Let ’ s say you ’ re building downtown where the department stores are or the financial centers are , and nobody lives there . Or maybe you ’ ve got a couple of luxury condos there , and then half a mile away you ’ ve got unemployment rates of 20-25 percent , where poorer people live . You ’ ll look at the census tracts , and sometimes you ’ ll find zero unemployment , because there ’ s nobody that lives there — period . So if you held it to the fact that it has to be in low unemployment areas , that would be ridiculous , because you might have a waterfront area with no unemployment but it ’ s poor all around , so you ’ ve got to have the flexibility to include that .
Even if it was a simple census tract with an unemployment rate of 40 percent , there is nothing in the law that says employees have to be hired from that area . You could have a project in Los Angeles , and the owner would be in his rights to employ 20 people from Arizona , or have people drive in from San Diego every day and fill those jobs . But the idea is , just like with any economic development , if you ’ re creating opportunities in an area where there is high unemployment , you ’ re raising the opportunities for employment . In any economic development program , if you build a project , it doesn ’ t mean that everyone is going to be hired from that area , but there are going to be more opportunities , and businesses are going to need people . That ’ s a likely source of employment , and that ’ s all you can do , other than writing it into the law or making it a requirement , and I don ’ t know how you would enforce it .
Staff : What effect do you think these sorts of controversies have on the program as a whole ?
Winer : It definitely has a negative effect . Whether it ’ s a legitimate beef because it was fraud or a scandal , or it ’ s something that gets blown out of proportion , it ’ s going to create negative perceptions . What the average person gets out of that is somebody is doing something underhand to skim money — government bureaucracy , a scandal , people being paid off , free money , illegal immigrants are coming in , the country is falling apart — all of that comes to mind . It ’ s unfortunate when you find that a project marketed in China was misrepresented — those stories need to be out there , because they ’ re true , you can ’ t hide that , and people need to know about it and be protected . But it obviously gives a black eye to the program .
The ones that I have the issue with are stories like Barclays . If they could prove that all the investors would have invested anyway , or if they could prove that nobody was hired from high unemployment areas , then I ’ m fine with it . But the angle I had a problem with was that you shouldn ’ t use those areas . If the problem was that it was a huge project and EB-5 was just used to help the developers get free money , then they took advantage of the program , the program was not the problem . I think the way that it comes out is that there is a problem with the program that allows that to happen .
“ You have to have some kind of criteria , other than just somebody sitting down and independently saying this is good , this one isn ’ t .”
Staff : Gerrymandering certainly has a negative connotation , but is this sort of flexibility necessary for the program ?
Winer : Gerrymandering in itself comes from USCIS . I think states often say that they restrict certain things because they don ’ t want to approve something that ’ s going to get turned down by USCIS as gerrymandering , and they don ’ t even always know what they ’ re talking about . The question is : what is gerrymandering ? California has a good compromise — they allow 12 census tracts . Now is 12 the perfect number ? Well , there ’ s no perfect number , there ’ s no perfect system . You could make exceptions , but you have to have some kind of criteria , other than just somebody sitting down and independently saying this is good , this one isn ’ t . The 150 percent criterion is good , and the 12 tracts do limit the crazy so-called gerrymandering . You can ’ t come up with 500 census tracts , which would be clear gerrymandering , or you can ’ t take something where five tracts away from the project the unemployment rate is still two percent and you ’ re using one hundred tracts to get the unemployment rate .
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