the City of Las Vegas in November but its application was denied.
UNITE HERE says that as EB-5 reform moves forward at the federal level, the organization will continue its efforts to hold developers using EB-5 money accountable to the communities where they are building, and will also work with local, state, and federal decision-makers to advocate for quality jobs for immigrant workers and others at EB-5 funded hotels.