Saturday, January 02, 2016

Definitively deceptive EB-5 math: New York Wheel claims different job totals, depending on audience

Let's contrast the common-sense counting of jobs with the extremely generous way job-creation is calculated under the EB-5 visa program, in which which foreign millionaires park $500,000 while "creating" at least 10 jobs can get green cards for themselves and their families.

A blatant example: the New York Wheel, the giant ferris wheel attraction being built at St. George in Staten Island, which is getting low-cost financing of at least $150 million, which saves tens of millions of dollars, under EB-5..

According to the New York Wheel's official web site, below right in graphic, the project's construction "will create approximately 350 union construction jobs and 600 permanent jobs." That adds up to 950.

But they're raising either $150 million, according to the New York Times, or $170 million, according to the web site of the New York Metropolitan Regional Center (NYMRC), cited below left in graphic. The NYMRCis the investment pool authorized to recruit investors who are willing to accept virtually no interest on their loan as long as they get those green cards.

Federal rules require at least 10 jobs per investment, so that would mean at least 1,500 or 1,700 jobs. Both numbers well exceed the figure of 950, which is verifiable via a head count.. 

But rest assured, the New York Wheel will meet federal requirements. The regional center found an economist who, using the generous formula allowed under EB-5, calculated indirect jobs spun off by the project and even induced jobs from even worker spending. So $170 million in spending would generated 4,939 jobs, more than five times the requirement. We just can't really count them.

Excerpts from NYMRC and New York Wheel web sites regarding job creation; click to enlarge
Confirming federal qualms

This clearly illustrates concerns raised by EB-5 critics and watchdogs. The Government Accountability Office last year concluded that the agency overseeing EB-5, the U.S. Citizenship and Immigration Services (USCIS), could not validly analyze job creation.

Earlier, an internal memo from Homeland Security Investigations (HSI), the investigative arm of U.S. Immigration and Customs Enforcement, an agency within the Department of Homeland Security (which also houses the USCIS-5), addressed the issue, as I wrote in January 2014.

HSI proposed, among other things, that the EB-5 program be limited to only active investors involved in managing and directing a business.
It recommended that "induced jobs"--resulting from workers' spending in the local economy--be eliminated from the job creation calculations. And it recommended that "the Regional Center Model be allowed to sunset, as HSI maintains there are no safeguards that can be put in place that will ensure the integrity of the RC [regional center] model.”

HSI concluded, based on its own research, that it has has "reason to believe that the RCs are greatly exaggerating their indirect and induced job creation figures. By not having to provide evidence of jobs directly created, the RC inherently creates an opportunity for fraud, where the business goal can be initiating projects that give the appearance of creating job growth, with the sole intent to meet USCIS criteria rather than produce jobs."

Surely the New York Wheel will produce some jobs. But it won't really create the number of jobs it claims to qualify under EB-5. Its backers even admit it.

No comments:

Post a Comment