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- New York City’s $25 billion Hudson Yards project is the largest real-estate development in US history.
- The project has incited criticism over the years for relying on a pool of funds from immigrant visas.
- By securing at least $1.2 billion in funding from an immigrant investor program called EB-5, Hudson Yards likely claimed funding from around 10,000 visas — the maximum permitted in a given year.
- Visit BusinessInsider.com for more stories.
Less than a month after its grand opening, New York City’s 28-acre Hudson Yards megadevelopment is still having to contend with a controversy over its financing methods.
The $25 billion complex, which covers an entire avenue and stretches four city blocks on Manhattan’s west side, relied on a pool of funds generated by foreign visa-seekers — a practice that, while entirely legal, has raised ethical concerns among academics and politicians.
For years, the public has been made aware that at least $1.2 billion in funding for the development hails from an immigrant investor program called EB-5, which gives visas to foreign investors who put as much as $1 million into a business that employs American workers.
The threshold can be reduced to $500,000 for investors who place their capital in a "targeted employment area" (TEA) — either a rural community or distressed urban area with a high unemployment rate (at least 150% of the national average).
Katie Warren/Business Insider
The boundaries for TEAs are determined by the state and can be molded to include as many census tracts as the government wants, as long as they share a border. The practice has been equated to gerrymandering, but, without it, Hudson Yards could not be considered a distressed urban area.
As a community bordered by expensive neighborhoods like Chelsea and Hell’s Kitchen, Hudson Yards was too wealthy on its own to qualify for the EB-5 program. To solve the problem, the state included a few census tracts from Harlem as part of the overarching TEA.
Suddenly, the development was eligible for hundreds of millions in funds, which it reportedly used on a few projects: an infrastructure platform, office tower, and a retail hub.
Katie Warren/Business Insider
"By utilizing the EB-5 program we were able to finance the critical infrastructure for the project, the platform, where traditional financing is all but non-existent," a spokesperson for Hudson Yards told Business Insider. "This capital, which comes at no cost to the American taxpayers, was the catalyst for the Hudson Yards project."
But it was also money that might otherwise have gone to struggling areas.
An NYU paper tracking the EB-5 program found that Hudson Yards’ developer, Related Companies, was set to raise capital from 3,200 immigrant investors as of 2017. Since investors typically obtain visas for around two additional family members, the development likely claimed funding from around 10,000 visas — the maximum permitted in a given year.
Though many hotel chains, including Marriott and Hilton, have dipped into the same pool of funds, politicians like Sen. Patrick Leahy have accused companies of "abusing" the program’s discounts.
As the most expensive real-estate development in US history, Hudson Yards is unlikely to be affordable to the unemployed citizens that EB-5 is designed to serve. But development still claims to benefit distressed areas.
A spokesperson told Business Insider that the EB-5 funding "allowed us to immediately create thousands of jobs all over the city, offering tangible regional economic benefits and direct benefits to areas of high unemployment."
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Source: Business Insider – feedback@businessinsider.com (Aria Bendix)