America’s Most Expensive Private Real Estate Project Denounced by NYC Official for Business Practices

Funding linked to immigration program, and presence of cashless stores, among concerns

People visit the main square at Hudson Yards in New York City on April 3, 2019. (Spencer Platt/Getty Images)

NEW YORK—Hudson Yards in Manhattan is known for being the most expensive private real estate development in U.S. history. Estimated to cost $25 billion, the neighborhood on the west side of Midtown won’t be fully complete until 2024, yet barely a month after its grand opening, New York City’s public advocate is raising concerns about its business practices.

At a press conference on April 16, Jumaane Williams called out Hudson Yards’s $1.2 billion worth of funding linked to an immigration program that was designed to help poorer neighborhoods. He questioned whether Hudson Yards qualifies as being in an “economically distressed area.”

He also expressed concerns about the presence of cashless stores in the development, saying the stores exclude those without credit cards.

Williams said Hudson Yards “was not for the majority of the city.”

“To the extent that it’s beautiful and can help with tourists is awesome,” he said. “But we can’t do it on the backs of New York City—people who are fighting for housing, homelessness, trying to buy food to eat.”

Immigration Investor Program Helped Fund $1.2 Billion

Hudson Yards received at least $1.2 billion in funding via a visa program, EB-5, according to The Wall Street Journal (WSJ) in 2015. The EB-5 program, created by Congress in 1990, was intended to create jobs and stimulate the U.S. economy, especially in economically distressed areas.

Under the program, foreigners can apply for a green card (permanent residency) for themselves, their spouse, and children if they invest a minimum of $1 million in a new business venture that can create at least 10 full-time jobs after two years.

As a further incentive to attract more foreign investors, the minimum threshold drops to $500,000 if the venture is within a targeted employment area (TEA) that’s deemed “economically distressed.” These are rural areas, or areas where unemployment is high—at 150 percent of the national average.

Federal law defers to the state to define the boundaries of a TEA for a given project, as long as census tracts of the entire area are contiguous.

While pointing to a board showing a map of how Hudson Yards was able to qualify as a TEA for its second round of EB-5 financing in 2016, Williams said he is calling on the state “to review this because this makes no sense.” He noted that the map geographically linked Hudson Yards and Harlem to reach a “target unemployment that they need.”

The map was obtained under the Freedom of Information Act and was first reported by CityLab.

“How many people have got jobs from here?” Williams asked, pointing to areas of public housing in Harlem. “What did the folks in these housing [projects] benefit from Hudson Yards? The only people who benefit were the people who could afford to pay $500,000 to a million dollars to get their families visas here.”

There is a cap of 10,000 EB-5 visas each year. Overall, the bulk of EB-5 investors are based in China, according to WSJ.

CityLab reported that Related, a major developer of Hudson Yards, had sought investments from about 3,200 foreigners.

“Given that each eligible investor may claim visas for immediate family members—and since these family visas (an average of three) also count toward the overall cap—the Hudson Yards development may have easily claimed an entire year’s worth of visas issued under EB-5,” Kriston Capps of CityLab wrote on April 12.

“If a project like Hudson Yards accounts for a whole year’s worth of EB-5 visas, it also consumes a year’s worth of financing meant for projects in low-opportunity places,” he added.

State Agency: Hudson Yards Jobs Still Benefit NYC Residents

Empire State Development (ESD), the state government’s economic development agency, is understood to have set the boundaries for the TEA.

“Under state law, the agency has the authority to string together an unlimited number of census tracts in order to achieve the desired aggregate unemployment standard,” Capps wrote.

The Epoch Times reached out to ESD for comment. An ESD representative said that Hudson Yards was originally qualified as being part of a TEA in 2012 when New York City’s average annual unemployment rate was 9.3 percent. The agency’s role is limited to deciding whether there is a need for job creation, and there was a clear need for job creation at the time, according to ESD. The agency maintains that an influx of new jobs at Hudson Yards can benefit residents in other areas of New York City.

A spokesperson for Hudson Yards told Business Insider: “By utilizing the EB-5 program we were able to finance the critical infrastructure for the project, the platform, where traditional financing is all but non-existent. ... This capital, which comes at no cost to the American taxpayers, was the catalyst for the Hudson Yards project.”

The spokesperson added that the EB-5 funding allowed the project to “immediately create thousands of jobs all over the city, offering tangible regional economic benefits and direct benefits to areas of high unemployment.”

At the press conference, Williams pointed to Harlem on the map and said there should be tangible benefits for the people living there.

He suggested that such maps should not “go geographically further than a certain point away from the project, or maybe you have a minimum amount of hiring requirements from the places that you’re including.”

The Epoch Times asked Hudson Yards to comment on Williams’s suggestions, and whether it is aware of how many workers employed at Hudson Yards are residents of the TEA zone, but did not hear back by press time.

Call to Rescind Cashless Stores

Williams criticized Hudson Yards for having too many cashless stores, saying those stores fail to serve people who don’t have credit cards.

“Twelve percent of people who live in New York City are unbanked, 25 percent of people living in the city are underbanked. They should have to ability to buy groceries and food for lunch,” Williams said.

“What we are asking today is that the minimum that can be done, is [businesses] like Sweetgreen and Citarella rescind their cashless program so that anyone who wants to eat lunch has the ability to do so,” he added.

Williams voiced his support for a bill to make sure New Yorkers are able to pay cash in all stores. In February, council member Ritchie Torres proposed to ban cashless stores in the city. Businesses face up to $500 fines for each violation if the bill is passed.

Williams called on cashless stores to change before the city has to step in. He also encouraged New Yorkers to boycott such stores.

Business owners say getting rid of cash registers speeds up transactions and reduces the risk of robbery, among other benefits of going cashless.

Other than Sweetgreen, chain stores nationwide like Dig Inn and Dos Toros now no longer accept cash. Starbucks, Amazon, and Shake Shack have reportedly experimented with the option, but continue to accept cash.

In March, Philadelphia passed a law to ban cashless stores. New Jersey followed issuing a statewide ban. Massachusetts passed a law nearly 40 years ago forcing businesses to accept cash.

Epoch Times reporter Penny Zhou contributed to this article.