How soon we forget. Consider New York magazine's mostly admiring portrait of the Related Companies CEO's latest success, The Only Man Who Could Build Oz, subtitled "How Stephen Ross outmaneuvered, outspent, out-leveraged, and out-sweet-talked his way into the Hudson Yards deal."
From the article:
Well, it's not just controversial because of the concept--essentially trade public assets (visas) for private investments--or that the calculation of a required ten jobs for investor comes via an economist's report, far more generous than a head count.
The TEA issue
It's controversial because, as Eliot Brown of the Wall Street Journal reported 9/9/15, the prosperous Hudson Yards area was linked with "adjacent" public housing in West Harlem in order to game the EB-5 system, to establish a Targeted Employment Area (TEA), a zone of high unemployment.
That ensured that the minimum investment was $500,000, rather than $1 million, and allowed Hudson Yards to compete with similarly situated projects on the EB-5 market.
Such gerrymandering is common in the EB-5 world; with Atlantic Yards, I've reported on the "Bed-Stuy Boomerang" and the "Fort Greene Finger," odd maps that connect the Atlantic Yards sites with zones of poverty--though surely few people from those census tracts got hired.
Too often it's ignored, especially when EB-5 is a footnote in a tale of a hard-driving real-estate hero.
The new EB-5 frontier: Vietnam
Real-Estate Developers Look to Vietnam for Cheap Financing, the Wall Street Journal's Konrad Putzier (ex-Real Deal) reported 3/15/19, citing new efforts from those marketing EB-5 projects.
The problem for real estate developers is that there's a per-country cap, which means EB-5 investors from China now face enormous delays--some 14 years for those who invested last year, according to the article, which notes:
From the article:
He has a banker’s knack for financing, whether it’s from working the various government tax subsidies for affordable housing or seeking overseas cash. (Related has raised over $600 million for Hudson Yards through the controversial EB-5 visa program, which gives foreign investors residency status.)
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| Graphic: Wall Street Journal |
The TEA issue
It's controversial because, as Eliot Brown of the Wall Street Journal reported 9/9/15, the prosperous Hudson Yards area was linked with "adjacent" public housing in West Harlem in order to game the EB-5 system, to establish a Targeted Employment Area (TEA), a zone of high unemployment.
That ensured that the minimum investment was $500,000, rather than $1 million, and allowed Hudson Yards to compete with similarly situated projects on the EB-5 market.
Such gerrymandering is common in the EB-5 world; with Atlantic Yards, I've reported on the "Bed-Stuy Boomerang" and the "Fort Greene Finger," odd maps that connect the Atlantic Yards sites with zones of poverty--though surely few people from those census tracts got hired.
Too often it's ignored, especially when EB-5 is a footnote in a tale of a hard-driving real-estate hero.
The new EB-5 frontier: Vietnam
Real-Estate Developers Look to Vietnam for Cheap Financing, the Wall Street Journal's Konrad Putzier (ex-Real Deal) reported 3/15/19, citing new efforts from those marketing EB-5 projects.
The problem for real estate developers is that there's a per-country cap, which means EB-5 investors from China now face enormous delays--some 14 years for those who invested last year, according to the article, which notes:
About 20% of the current EB-5 investment in U.S. real estate comes from Vietnam, trailing only the 25% from India and 30% from China, according to estimates by Nicholas Mastroianni II, chief executive officer of the EB-5 regional center U.S. Immigration Fund. These centers pool money from investors and invest it in real-estate projects.The U.S. Immigration Fund's offshoots have managed the second and third round of fundraising for Atlantic Yards, which were in 2014. Now Related, seeking investors for another phase of Hudson Yards, is looking to Vietnam.
From the article:
Because the program's main draw is a green card, these foreign investors are often willing to accept lower returns, making it a cheaper source of financing.In other words, the developers--and middlemen like the regional centers--gain from marketing a public asset. From the article, which has a distinctly investment-centered perspective:
The surge in Vietnamese participation couldn't come at a better time for U.S. developers, which have bemoaned the decline of cheap funding as Chinese investors pull back.The close:
And then there is the uncertainty over the program itself. One reform proposal would raise the minimum investment from $500,000 to $1.35 million. "That," Mr. Thompson said, "could shut down the whole industry."Of course, given that the minimum investment hasn't risen in decades, maybe it's time for a change.
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