EB-5 Capital Gerrymandering
of Targeted Employment AreasTeam
- Wuyahuang Li
- Olivia Serra
The EB-5 Immigrant Investor Program, established by the U.S. Congress in 1990, grants lawful permanent residency to foreign nationals who invest in a new commercial enterprise that creates at least 10 American jobs. Initially requiring a minimum investment of $500,000 (increased to $900,000 since 2019), the program primarily targets high-unemployment areas, aiming to stimulate the U.S. economy and provide capital for struggling regions.
The Hudson Yards project in New York City exemplifies EB-5 capital gerrymandering. The $25 billion development, the most expensive in U.S. history, secured $1.6 billion through the EB-5 program by manipulating census tract boundaries to qualify as a TEA. This gerrymandering linked the affluent development to high-unemployment areas in Harlem, artificially inflating the local unemployment rate to meet EB-5 criteria. As a result, Hudson Yards' unemployment rate was reported as 12.6%, significantly higher than the national average.
This practice raises ethical questions about the intended benefits of the EB-5 program. While projects like Hudson Yards receive substantial investment, the actual high-unemployment areas see minimal job creation or economic improvement. The manipulation of TEA boundaries benefits wealthy developers and foreign investors while neglecting the communities that the program is supposed to help.
Our research extends beyond New York City, examining similar patterns in Los Angeles, Orange County, Jersey City, and Boston. These case studies reveal that EB-5 gerrymandering is a widespread issue, often failing to deliver on its promises of job creation and economic revitalization in targeted employment areas. Our findings call for a reevaluation of the EB-5 funding model to ensure it genuinely benefits underdeveloped regions and addresses the systemic issues of poverty and unemployment.
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