Tuesday, December 20, 2011

EB-5 controversy makes CA public radio show; CA rep says state doesn't bend rules

Yesterday, the Patt Morrison Show, on KPCC/Southern California Public Radio featured a segment taking off from the New York Times's coverage of how EB-5 projects in New York City stretch the rules

The first guest on Psst, you want to buy a green card? It’ll cost you $500,000 was Times reporter Patrick McGeehan, who gave a basic summary of his article, explaining of state officials "string together census tracks" to claim projects are located in high-unemployment areas, thus allowing a more attractive minimum investment to those seeking green cards: %500,000 versus $1 million.

McGeehan used the term "little private investment banks" to describe the middlemen, formally known as regional centers, who earn both fees and the spread between the low interest the borrower is paying and the no-interest paid by those seeking green cards.

He also noted that the EB-5 program is dependent on "theoretical" job creation, based on a formula.

The program, he said, "was used quite effectively in Vermont, to build ski resorts... Now the problem is these big shiny projects... like a pro basketball arena in Brooklyn [are] stealing away the oxygen."

Actually, though the Atlantic Yards EB-5 project was pitched as an investment into the arena, does not involve a piece of the arena.

A voice from California

Guest Brook Taylor, deputy director, California Governor’s Office of Business and Economic Development, declared that, by contrast with New York, "California adheres pretty strictly to the letter of the law," making sure that projects are truly located in areas of high unemployment.

"We don't get very creative in terms of gerrymandering unemployment regions," he said.

Host Morrison tried to get Taylor to talk about the basic issue behind EB-5--whether it represented selling green cards--but he segued to respond about how the state is adhering to the rules.

An immigrant advocate

The third guest was Thomas A. Saenz, President and General Counsel, MALDEF, Mexican American Legal Defense and Education Fund. Given that liberal immigration organizations have generally sat out EB-5--it's off their radar screen--I was curious to hear his take.

Saenz said, "it's very important that everybody undestand that this is a 21-year-old program," which is true, but--I'd point out--it's newly popular because of the credit crunch and the desire of Chinese to immigrate.

He noted that our immigration policy contains several prongs, including those based on family reunification--which MALDEF thinks should be a priority--and on employment. He then segued to stressing how presidential candidates offer simplistic rhetoric about immigration.

An outraged caller

One caller, "Joe from Anaheim," said the Times article "blew me away."

"If we're going to sell a visa, it's $5 million, not $500,000," he said. "It's terrible that we're selling visas under the guise of economic growth... This is how big money in the Middle East and overseas buys pieces of America."

I'm not so sure about that. They're getting some obscure projects, or not-so-convertible pieces of them.

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