Reactions to NYTimes article on EB-5 Gerrymandering

I had previously discussed the issue of potential EB-5 gerrymandering raised by the New York Times.  Experts are now debating this issue.

Here is my PRIOR EB-5 ARTICLE covering the gerrymandering issue.  To summarize, 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(Targeted Employment Area, or, “TEA”).  The New York Times has reported that certain New York developers are often relying on gerrymandering techniques to create development zones that are supposedly in the TEAs — and thus eligible for special concessions — but actually are in prosperous ones.  

Registered Investment Advisor Michael Gibson has written about the early reaction on this issue.  “The principal question which they [New York Times Editors through interviews with attorneys, economists, etc…] asked was that even if the TEA designations are inconsistent and the regulations are vague, who does it hurt if capital is raised to promote economic activity, even if it does not benefit, as Congress might have intended, true rural or areas of high unemployment?”  Mr. Gibson (Linkedin Profile) quite rightly points out, “I said that one might argue that it hurts the ability of those in rural and impoverished urban areas which cannot compete with the resources of the large MSA developers to raise funds overseas.  The developers in large cities like New York, Miami or Los Angeles have significant advantages and access to raise both traditional and non-traditional forms of capital that might not be available to their counterparts in the farm, mountain, rural States or the impoverished inner cities with collapsing industrial infrastructures.”

“The question is, are the state authorities adhering to the spirit of the law?” said Mr. Mayorkas, the federal immigration official who is the director of United States Citizenship and Immigration Services.  “Where is the project being developed, and where are the jobs being created?  Are the people from the areas of high unemployment being employed?  Because that’s really the purpose.  If they’re not being hired from those areas, then the question is justified.”  Mr. Mayorkas, whose staff has been scrambling to keep up with the boom in the program, said in the NY Times interview that he was concerned about allegations of gerrymandering.   NY TIMES