Is Hudson Yards In the ‘National Interest’?

Developer Related Cos. is in the process of raising $1.2 billion to help fund its massive Hudson Yards development on Manhattan’s west side.

The largest user of the EB-5 immigrant investor program has a leg up on its competitors: speed.

The program lets foreigners acquire U.S. residence status by making an investment in the U.S. that creates jobs. Real-estate developer Related Cos., which is in the process of raising a total of $1.2 billion through the program for its Hudson Yards project in New York, jumped to the front of a lengthy line when it applied to raise money through EB-5, a substantial advantage in a process that can take more than a year.

Meanwhile, its brokers in China advertise to potential immigrant investors that they will get accelerated processing times that are nearly a year faster than average.

Aiding Related in this process was a successful push to be considered a project of “national interest” by the federal agency that oversees the EB-5 program, U.S. Citizenship and Immigration Services. That sped up the processing time of its own application to raise money through EB-5, and is featured prominently in its advertising materials in China, where the bulk of the EB-5 investors are based.

The designation is rarely used by USCIS, which says on its website that a federal agency must first state that it “will be detrimental to our government” if an individual project is delayed.

Related, known in New York for its political connections and savvy ability to navigate government programs, successfully made the case that it should qualify for the designation because its Hudson Yards mixed-use development includes an 800-foot span of a proposed 2 1/2-mile rail tunnel that ultimately is meant to connect Manhattan and New Jersey. The argument to federal officials was that a delay in Hudson Yards would slow the tunnel project.

The overall tunnel is years away from reality. The first 800-foot chunk was built because federal rail officials were worried that if Related moved ahead with its Hudson Yards development, it would be difficult or impossible to build the section of the rail tunnel under the project later. So in May 2013, Amtrak said it had secured $185 million to build a long concrete box meant to eventually hold trains.

In the same month the money was secured, Related applied for the expedited status, aided by letters of support from Sen. Charles Schumer (D., N.Y.), Rep. Peter King (R., N.Y.) and others including Amtrak, which is planning the tunnel.

Stephen Gardner, an executive vice president at Amtrak, said the Hudson Yards development and the concrete box needed to be built simultaneously, and a delay in Hudson Yards “would have imposed significant additional costs on Amtrak and been detrimental” to the tunnel project.

The designation as a project of national significance features prominently in Related’s pitch in China, where it has secured well over 1,200 investors thus far.

Wailian Overseas Consulting Group, a broker for Related in China, says on its website that as a “project of ‘national interest,’ ” Hudson Yards “fulfills an important criterion set by the immigration authorities’ for fast-track processing.” Wailian declined to comment.

Expedited processing times have raised eyebrows when used in other projects in the past.

Pat Hogan, who runs a company that helps developers raise money through EB-5, said when a Las Vegas hotel project got expedited processing of its applications, this gave the developer a giant advantage in fundraising.

Mr. Hogan flagged the expedited cases to USCIS, according to a report earlier this year by the Department of Homeland Security’s inspector general that looked into the expedited review of the Las Vegas hotel and casino project after USCIS staff complained there was “no basis” for expedited processing.

“They use it as a marketing ploy. That’s unfair,” Mr. Hogan said of the Las Vegas project. “That’s unfair against everybody.”

Related said that it follows all federal and state rules. USCIS declined to comment on Hudson Yards or any specific applicant.

http://blogs.wsj.com/moneybeat/2015/09/10/is-hudson-yards-in-the-national-interest/

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