Manhattan’s new luxury mega-project was partially bankrolled by an investor visa program called EB-5 meant to help poverty-stricken areas
Since its official unveiling last month, critics have been teeing off on Hudson Yards, the $25 billion office-and-apartment megaproject on Manhattan’s West Side. The Guardian’s Oliver Wainwright calls it “bargain-basement building-by-the-yard stuff that would feel more at home in the second-tier city of a developing economy.” In Curbed, Alexandra Lange writes that it suffers from “no contrast. No weirdness, no wildness, nothing off book.” The New York Times’ Michael Kimmelman describes it as a “vast neoliberal Zion.”
“New York politics and real estate are notoriously akin to Rashomon,” reads Kimmelman’s review. “Any verdict on an undertaking as costly and complex as Hudson Yards depends on one’s perspective.”
.... among all the many reasons to feel salty about Hudson Yards, one perspective may deserve a place of privilege: the view from Harlem. Without their knowledge, the residents of a number of public housing developments helped to make Hudson Yards possible. The mega-luxury of this mini-Dubai was financed in part through a program that was supposed to help alleviate urban poverty. Hudson Yards ate Harlem’s lunch.
Specifically, the project raised at least $1.2 billion of its financing through a controversial investor visa program known as EB-51. This program enables immigrants to secure visas in exchange for real estate investments. Foreigners who pump between $500,000 and $1 million into U.S. real estate projects can purchase visas for their families, making it a favorite for wealthy families abroad, namely in China. EB-5 is supposed to be a way to jumpstart investment in remote rural areas, or distressed urban ones.
Hudson Yards, of course, is nobody’s idea of distressed.
The EB-5 visa program has come under increasing scrutiny in recent years, owing to a number of fraudulent real-estate schemes financed via investor visa dollars. In one notorious episode, two Vermont financiers built a resort complex—water park and all—using EB-5 funds, including $200 million that they misappropriated. They were planning a rural biotechnology campus before the U.S. Securities and Exchange Commission brought the hammer down. The stink on this scheme rose so high that the federal agency that administers the investor visa program terminated the state’s EB-5 program.....
- 1. Here’s how these requirement works: EB-5 visa applicants must invest a minimum of $500,000 in a project within a designated geographic area called a targeted employment area, or TEA. To be eligible for this financing, a project needs to qualify as falling within a TEA—which is going to be either a rural area or a distressed urban area. For an urban area to count as a TEA, it has to meet a certain unemployment threshold (150 percent of national unemployment).
Lower Manhattan doesn’t meet this unemployment threshold, so Hudson Yards, on its own, can’t qualify as a distressed urban area. However, when Congress created the EB-5 visa as a part of immigration reform legislation in 1990, lawmakers did not specify how states should draw up the geographic boundaries for a TEA.