Jared Kushner, President Donald Trump's son-in-law and senior advisor, took advantage of a federal program aimed at helping low-income communities to build a 50-story luxe residential tower in a wealthy neighborhood in New Jersey.
According to The Washington Post, Kushner and his real estate partners were able to receive $50 million in low-cost financing by using a tactic that is akin to the gerrymandering of legislative districts. The tactic is legal.
The loan program is aimed at promoting investment in struggling areas. Kushner Cos. drew up a map that stretches for miles beyond the affluent neighborhood of 65 Bay Street, which is where the tower is being built, to areas of south Jersey City where unemployment is high (see map below).
As a result, the project qualified for low-interest loans accessible through the EB-5 U.S. visa program, which is meant for foreigners to gain residence if they invest $500,000 in targeted areas of high unemployment.
Rather than use the employment numbers of the neighborhood in which the construction is based, developers play up the unemployment numbers of neighboring areas — if they're 1.5 times the national average — to get favorable terms.
Bay Street isn't the only spot where Kushner Cos. is applying this tactic.
Another project proposed by the New York-based real estate firm is at 1 Journal Square where $150 million in financing is being sought through the program. The map, once again, links to poorer neighborhoods in New Jersey, despite being located in one of the most affluent neighborhoods.
Post reporter Shawn Boburg details how this program "has been plagued by fraud and abuse."
The U.S. Immigration Fund-NJ, which is helping Kushner raise EB-5 money for both projects, defends the practice, saying it can create jobs for those living in areas where unemployment rates are high. The reality, however, is that high-rises like the one Kushner is looking to build go to union workers.
Other developers, including Trump, has made use of EB-5 money to fund major property developments.
Meanwhile, the future of the program is currently up for debate in Congress. The White House has not weighed in on the regulatory changes — proposed by the Obama administration — that would close the very loophole that allowed Kushner Cos. to qualify for incentives that are supposed to be reserved for poorer areas.
We've reached out to a Kushner Cos. spokesman as well as the U.S. Immigration Fund-NJ for comment, but have not received a response.