Chuck Schumer Says EB-5 Developers Won’t Build in Poor Neighborhoods
U.S. Sen. Charles Schumer (D., N.Y) Wednesday had an answer to those who want to use a federal immigration program to help spark property development in impoverished neighborhoods: it won’t work.
The so-called EB-5 program gives certain immigrant investors green cards if they put money into job-creating projects. But the program has been the subject of a fight in Congress because real estate developers in affluent urban neighborhoods have dominated the program by using a provision meant to aid poor and rural areas–sparking anger from rural lawmakers who call this an abuse and distortion of the intent of the program.
This conflict was in plain view Wednesday at a Senate Judiciary Committee hearing on this issue of the “targeted employment areas” that are meant to receive EB-5 investment. On one side were Sens. Charles Grassley (R., Iowa) and Patrick Leahy (D., Vt.), who have led the push to change this provision.
On the other side were Mr. Schumer and Sen. John Cornyn (R., Tex.) who advocated strongly on the side of the major real estate developers. Those developers–who benefit from the low-cost financing the program offers–say added restrictions to the targeted employment area rules would add to their costs and could hurt job creation in cities.
But in defending this approach, Mr. Schumer took a rather surprising position for a Democrat who often is on the side of directing aid to impoverished areas. He said using the government program to incentivize development in poor neighborhoods simply isn’t feasible. Instead, poorer areas like the Bronx benefit when jobs are created elsewhere in a city, like a downtown office tower.
“I disagree with one of the witnesses who said, ‘Oh we want to put the projects in only poor people areas,’” Mr. Schumer said. “It won’t happen–it’s not how cities are structured.”
Mr. Grassley challenged him on this, asking that if Mr. Schumer wanted to help the Bronx and Harlem, “Wouldn’t it be better to use this project to help build up those areas?”
Mr. Schumer’s response: “In all due respect, my dear friend Chuck, it’s not how cities work.
“It’s like saying the only EB-5 money you could get is for wheat, but you have to locate it the corn fields of Iowa,” he said.
Many economic development professionals would surely beg to differ.
Sparking investment and development in impoverished areas is a central tenet of federal economic development programs like the New Markets Tax Credit.
And while many projects in poor cities are simply unfeasible with or without EB-5, the program has been used repeatedly, to success, in Rust Belt cities like Cleveland, which typically have difficulty attracting traditional financing for development projects.
The president of the Bronx Overall Economic Development Corp., said in a prior interview that EB-5 was clearly intended to help places just like the Bronx, and multiple developers are considering it. “I would like for the intent to actually occur,” she said. “Preferably in the Bronx.”
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