From left: A U.S. visa, the International Gem Tower and a rendering of the Barclays Center at Atlantic Yards
With financing conditions extremely tight, New York City developers have increasingly turned to the EB-5 program, which gives foreign investors visas in exchange for investment in job-creating projects, to land funding for their projects. But according to the New York Times, developers are bending the rules to make their projects more attractive for those foreign funds, and taking money away from other projects that need funding.
The minimum investment to qualify for a visa under the program has always been $1 million — but the threshold is reduced to $500,000 if the project is in a rural area or a community where unemployment is 50 percent greater than the national average. Wealthy developers are taking advantage of this exception to garner more investment.
For example, though Extell Development’s $750 million International Gem Tower is rising in the diamond district, one of the wealthiest areas in the country, it uses unemployment data from Times Square to justify receiving $500,000 investments. Similarly, the Battery Maritime Building project and Forest City Ratner’s Atlantic Yards bend census areas to warrant designations as projects in areas that need help attracting jobs.
The program has attracted more than 3,800 investments this year, four times the amount in 2009, from foreigners who are happy to take a visa instead of a big return on their money. Lawmakers, including U.S. Senator Charles Schumer, have pushed to expand the program in the wake of the recession. But critics feel the visa trade-off compromises immigration policy, and wealthy New York City developers are taking funds that would otherwise go to projects that truly need them. [NYT]