A new hotel just opened in downtown Los Angeles, with most of the money to pay for it originating outside the country – 95 percent of the financing came from 320 immigrant investors from 14 countries.
The sleek, modern lobby is unusual because it serves two hotels in one building: a Marriott Courtyard and Residence Inn.
General manager Erik Palmer says the two-in-one model appeals to investors.
“From an owners’ lens, it makes the hotel a lot more efficient. We have one front desk team, one housekeeping team and one engineering team,” he says.
Almost all the financing came through what are called EB-5 visas, otherwise known as investor visas. In return for a $500,000 investment that creates at least ten jobs, foreigners get a green card.
One hotel investor – William Jeffcock – is a British citizen by way of Monaco.
“Because my home and residence was Monaco, there were very few paths which I would have qualified for. So the EB-5 really was the only way for me to come,” says Jeffcock.
He says his hotel investment was not primarily to buy a green card for the U.S.
“I hope to make money on this,” says Jeffcock. “I believe in the next two or three years I’ll be making 2 to 6 percent on my money.”
But other businesses using EB-5 money don’t always deliver what’s promised. In several states, the visa program has been used to defraud investors. Some observers dispute the number of jobs created.
Plus, there’s the issue of who collects the money. Even though the U.S. government is giving away the green cards, it’s the private sector that collects the half-million dollar payment.
“If you really want to create jobs, why not do it directly, by having the money come to the government? And then the government can decide how to allocate that to create jobs,” says John Vogel, who teaches at the Tuck School of Business at Dartmouth.
Vogel says the government could use money from investment visas for hiring workers to repair our infrastructure or expand internet access; the kind of economic development that benefits more of society than new hotels.