Continued from page 27 you look at the census, the census tract is defined as a geographic subdivision; therefore, a group of census tracts is a legitimate geographic subdivision, but some states won’ t allow combinations of census tracts unless it fits into natural boundaries.
“ There are no two states that do the process the same.”
Staff: Are there any states in which it tends to be easier to obtain TEA status than in others?
Winer: We could do the whole interview on that alone. There are no two states that do the process the same. When you say ease, there are two things to really consider: on the one hand, there are the numbers themselves. Nobody can invent the numbers; where the unemployment rate is high, it’ s easier to get TEAs. The second part of it is that some states are easy to deal with and have knowledgeable staff who are efficient, understand the program, and have quick turnaround times. In other states, it takes a much longer period of time; the staff you’ re dealing with doesn’ t have the knowledge and you have to explain to them what’ s going on, or they may have roadblocks. For the most part, the states are very good and the personnel are very good. Right now, there is really only one state— New Mexico— where you cannot do a TEA.
There are about a half a dozen states that do not have a process of authorization in place, because if the states are small, they generally don’ t get any requests. If I put in a request, they would go over it and consider it at that time. In one case, the state representative was very cooperative and said he’ d be more than willing to authorize TEAs, but said he’ s not going go through the process unless there’ s a viable project.
So you have about a half a dozen states that may not be authorized and that may not have a process in place, but it’ s because either they’ ve never gotten a request, or they’ ve never gotten a request where a project was viable.
Staff: How has the significance of TEAs in the program been affected by the changing economic climate over the years?
Winer: There is more interest in opportunities for economic development, and the question of who it is beneficial to. It’ s beneficial to the foreign investors, through green cards; the people who head the projects, who need that money, with the economy being weak; and it guarantees, as long as everything is on the up and up, that there will be jobs created for Americans.
Overall, has it gotten easier or harder? The answer is, it hasn’ t changed at all, because of the way the program is written. Certain states have gotten easier and certain states have gotten harder, because you have to be 150 percent above the national average. The only thing that matters is how that changed last year. As an example, getting TEAs in California became harder because the rate in California in 2012 dropped faster than it did in the United States. Likewise, Nevada used to be the only state where the whole state qualified, and while it’ s still the highest unemployment state, the state no longer qualifies in total. On the other hand, states like New York, Pennsylvania, and New Jersey— where the rates essentially stayed the same, while the U. S. was dropping— created significant opportunities for TEAs, because now many areas that could not have been done before have been made eligible.
Staff: We hear a lot about“ gerrymandering.” Are these sorts of situations an appropriate use of the EB-5 program?
Winer: There was a project in Marina Del Ray that was crazy. It could’ ve been done with 10 or 12 census tracts, but that wouldn’ t fit into natural boundaries. You could do combinations of planning districts, so we came up with a combination of five or six planning districts, which are 150 tracts. The crazy part about it is that this project was directly across the street from the city of Los Angeles. If it had been the other side of the street [ within city limits ], it would have automatically qualified as a TEA, because last year, all 3,000 census tracts in Los Angeles qualified. People will get concerned about taking 8 or 10 tracts where the unemployment rate is low, but nobody is concerned about, well if the city of Los Angeles qualifies, why can I build in the most exclusive area in Bel Air? Or Nevada, which until this year wholly qualified. You could live in the richest census tract, with the lowest unemployment rate, and you could build your project anywhere— in the middle of Las Vegas, Reno, the Lake Tahoe area. But somebody would be upset if you went and looked at five or six tracts. You have to have some kind of criteria. I’ m not arguing against it, but I’ m just saying how you can get too ridiculous
I did not work on [ the Barclay’ s Center ], but I thought that controversy was off-base. It very well may be the case that it would’ ve been built anyway, and that they were just using [ EB-5 ] to get money, so I’ m not debating that aspect of it. If they’ re approaching the TEA the way it should be approached— doing it honestly and creating opportunities for people in a high-unemployment areas— then there was nothing wrong with it. Obviously, if their intention was to hire the people that didn’ t live in those areas, or to exclude people from that area, then you have more of a moral problem than a program problem.
The reason I didn’ t have any problem with it was because the unemployment rate in that area was low, but the high unemployment areas were close by. There are many projects that are done all over the country like that, within a mile or two of high unemployment areas. So why not give people in close-by areas an opportunity? What I oftentimes find is that unemployment rates in downtown areas of cities will be low. The unemployment rate may be low because the systems just don’ t allow you to be that accurate.
28 EB5 Investors Magazine