Related Cos

More American Cronyism – U.S. Government Selling Visas to Fund Luxury Apartment Buildings

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Merging, on paper, the affluent midtown neighborhood and the struggling one uptown placed Hudson Yards in a community with an overall high unemployment rate, positioning developer Related Cos. to gain low-cost financing from foreigners seeking green cards.

The program through which that happens, known as EB-5, enables foreign nationals to obtain U.S. permanent-resident status by putting up money for new business ventures that create American jobs. It gives ventures in high-unemployment and rural areas a special status to encourage investment. But as the program’s popularity has soared in recent years, the bulk of immigrant investment is going to projects that are located, like $20 billion Hudson Yards, in prosperous urban neighborhoods.

At least 80% of EB-5 money is going to projects that wouldn’t qualify as being in Targeted Employment Areas without “some form of gerrymandering,” estimates Michael Gibson, managing director of USAdvisors.org, which evaluates projects for foreign investors.

Increasingly, the money appears to be flowing to the flashiest projects, which the investors often see as safest, EB-5 professionals say. Among those getting EB-5 money are an office building set to host Facebook Inc. near Amazon.com Inc.’s Seattle headquarters, a boutique hotel in high-end Miami Beach, and a slim Four Seasons condo-hotel in lower Manhattan that sports a penthouse with an asking price above $60 million. In all of them, geographic districts were crafted to include higher-unemployment areas. 

– From the Wall Street Journal article: How a U.S. Visa-for-Cash Plan Funds Luxury Apartment Buildings

Another day, another story highlighting just how completely corrupt and sleazy the U.S. economy has become.

I’ve covered the issue of EB-5 visas before, and how a program that was initially supposed to help high unemployment neighborhoods attract investment, has become another scheme to further enrich America’s crony capitalist class.

Before we get into the meat of this post, here are a few excerpts from last year’s piece, How NYC’s Biggest Real Estate Project in a Generation is Being Financed by Selling Green Cards to the Chinese:

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How NYC’s Biggest Real Estate Project in a Generation is Being Financed by Selling Green Cards to the Chinese

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Screen Shot 2014-12-15 at 11.04.34 AMThe selling of U.S. green cards to foreigners, particularly the Chinese, has grown exponentially in 2014, and represents a significant public policy debate very few Americans are aware of. I covered the surging issuance of EB-5 immigrant visas a couple of weeks ago in the post: How the Pennsylvania Turnpike Commission is Selling Residency to Chinese “Investors” at $500k a Pop. Here’s an excerpt:

A major theme here at Liberty Blitzkrieg over the past year has been the creative ways in which corrupt Chinese oligarchs and government officials are maneuvering their way into the United States. To be clear, I am not anti-immigration by any stretch of the imagination. My mother was an immigrant. This is about being against corrupt and morally compromised individuals being welcomed here with open arms just because they have cash. We have enough domestic criminal oligarchs as it stands. These people have collectively captured the American political and economic system and control it to their own ends. Do we really need to import more of these types from abroad?

Here’s what I’d like to know. Who are these investors and who vets them? It is a known fact that corrupt Chinese officials and businessmen are scrambling to get themselves and their money out of their homeland as the government cracks down on corruption. How many of them are going to use this program to get into the U.S., and what will be the long-term impact to our society? Important questions that must be asked, but most likely aren’t being taken seriously.

While that article focused on a turnpike in Pennsylvania and mentioned a few other projects, it didn’t clarify how widespread the use of these visas has become in 2014. Specifically, there were 10,928 applications for EB-5 visas in the fiscal year ending September 30, 2014. This was up a stunning 72% from fiscal year 2013. Even more shocking, the number of applications in 2006 was 486. So the 2014 figure is up 22x in less than 10 years. That’s not normal.

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