Minorities Report: Federal EB-5 program leverage behind new Pearl District project

In two months, construction will begin on a $50 million Residence Inn Marriott hotel in the Pearl District that would not have been possible without a modern-day immigration reality: wealthy people are able to buy United States citizenship.

The new Pearl District hotel and a second hotel in the Riverplace district are both projects put together by developer Homer Williams of Williams & Dame Development. Both are part of a wave of new large-scale projects about to hit Portland and Oregon. Almost all of the financing is coming from Asian investors.

But the investors aren’t participating in the projects just for a financial return on their capital. They’re also in it for the citizenship.

The federal EB-5 program provides green cards to foreign investors (and their families) who put down at least $500,000 in projects that produce a minimum of 10 Oregon jobs in areas with high unemployment. Those who invest $1 million have fewer restrictions.

The Pearl District hotel is just the first EB-5 project to get under way in Oregon. A number of other projects that will produce more than 500 local jobs and dozens of new immigrants are expected to gain approval within the next few months.

Williams says most, but not all, of his projects’ investors are from Asia, and without them, there is no way investment money would have been available to build the hotels.

Suitcases full of money

Marvin Kau is vice president of project development at American United, an Oregon development group formed specifically to put together projects to take advantage of the EB-5 immigration rules. Though the rules have been on the books since 2008, virtually nobody in Oregon took note, Kau says, until investment money dried up due to the economic downturn.

The economic boom in China, along with EB-5, presents a new way to get projects financed.

Nationally, $1.2 billion in capital investment came through the EB-5 program last year, Kau says, much of it in California. Oregon is just starting to get in on the action.

After repeated trips to China to sign up investors, Kau has put together two Oregon projects. One will cost $12 million, financed by 24 Chinese investors putting down $500,000 each. The other will bring $10 million in investment money to Oregon through 20 investors.

In return for the investments, 44 Chinese families — parents and children — will get green cards.

Both projects will create about 15 jobs per investor, Kau says — more than 600 new jobs in Oregon. Combined with the jobs from Williams’ hotels, EB-5 could be bringing close to 1,000 jobs to Oregon in the next two years.

According to Kau, China is full of people willing to pay for U.S. citizenship.

“The joke in the industry is people think you get off the airplane in Beijing and you’ve got investors standing there with suitcases full of money,” he says.

Kau cautions that it’s not that simple, mostly because developers from San Francisco and Los Angeles are taking those same flights and competing for those same EB-5 investors.

But the only real bottleneck, Kau says, is federal approval of EB-5 applications. Immigration officials require proof that the investment money was lawfully obtained, among other restrictions.

“I’ve got hundreds of millions of dollars worth of projects on my desk,” Kau says. “It’s just a matter of working through them.”

Go to top
Template by JoomlaShine