The federal government's EB-5 visa program allows foreigners to invest in U.S. businesses or developments in return for getting to the front of the line when applying for green cards. The program, which has been around since the 1990s, is getting more attention lately because so many Chinese investors with money to burn are signing up. But it's also been criticized on several counts, including a little-enforced provision that allows a smaller minimum investment for projects located in economically needy communities. Turns out that the parameters for such inclusion are pretty loose, as the Business Journal is reporting this week. A hotel project in Marina del Rey is classified as being in a a high-unemployment area, for example. Basically, they're gerrymandering locations in order to include low-income communities like South L.A. and Crenshaw.
At Via Marina and Tahiti Way in Marina del Rey, San Diego's Hardage is planning a $70 million, 288-room Marriott Courtyard hotel. The developer hopes to raise half that amount through EB-5 investments. It expects to begin construction late next year, according to the project website. But Marina del Rey has an unemployment rate of less than 6 percent, almost half the county average and ranks in the top 10 in per-capita income in the county, according to Census Bureau data. Though the project is not in a city, county or census tract defined by the state as a high-unemployment area, it still qualified after a Hardage subsidiary drew a map annexing faraway communities. The map heads northeast from the marina, avoiding the commercially successful areas of Santa Monica, Culver City and Playa del Rey, then expands broadly to the southeast, encompassing poorer communities such as Crenshaw, Baldwin Hills, Leimert Park, Hyde Park and a wide swath of South Los Angeles.
I reported on EB-5's shortcomings last year in a Los Angeles magazine piece on Chinese investment.