Increasingly, the money appears to be flowing to the flashiest projects, which the investors often see as safest, EB-5 professionals say. Among those getting EB-5 money are an office building set to host
facebook Inc. near Amazon.com Inc.'s Seattle headquarters, a boutique hotel in high-end Miami Beach, and a slim Four Seasons condo-hotel in lower Manhattan that sports a penthouse with an asking price above $60 million. In all of them, geographic districts were crafted to include higher-unemployment areas.
Some left out
Meanwhile, some wanting to raise money for projects in rural areas and low-income parts of cities say they find it increasingly hard to compete. Evan Daniels has been trying for four years to raise about $40 million through the EB-5 program for a door-manufacturing plant in the rural southwestern Missouri town of Lamar.
"The harder we worked on this, the more we found the money was going to L.A. and New York," he said.
Joseph Walsh, a consultant who discussed the issue with Mr. Daniels, said finding foreign investors for rural manufacturing projects in the U.S. was a hard lift, particularly with competition from urban areas. Mr. Walsh said he was frustrated by developments he views as misusing the EB-5 law. "We should be using this money in projects that couldn't be financed" otherwise, he said.
Related, the Hudson Yards developer, was founded by Miami Dolphins owner Stephen Ross as an affordable-housing- focused builder but is known for large-scale commercial projects in cities that include San Francisco, Los Angeles and Chicago. Hudson Yards, believed to be the largest private development under way in the U.S., includes a tower around the height of the Empire State Building.
Related decided to plunge into EB-5 financing in 2013 after seeing other developers do so.
In the usual working of the program, brokers recruit foreign investors, and then regional centers bundle their investments. Related, however, set up its own infrastructure to bundle investments. It also formed an exclusive relationship with a Chinese brokerage firm.
The company and its brokers have held a steady stream of events in China for potential EB-5 investors, ranging from a gala featuring a Chinese television personality and flamboyantly dressed dancers to more mundane PowerPoint presentations. Related Chief Executive Jeff Blau said in April that about 300 people were finding investors for the company in China, Vietnam and Korea.
In China, one pitch is speed in obtaining green-card approvals from U.S. Citizenship and Immigration Services. Related's main broker has advertised that EB-5 investors receive initial approvals 11 months faster than the standard wait. That would mark a big advantage, because the average wait is about 14 months. It is unclear how its applications would be processed so quickly. USCIS declined to comment on Related's applications.
- New York
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