Visa Express: Foreign Investors Buy a Chunk of San Francisco — and Their Green Card
|Visa Express: Foreign Investors Buy a Chunk of San Francisco — and Their Green Card|
You can buy a lot of things in the Tenderloin that you can't easily buy anywhere else. For years, the corner of Leavenworth and Golden Gate was a one-stop shop for certain appetites.
Outside, pill pushers peddled oxycontin. Inside, the Big Boy Market corner store offered the usual assortment of sodas, cigarettes, and Swisher Sweets to some patrons, while selling individual Ziploc baggies and sheets of aluminum foil — DIY hard drug kits — to others. You just had to know to ask.
The Tenderloin may be one of the last places in San Francisco to gentrify, but gentrifying it is. After years of complaints, the Big Boy Market is no more. Its former storefront will soon house the latest outpost of Dave Eggers' 826 Valencia, the national literary nonprofit that provides writing programs for children.
Next door, a developer is proposing to build 231 new "group housing units," tiny apartments akin to the neighborhood's ubiquitous single room occupancy hotels, but intended for a more affluent clientele paying market rate rents. Just up the block on Golden Gate, the Lofts at 7 offers 400-square-foot "lofts" that start at $2,595 a month and boast access to a rooftop outdoor cinema, among other amenities.
US GREEN CARD s : http://DV-US.com
The changes portend an influx of wealthier residents, some of whom may have a lower tolerance for homelessness and street crime. That means some of the Tenderloin's black market activities could be pushed out. But the tech boom's encroachment on the TL is also putting pressure on the working class immigrants — from the Southeast Asian refugees of the late 1970s to the Latino, Chinese, and Middle Eastern immigrants today — who traditionally gained their first foothold in San Francisco in one of the area's SROs.
A cleaner, richer Tenderloin does have something to offer immigrants — just a different class of immigrant, the kind with half a million bucks lying around. The development gold rush in one of the city's last bastions of affordability means that in today's Tenderloin, green cards are for sale.
A $500,000 green card may sound like a pipe dream to an immigrant family crammed into a tiny bedroom in an SRO on Eddy Street — a 2013 study commissioned by the Tenderloin Hunger Task Force found that a third of Tenderloin households have incomes of less than $15,000 a year — but to wealthy overseas investors, it's a savvy business decision.
Thanks to a program of the US Citizenship and Immigration Services (USCIS), immigrant investors can secure a green card for themselves and their immediate family members by sinking $500,000 into a new, job-producing business in an economically disadvantaged area.
The "Employment-Based Fifth Preference Immigrant Investor Program" — now known as EB-5 — was introduced as part of the Immigration Act of 1990 as a way to "to stimulate the U.S. economy through job creation and capital investment by foreign investors." Ten thousand visas would be set aside each year, reserved for foreigners who invested $1 million in a new business that would employ at least 10 full-time workers.
In exchange for the cash infusion, the US government would reward the entrepreneurs with green cards for themselves and their dependents. The investors were required to be directly involved in the management of their businesses, however — a tall order for investors living overseas — and the visas were rarely sought until two years later, when Congress changed the whole ballgame.
In 1992, the EB-5 Regional Center Program amended the rules of the game to make it even easier to attract foreign money. If the new business was in a rural or low-employment area (the boundaries of which can be gerrymandered), the cash requirement was cut in half, to $500,000. The pilot program also allowed US-based businesses or governments to create organizations — called "regional centers" — that could recruit dozens or even hundreds of immigrant investors and pool the total sums gathered to build major projects, like a new hotel or the Barclays Center in Brooklyn, whose developers have reportedly brought in $477 million in EB-5 funds for the Atlantic Yards megaproject.
Immigrant investors no longer needed to have a direct hand in the management of the business — being a limited partner in the business entity is enough — and instead of demanding the creation of 10 full-time jobs per visa, USCIS began counting direct, indirect, and induced job creation toward the requirements. This means that in addition to the people directly employed by the new business, regional centers can count the jobs created by a business's vendors or suppliers (indirect jobs) and the jobs created by increased economic activity due to the new enterprise (induced jobs). There's no standard formula for determining the number of indirect and induced jobs created by a particular project, so the regional centers can shop around for a favorable econometric analysis.
