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How Mega-Project Financing Tools Gerrymander Distressed Communities
Kriston Capps reports on the financial deal that helped finance the Hudson Yards mega-project in New York City. Bolstering a point that heavily criticized design choices are not the component of the project most deserving our contempt. Capps explains that reasoning:
Without their knowledge, the residents of a number of public housing developments helped to make Hudson Yards possible. The mega-luxury of this mini-Dubai was financed in part through a program that was supposed to help alleviate urban poverty. Hudson Yards ate Harlem’s lunch."
Specifically, the project raised at least $1.2 billion of its financing through a controversial investor visa program known as EB-5. This program enables immigrants to secure visas in exchange for real estate investments. Foreigners who pump between $500,000 and $1 million into U.S. real estate projects can purchase visas for their families, making it a favorite for wealthy families abroad, namely in China. EB-5 is supposed to be a way to jumpstart investment in remote rural areas, or distressed urban ones.
Related Companies, the developer of Hudson Yards, "raked in" at least $1.2 billion in EB-5 funds for the project, despite the project being "nobody's idea of distressed."
So how did Related Companies manage to qualify for the project? A highly gerrymandered map, created by Empire State Development, the economic development agency for the state of New York.
New York state “gerrymandered” a map to qualify Hudson Yards for $1.6 billion in financing meant for low-income areas—by threading it to public housing in Harlem. @kristoncapps reports:https://t.co/71yXG5KqIl pic.twitter.com/gX3PrCHlex
— CityLab (@CityLab) April 21, 2019
As note by Capps, the Hudson Yards project is one symptom of larger problems with the EB-5 program, and not just an example of systematic failures of New York real estate.
Sophie Kasakove provides additional follow-up coverage of Capps's reporting, tying the EB-5 story of Hudson Yards to controversies created by the use of tax increment financing in Chicago.