Hudson Yards is built on money from the EB-5 program, an immigrant visa program that is now under threat of expiration. The program is at the center of a heated controversy between industry leaders, EB-5 interest groups, and U.S. Congress.
The EB-5 program is a child of the nineties, born during the troubled days of the credit crisis. It offers a green card and potential citizenship to foreign investors in exchange for economic investment in the U.S. The minimum investment amount is $500,000, and investors must also “plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers,” says the USCIS information page.
The program was intended to create jobs and stimulate industry in economically struggling areas; however, it is now largely used by developers seeking to build in prosperous urban areas. Related Companies is one of its biggest beneficiaries, both in New York and nationally: it has raised more than $800 million and controls one-third of the EB-5 market nationwide, The Real Deal reports.
Of that $800 million, $600 million is for the Hudson Yards project.
Now the program’s future seems uncertain. Key portions of the program expire on Dec. 11, and some Congress members are pushing for change. Senators Charles Grassley (R., Iowa) and Patrick Leahy (D., Vt.) recently drafted a bill that would significantly hinder developers seeking to build in high-income areas. In particular, they seek to limit a practice that has allowed developers to meet certain unemployment-level thresholds required for EB-5 eligibility. The Wall Street Journal reports that some developers work with state governments to cobble together districts that will connect their projects, located in more affluent urban areas, with lower-income neighborhoods in order to meet that high-unemployment threshold.
Critics call this practice “gerrymandering.” Supporters of the current EB-5 program argue that limiting eligibility to neighborhoods makes little sense, as many construction workers commute from poorer neighborhoods far away from the project itself.
Related Companies has been one of the loudest voices in support of EB-5’s continuation. It spent a whopping $700,000 lobbying on immigration issues between April and September, the Wall Street Journal found. This is several times more than any other single company involved in the controversy.
Nevertheless, a number of voices are chiming in on the battle. Many in rural areas complain that because the program has reached its 10,000-visa capacity, the competition for the precious investment dollars too often favors the high-profile urban projects. Those who have used the program to back noncontroversial projects such as manufacturing plants and developments on closed military bases fear a Congressional stalemate that would cause the program to expire. And the EB-5 trade group, Invest In the USA, senses the urgency of getting some form of bill through Congress, even at the cost of compromise.
Ultimately, compromise does seem a likely, if unpopular, outcome. “There has to be a compromise,” insisted Nick Mastroianni, chief executive of the regional center US Immigration Fund LLC. “It’s going to be painful for both sides.”