Last week, Congress reauthorized the controversial EB-5 Regional Center Program. In the months leading up to reauthorization, EB-5 has come under increased scrutiny from lawmakers, federal agencies, labor unions, immigrant rights organizations, and the media.
UNITE HERE, representing over 250,000 hospitality workers in North America, has been monitoring projects seeking and using EB-5 financing. UNITE HERE has been outspoken in calling attention to the unfairness of the program moving forward while comprehensive immigration reform is stalled.
UNITE HERE leader Maria Elena Durazo stated: “With EB-5, the US government essentially says to immigrant workers: ‘While you or your 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.’”
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.
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. 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. The developer will have to 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. 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.