Skip to comments.Foreign investments in Sodo raise questions[WA][EB-5 Visas-Green Cards for Investing]
Posted on 08/02/2007 11:02:55 AM PDT by BGHater
Sodo landlord Henry Liebman, that area's largest single landowner, says he couldn't have amassed as much property and wealth without money from foreigners. Those investors use a little-known government program to gain citizenship in exchange for their money, with which Liebman is buying up industrial real estate.
The EB-5 visa program, launched in 1990, grants foreigners conditional citizenship upon their investment of either $500,000 or $1 million in an American business venture. The smaller investment is sufficient if the venture is in a high-unemployment area, defined as one with 1.5 times the national average unemployment rate.
Areas in which EB-5 investments are permitted are known as regional centers. Liebman's regional center is by far the largest of the 15 currently active, according to the U.S. Citizenship and Immigration Services. In 2006, it raised $120 million and created 2,500 jobs directly and indirectly, the agency said.
But there seems to be some difference of opinion between Liebman and immigration officials on what the EB-5 program was designed to do, and how.
Liebman says the program's function is to create jobs -- but not necessarily in areas of high unemployment.
"There's absolutely no intent to direct the money to low-unemployment areas at the expense of high-unemployment areas," he said.
In fact, he said, in order to qualify as areas in which EB-5 investments may be made, regional centers don't really have to meet any fixed criteria.
The law implementing the EB-5 program "doesn't discuss the characteristics of the regional center," he said. He said regulations governing the program leave "wide open" what can qualify as a regional center.
That's not how federal immigration officials see it.
The EB-5 program "focuses on urban areas that are depressed and have high unemployment," said an Immigration Services official, who cited agency policy in declining to let his name be used.
"It's basically an attempt to put enterprises into those areas, to stimulate opportunity and employment for the residents of those areas."
The Immigration Services Web site says a regional center "seeks to promote economic growth through increased export sales, improved regional productivity, creation of new jobs, and increased domestic capital investment."
One concern of Dave Gering's, who heads the Manufacturing Industrial Council of Seattle, is that a regional center can promote speculative investments in an area that has no trouble attracting its own private investment.
Sodo has a vacancy rate of only 2 percent, he said, and during the depth of the recession, that climbed only to 5 percent.
"My understanding is that (the EB-5 program) was intended to operate in areas that suffered from a lack of investment," he said. "The Duwamish doesn't suffer from disinvestment. I don't think it ever has. So to me, it seems like a disconnect."
By one measure, Sodo does suffer from high unemployment. In the single census tract making up the Sodo area, the unemployment rate was 18.6 percent in 2005, the latest number for which data are available, Washington Employment Security Department economist Cristina Gonzalez said.
The national average unemployment rate that year was 5.1 percent. That means Sodo's unemployment rate in 2005 was not just 150 percent of the national average, but 365 percent.
But Gering rejects using unemployment numbers to assess joblessness in Sodo.
"No one lives in Sodo, so there is no unemployment there," he said.
Liebman said in June that federal approval to require Sodo investments of only $500,000 was established "probably (in) August 1996." He also said that "it's been updated annually since then."
But "under the regs, there's no provision ... for requiring an update" to unemployment numbers, said the same immigration official. He expressed surprise when told some people in Seattle take issue with Liebman's continued ability to provide green cards with investments of only $500,000.
"What we'll probably do, we'll request an update of that unemployment data," he said. "Where the rubber meets the road is based on ... the more recent official unemployment data for that geographic area."
The agency has not requested such data, Liebman said. But, he said, "we provide them with unemployment data every time we do a project, so I don't know why they would ask for anything more."
One clearer aspect of the EB-5 program is that it's intended to create jobs. To qualify under the program, every investment must create 10 jobs that are new not just to the regional center, but to the U.S.
As of May, Liebman's program had received investments from 303 investors under the EB-5 program. That means it should have created 3,030 jobs.
When asked whether that's how many jobs he has created to date, Liebman replied that that number "seems high to me." Yet his earliest projected job-creation numbers were far higher.
In 1999, Liebman projected a typical development project would create, per investor, 20 new jobs directly. In addition, he said, it would create another 111 jobs indirectly -- for example, by letting a nearby deli take on a new counter clerk to serve newly hired workers at a tenant business. That's a total of 131 jobs per investment.
By those projections, with 303 investors to date, he should have created 39,693 jobs.
"He used ridiculous job multipliers," Gering said of those projections. "Nobody would think that that's happened."
But a recent report by local economist Paul Sommers suggests that, although Liebman's program creates far fewer jobs than his early projections anticipated, it does tend to spawn more positions than are required by the EB-5 program.
The report, written in response to a request by Immigration Services, estimated the number of jobs that would be created by the investment Liebman undertook in March 2006 at 4746 Ohio Ave. S. With 52 immigrant investors, that project should have created 520 jobs. Sommers estimated it would create roughly twice that number: 1,041 positions statewide, most of them in King county.
Liebman said he has a similar report prepared for every property he buys.
So, though the numbers are all over the place, Liebman may be fulfilling the program's job-creation requirements.
Another difficult aspect of the EB-5 program is its unsavory appearance.
Maurice Berez, the program's chief adjudications official, defended it, while acknowledging that the EB-5 program "leaves a bad taste in people's mouth, the idea -- which is inaccurate and unfair -- that people can 'buy a green card.' "
The program between 1995 and 1998 was frequently abused when would-be immigrants were allowed to pay a small amount in cash for a green card, signing a promissory note for the balance. The note didn't come due for several years -- long after the two-year conditional period built into the EB-5 visa had ended and permanent residency had been granted.
"The program has a checkered past," Berez said. But he was quick to point out its reformed state. He said many EB-5 visa holders have worked themselves up from poverty in their native countries before coming to the U.S., proving that they are the same sort of achievers that immigration law has traditionally sought to attract.
Allegations that the EB-5 visa lets people buy citizenship -- that it favors yacht people over boat people -- is "a simple answer that doesn't reflect the truth nor the facts of the program reflected in the people who have come through it seeking a life in America," he said.
"No one lives in Sodo, so there is no unemployment there," he said.
The only people who "live" in SoDo are homeless folks who hang out on Alaskan Way and folks who might have a PO Box there. There is simply no place to live.
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The EB-5 visa program, launched in 1990, grants foreigners conditional citizenship upon their investment of either $500,000 or $1 million in an American business venture.
So Liebman takes their money and buys land, and the foreigners somehow get green cards for making an "investment". But if it is an investment, why does Liebman end up with the land and not the "investors"?
I worked in the Sodo area for 9 years around 1st Ave and E. marginal way. On my daily lunch walks I have noticed a few houses among the industrial buildings. I do agree that most people living in the area are bums. They tended to use our loading dock as their bedroom, bathroom, and drinking parties.
I’m in Georgetown, just south of SoDo (and formerly incorporated on its own 130-odd years ago). E Marginal and 1st is about the dividing line.
Plenty of homes here. Worth lotsa money, too!
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