(Rendering of AAFE’s Renaissance Hardesty Project in Kansas City. Credit: El Dorado Architects.)
An article in CityLab looks at AAFE’s efforts to fix a broken community development tool known as EB-5.
The story, When Harlem Unemployment Pays For Midtown Luxury, explores the problems with the controversial immigrant investor program. The so-called “cash-for-visas” initiative was meant to help communities with high unemployment when it was created in the 1990s. In recent years, however, EB-5 has been misused for luxury projects in affluent neighborhoods, such as Manhattan’s Hudson Yards.
As Congress looks at reforming the program, CityLab reported that AAFE is working to put EB-5 back on track:
To see the kind of problem EB-5 was originally designed to solve, see the Hardesty Federal Complex. Once home to the Kansas City Quartermaster Depot, this set of hulking federal warehouses in an 18-acre brownfield adjacent to the Kansas City Terminal Railroad has sat mostly vacant since 2002. Where Hardesty looms today, however, Northwest Missouri State University will soon offer its students the opportunity to pursue a degree in urban agriculture. It will be the first-ever urban agriculture degree program in the nation, in fact, and it’s steering the relocation of the Maryville, Missouri-based university’s agricultural sciences department to Kansas City. The new university campus will serve as the anchor for an ambitious project that now includes a culinary school, commercial retail, seven acres of rooftop farming, and a food hub: a smorgasbord of programming in an area that Kansas City Mayor Pro Tem Scott Wagner has described as a food desert.
Hardesty Renaissance is one of four AAFE community development projects utilizing EB-5 funding. The others are a commercial center (including a grocery store) in the Far Rockaways; our mixed-use project in Queens known as One Flushing; and AAFE’s new Center for Community & Entrepreneurship in Flushing.
In the article, AAFE’s chief development officer, Ernesto Vigoreaux, talked about the Kansas City project. “Through EB-5 financing, in this blue-collar, low-income community in the historic northeast of K.C., we’re now able to advance the development of a new university, the food hub, small-business retail, rooftop farming—of course with the goal of creating jobs,” he said.
EB-5 is supposed to be reserved for projects in “Targeted Employment Areas.” But upscale projects often qualify when census tracts are gerrymandered, incorporating low-income neighborhoods, along with wealthy areas. In contrast, all four of AAFE’s projects qualify on their own merits in single census tracts.
Vigoreaux told CityLab, “We’re looking really to utilize this financing vehicle for its original intent, which is to channel or funnel foreign equity investments into distressed communities.” In today’s inflated real estate market, acquiring development sites has become increasingly expensive. Vigoreaux said EB-5 financing is making an enormous difference in a challenging financial climate.
You can read the full article in CityLab here. We’ll have our own take on the EB-5 program in an upcoming article.