Relevant Group follows up on congressional letter, calls out union on EB-5

Hotel developer claims to created jobs ‘in excess’ of requirement; only 25 investors have received green cards

Relevant Group's Grant King, Dan Daley and Andrew Shayne; Representative Luis Correa (Getty Images, Relevant Group, LinkedIn)
Relevant Group's Grant King, Dan Daley and Andrew Shayne; Representative Luis Correa (Getty Images, Relevant Group, LinkedIn)

Relevant Group has shed some light on its use of EB-5 financing, comments that come in the wake of a letter sent by a contingent of U.S. congressional representatives asking a federal agency for more information on the Hollywood developer’s funding.

The company said it has created more than the necessary jobs required under the EB-5 program and that some of its investors have already obtained green cards, according to a letter obtained by The Real Deal.

Last week, Rep. Lou Correa and 15 other congresspeople sent a letter to U.S. Citizenship and Immigration Services asking the federal agency to disclose information about how much financing Relevant had used through the EB-5 program, and whether the developer complied with job-creation requirements. Correa, who represents a district that stretches from Anaheim to Santa Ana in Orange County, sits on the House’s Subcommittee on Immigration and Border Security, which oversees USCIS.

The federal agency oversees the EB-5 visa program, which allows foreigners who invest at least $500,000 into a business in the U.S. to apply for visas granting permanent residency — often called “green cards.” In high-employment areas, each investor must put in a minimum of $1 million, which is supposed to create full-time positions for at least 10 employees, according to EB-5 program requirements.

The congressional letter came after Unite Here Local 11, a union that represents hospitality employees, sent a similar letter to USCIS.

For years, Relevant has been building a mini empire of hotels between Sunset and Hollywood Boulevard using EB-5 financing. In 2017, the firm opened the 169-room Dream Hollywood hotel. Last year, after financing snags and construction delays, the company opened the Tommie and Thompson hotels. The Citizen News event venue in Hollywood — its final EB-5 project, Relevant said — opened last month, according to the company’s letter to Congress.

In its letter, Relevant Group said it used EB-5 financing from a total of 414 investors for the four projects. To comply with EB-5 requirements, Relevant said it needed to create at least 4,140 jobs in total.

Relevant said it used funding from 171 investors to create 1,966 jobs in connection with Dream Hollywood –– more than what was required by USCIS. The investors in Dream Hollywood participated as part of an EB-5 Regional Center, which allows them to pool money and count direct or indirect jobs toward the obligation on employment, according to the developer.

Both direct and indirect jobs created have to be full-time positions, meaning the employee works a minimum of 35 hours per week. Construction jobs only qualify if the project takes more than two years to build.

An example of an indirect job would be an employee who works at a store or restaurant opened as a tenant in one of Relevant’s hotels. TAO, an upscale Asian restaurant, opened at Dream Hollywood in 2017, meaning Relevant could count any employees there as indirect jobs.

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Relevant’s own recent employee disclosures at Dream Hollywood fall well short of the 1,710 jobs required and the addition of workers at TAO or the hotel’s three other restaurants would be unlikely to make up the difference.

In 2020, Relevant disclosed it had 183 employees at Dream Hollywood when it obtained two paycheck protection program loans totaling $3.75 million. The firm said the proceeds of the loans were to be used for payroll. One of these PPP loans was forgiven in July of last year.

Some of these employees could be part-time workers, according to the Small Business Administration, which manages the PPP program.

Relevant pointed to construction and “jobs created as a result of the economic activity from construction and operation of the projects” in claiming it has met its EB-5 obligations. The firm provided job data from “independent economic reports.”

After construction on its projects, Relevant provided “all expenditures from construction, operating accounts from operations and W-2s of employees” to USCIS through an unnamed third-party economist to “calculate overall job count,” Relevant’s managing partner, Grant King, told TRD in an email. USCIS then audits the data, King said.

Members of Congress had also asked USCIS to disclose whether any of the EB-5 investors in Relevant’s projects had already obtained green cards.

USCIS has approved green cards for 25 of the EB-5 investors in Dream Hollywood, Relevant said, meaning it determined Relevant created at least 250 jobs. The company said other EB-5 investors have not yet received visas due to “substantial backlogs” and “limited entry visa availability.” It’s unclear whether this is the case.

The congressional letter — also signed by prominent Southern California Democrats Rep. Katie Porter, Rep. Judy Chu and Rep. Ted Lieu — also asked USCIS to disclose specifically how much financing Relevant used through the EB-5 program.

Relevant did not respond to that inquiry in its own letter.

“I think a more important story is why the hotel unions continue to use mafia tactics to try to pressure hotel developers into unionizing their hotels,” King added in an email.