New York City Real Estate Developers Suspected of Gerrymandering to Gain EB-5 Funds

The New York Times is reporting that in New York, developers and state officials are stretching the rules to qualify projects for EB-5 foreign financing.

Rather than $1 million, USCIS has reduced the minimum investment to $500,000 if the investment project is in a rural area or a community where unemployment is 50 percent greater than the national average.  The New York Times is reporting that certain New York developers are often relying on gerrymandering techniques to create development zones that are supposedly in areas of high unemployment — and thus eligible for special concessions — but actually are in prosperous ones, according to federal and state records.  NEW YORK TIMES.  

The Times has identified three separate projects suspected of this gerrymandering:  Gem Tower, Battery Maritime, and Atlantic Yards.  One of the more prominent projects is a 34-story glass tower in Manhattan that is to cost $750 million, one-fifth of which is to come from foreign investors seeking green cards. Called the International Gem Tower, it is rising near Fifth Avenue in the diamond district of Manhattan, one of the wealthiest areas in the country.  The Battery Maritime Building, at the foot of Manhattan near Wall Street, is also located in a suspected gerrymandering zone. The zone snakes up through the Lower East Side, skirting the wealthy enclaves of Battery Park City and TriBeCa, and then jumps across the East River to annex the Farragut Houses project in Vinegar Hill, Brooklyn.  The Atlantic Yards zone designation is so oddly ‘configured’ that it is reportedly known as the “The Bed-Stuy Boomerang.”       

Mr. Mayorkas, the USCIS Director, whose staff has been scrambling to keep up with the boom in the program, said in the interview on Friday that he was concerned about allegations of gerrymandering.  NY Times.