One Journal Square, a mixed-use development designed by global architecture firm Woods Bagot, has been put under the microscope as the project’s developer, Kushner Companies, seeks funding through the controversial EB-5 investor visa program.
The Jersey City development has been hit with turmoil recently, with its main tenant, WeWork, backing out and taking several million dollars of tax breaks with them, as well as potentially losing a major chunk of cash ($30.4 million in city bonds, to be precise) and a 30-year tax abatement to boot, according to Bloomberg News. Kushner Companies, like many developers, has turned to Chinese investors to garner funds, specifically $150 million of the $1 billion budget, utilizing the EB-5 investor visa program.
The EB-5 program, more formally known as the EB-5 Immigrant Investor Visa Program, was created by the Immigration Act of 1990 as a way to spur investment into rural communities and communities struggling with high unemployment rates. The gist is that a foreign investor can invest a minimum of $500,000 to $1 million in a business that will employ at least ten American workers, and, in exchange, they will receive a U.S. visa, which can turn into permanent residency for the investor and their family.
The program was developed to spur growth in downtrodden communities, however, the program has become a loophole for developers to fund luxury projects, claiming nearby neighborhoods struggling with unemployment in order to qualify their luxury developments for the program. Then all they have to do is sell visas to wealthy foreigners in exchange for ‘cheap money.’
(Courtesy Kushner Companies, via New York YIMBY)
The number of visas issued through the EB-5 program has increased dramatically in recent years, from a meager 64 visas in 2003 to nearly 9,000 visas issued in 2015, according to The New York Times. Of those 9,000, approximately 80 percent were to Chinese investors, according to The Washington Post. Despite the increase in growth, a report by the Government Accountability Office in 2015 suggests the program is at high risk for fraud and has no reliable means of verifying sources of funds (like that one time invested funds were linked to several Chinese brothels).
Although the EB-5 program itself is no stranger to scandals (for example, a member of Iranian intelligence utilized the program to obtain a visa), there is no doubt that much of this particular scandal comes from the company in question’s ties to a particular senior adviser to the White House (that would be Jared Kushner, husband to Ivanka Trump and former chief executive of Kushner Companies).
Only one day before Kushner’s sister spoke to investors in Beijing about One Journal Square, saying the project “means a lot to me and my entire family,” President Trump signed an extension to the EB-5 program as part of his Omnibus bill, raising many eyebrows.
Although there is no evidence that Kushner or his sister have done anything illegal or in direct violation of any ethics codes, the controversy surrounding One Journal Square has drawn a lot of attention to the conflict-of-interest concerns floating around President Trump’s White House, as well as the ongoing debate about the future of the EB-5 program and what that means for luxury developers.
Despite the scandal and struggle to find funds, however, One Journal Square is still set to begin construction early next year. Stay tuned.