Hudson Yards, most expensive U.S. real-estate project ever, damned for using EB-5 money meant for distressed areas

A New York Times opinion article titled “Another Reason to Hate Hudson Yards” makes a case that the mega-project is a perfect example of EB-5 abuse. The $25 billion Manhattan development was funded by at least $1.2 billion in EB-5 capital — but EB5 green card applicants only had to give $500,000 each, the lower investment cost for Targeted Employment Areas (TEA’s), areas with severe unemployment. The article surmises that Hudson Yards alone probably used up an entire year’s worth of EB-5 visas. Critics have long held that TEA designation, currently decided by the state the project is located in, is gerrymandered by developers, and that the lower-tier of EB-5 investment ($500,000) often goes to luxury projects and not struggling neighborhoods. The article is critical of other aspects of EB-5 and says reform is a “vital priority.” Change could be on the horizon with the EB-5 Modernization Regulation under final review by the Office of Management and Budget (OMB), which includes the proposal that TEA designation be made federally, and not on a state level. In spite of the article’s vicious critique, it maintains that EB-5 — if reformed and if single census tracts are used for TEA’s — could “work elegantly” to financially build up areas in real need. Curiously, though the article supports reform for TEA designation, it does not support the increase of investment levels — another platform of the Modernization Regulation — as maintaining the investment-level status quo would maximize capital raised for distressed areas. See the The New York Times story