The Hyatt Regency Lake Washington in Renton, by Boeing’s factory, was financed in part by loans from Chinese citizens seeking EB-5 visas.
Boeing Factory From The Hyatt Regency Lake Washington
A total of 199 EB-5 investors each put in $500,000 for $99.5 million, and also paid a $50,000 administration fee. 49 of the investors are suing for their full $550,000, even though it appears their claim may receive some payout and even though they got what they were actually after which was a cheap way to purchase U.S. citizenship (the price wasn’t raised to its current level until 2022).
The EB-5 visa program, officially the Immigrant Investor Program, allows foreign investors to obtain a U.S. green card (permanent residency).
- It takes a standard investment of $1,050,000 currently ($800,000 in targeted areas – rural or with high unemployment).
- The investment has to ‘create or preserve’ at least 10 full-time jobs for U.S. workers within two years of admission to the U.S. and the investment has to be fully at-risk, with no guarantee of return.
- This provides a path to U.S. citizenship after 5 years, spouse and children can benefit, and no family or employer sponsor is needed.
In general, processing takes 2-4 years with faster processing for rural projects. However, since no more than 7% of each year’s EB-5 visas can go to nationals of a single country (unless the full allotment for the year is not taken), China faces long backlogs due to oversubscription.
At this point it reportedly can take over 10 years for new applicants from China to get approved. Wealthy Chinese nationals want out!
Hyatt Regency Lake Washington
The property suffered during the pandemic. It’s part of a larger mixed-use development project with empty office towers that would have supported room nights at the hotel. Boeing has struggled and the hotel relied heavily on business travel there for transient business. It wound up in bankruptcy.
Boeing Factory From The Hyatt Regency Lake Washington
The hotel was sold out of bankruptcy for $103 million, or $296,830 per key.
That doesn’t cover the $147 million in debts attributable to the property, and the EB-5 investors were subordinate to other lenders – which they say wasn’t properly or fully disclosed so they’ve been suing the developer. (They claim that only $19 million could be borrowed with greater priority than their investment, not the $130 million ultimately borrowed.)
The suit claims the hotel should have cost “between $43 million and $105 million” to build, not the $250 million total raised for the project. While I’m not an expert in hotel construction costs, an average full service hotel now costs $400,000 per room to build though this hotel would likely trend higher due to land costs (relatively high in King County, though lower than downtown Seattle); labor costs (Seattle-area rates trend above national averages); and that it features quite high-end furniture, fixtures, and equipment.
Hyatt Regency Lake Washington
It’s not going to hit the $1 million per room it might cost to build true luxury in an expensive downtown, and while the ultimate cost to deliver the hotel may have been high and higher than expected it doesn’t seem on-face shocking either.
Ultimately there’s a lot of gaming of the U.S. immigration system because it’s overly cumbersome and complex (creating the opportunity to game) and desire to come here vastly outstrips the number of legal slots available. There are developers, employment brokers, and attorneys whose industry it is to take those limited slots and steer them.
There’s no better place to come be an entrepreneur or scientist. There’s no better place to secure wealth, although maybe a bunker in New Zealand is a second option (but if it comes to that, the people you’ve hired to protect you seem likely to turn on you when dollar-denominated wealth carries much less sway). We’re far enough away from China’s sphere of influence and Russia’s, and that makes the U.S. a great hedge.
We should want the best and brightest, and even want them more than the median person who holds citizenship today due to accident of birth. A $500,000 or $1 million loan for a hotel project though? That’s too cheap! It’s just a recipe for someone else’s grift to take some of the surplus from that transaction. But suing because that loan goes bad? Maybe they’ve become true Americans after all! Though it clearly misses the point of what they were buying in the first place.
By the way here’s what a Republican debate on immigration used to look like.
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