The EB-5 program picked up steam following the Great Recession, when the collapse of domestic capital markets forced developers to look elsewhere for major capital commitments. In 2005, there were just 153 EB-5 visas issued. Participation in the program jumped to 4,218 visas in 2009 and 8,567 in 2013. In 2014, the State Department cut off EB-5 applications for Chinese investors two months before the end of the fiscal year — the first time in history the program had reached its limit.
For real estate developers, EB-5 is a great deal. Where a traditional financier might demand a significant return on investment, an EB-5 investor gets his money's worth courtesy of the US government. Earning a return is secondary, and both the Securities Exchange Commission and an academic study by the NYU Stern Center for Real Estate Finance Research have found that EB-5 investors accept lower interest rates on their investments than they would if the green card weren't offered.
In other words, the US government is basically providing the ROI for private development loans via preferential treatment for wealthy immigrants, all while deporting poor immigrants at record rates.
The irony of immigrant money transforming an immigrant neighborhood is not lost on Unite Here Local 2, the hotel workers' union that counts many Tenderloin residents among its members. On Tuesday, Aug. 25, the union held a press conference outside the former Renoir Hotel — the fire-gutted structure on the border of the Tenderloin at Market and McAllister Streets. The Renoir is under renovation and will reopen next winter as San Francisco Proper, a 135-room boutique hotel, thanks to $42 million in EB-5 money raised by the developer, the Kor Group. That $42 million came from 84 immigrant investors, so it is supposed to translate into 840 direct, indirect, and induced jobs — a calculation that Local 2 President Anand Singh calls "outlandish."
"It's no secret that hotels and restaurants depend on the work of immigrants," Singh said, standing in front of several dozen union members bearing signs reading "I can't afford a $500,000 green card."
Singh added, "EB-5 highlights so much of what is wrong and broken with the US immigration system."
The union, which is angry that Kor has not committed to a card check neutrality agreement that would allow workers at the new hotel to organize, likens EB-5 to "immigration reform for the one percent." Kor did not respond to a request for comment.
Gordan Mar, the Executive Director of Jobs with Justice San Francisco, a coalition of labor and community organizations, was more direct in his critique. "Our nation sells visas to the highest bidder and then gives the profits to wealthy developers," he said. "Here in San Francisco, we can see what a simple-minded focus on job creation through government subsidies can do to deepen income inequality."
Just down Market Street, another major Tenderloin project seems primed for EB-5 investment. Group I, a real estate development and management company, is planning to develop 950-974 Market. According to Hoodline, Group I's most recent plan for the project includes a 262-unit residential building and a 235-room hotel. Group I, which also renovated the neighboring Warfield Building, would not confirm whether EB-5 funds will be used for the project. (A spokesperson said that Joy Ou, the President and CEO, was "really the EB-5 expert at Group I" but could not answer questions because she was out of the country.) It seems telling, however, that Group I has established its own EB-5 regional center, Group I Regional Center LLC.
The hotel workers' union isn't the only critic of EB-5. In advance of a Congressional vote to re-authorize the EB-5 Regional Center Program (which expires Sept. 30, 2015), the Government Accountability Office conducted a thorough review of the program. The GAO's report, released Aug. 14, says that USCIS needs to do a better job assessing the risks of fraud and reporting the actual economic benefits of the investments. Among the abuses the GAO raised were a case where a new enterprise told employees simply to sit in an office during business hours and another where funds were solicited to build a new hotel without any intention of doing so. With the future of the program hanging in the balance, pro-development heavy hitters such as the U.S. Chamber of Commerce, Hilton, Marriott, and Commercial Real Estate Finance Council have been pushing Congress to keep the visa gravy train running.
Singh has his own idea for improving the program. "If you're going to give green cards to the owners of hotels, people who work in hotels should get green cards too.”
US GREEN CARD s : http://DV-US.com