EB5 Investors Magazine Volume 2 Issue 1 | Page 30

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 .
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