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Kushner family’s real estate dealings land foreign-investor visa back in the spotlight

June 15, 2017 at 6:25 PM EDT
Thousands of investors apply and participate annually in the little-known EB-5 visa program, designed to stimulate the U.S. economy through job creation and capital investment by foreign investors. Economics correspondent Paul Solman reports that recently, one real estate business in particular has put it back in the spotlight: that of the family of Jared Kushner, President Trump’s son-in-law.
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JUDY WOODRUFF: But first: how a little-known program designed to attract foreign investment is increasingly under the microscope, for economic reasons and political ones. Thousands of investors apply and participate annually, and one real estate business in particular has put it back in the spotlight in recent months: the family of Jared Kushner, the president’s son-in-law.

Our economics reporter, Paul Solman, has covered the controversies around the program before.

Here’s his latest update. It’s part of our weekly series Making Sense.

PAUL SOLMAN: The soaring real estate market in Jersey City, New Jersey, due south of Wall Street, a city becoming famous for its many murals and its wave of emigres from Manhattan and Brooklyn fleeing sky-high rents.

One neighborhood that’s on the rise, Journal Square, named after the 150-year Journal News.

One of its latter-day reporters, Terrence McDonald.

TERRENCE MCDONALD, The Jersey Journal: This was our old headquarters. And Jared Kushner’s company bought that and bought the office building next door and bought this whole vacant lot right here.

PAUL SOLMAN: Jared Kushner is, of course, President Trump’s son-in-law.

And what are they going to build?

TERRENCE MCDONALD: The plan is to build two towers on this vacant lot and one tower across the street, 72 stories, mostly residential and also commercial retail on the bottom.

PAUL SOLMAN: Now, you may have heard about this development last month, when Jared Kushner’s sister pitched it to investors in China.

MAN: CNN found out about this event because of this ad. It was actually posted in the elevator of our building here in Beijing.

PAUL SOLMAN: So, reporters went, including CNN’s Matt Rivers, and most were promptly shown the door, which only provoked more coverage.

Why the selective secrecy? For one thing, Nicole Kushner Meyer may have thought twice about the optics or my-optics of trading on her family connection to the president, though Kushner companies later said Meyer — quote — “apologizes if that mention of her brother was in any way interpreted as an attempt to lure investors” — unquote.

But also iffy, the investment itself, criticized for selling U.S. citizenship for cash, the embattled EB-5 visa program, in which foreigners who ante up a million dollars to create 10 U.S. jobs are granted permanent residency, and eventual U.S. citizenship, for themselves and for all immediate family members under age 21.

Now, the Kushners, who declined to comment for this story, have used EB-5 investments before, also here in Jersey City.

JARED KUSHNER, Senior Presidential Adviser: As a company, we have done a lot of projects, but I have actually never done a groundbreaking before.

PAUL SOLMAN: Fifty million dollars of Chinese cash for visas helped build Trump Bay Street, the president licensing his name to his son-in-law’s company, the financing at below-market rates.

TERRENCE MCDONALD: This is one of the newer luxury high-rises here in Jersey City. The highest price I saw was on the 48th floor. It’s a 50-story building. It was about $5,000 a month for a two-bedroom/two-bathroom apartment.

PAUL SOLMAN: Luxury apartments, just a few minutes by subway from Manhattan. But, hey, Congress decided, during a recession in 1990, that a million dollars to create 10 jobs is a good deal for the U.S. economy, no matter what the project.

It turns out, however, that the investors in Kushner’s project only had to put up $500,000, half-price tickets to citizenship for themselves and their entire families, thanks to a clause that takes 50 percent off if you create the jobs in a — quote — “high-unemployment area” — unquote.

But wait a minute. The unemployment rate around Trump Bay Street was very low.

NORMAN ODER, Atlantic Yards/Pacific Park Report: There is an essential dodge here going on. There’s something really fake going on.

PAUL SOLMAN: Journalist Norman Oder was the first to report on the loophole that the Kushners, and pretty much all urban developers who use the EB-5 program, exploit.

NORMAN ODER: EB-5 investments are supposed to be a million dollars unless it’s in a rural area or an area of high unemployment. That’s called a targeted employment area. Then it’s $500,000. Guess what? Every project is finagled into a high-unemployment area.

PAUL SOLMAN: So how do you do that?

NORMAN ODER: You have to connect census tracts.

PAUL SOLMAN: So, let’s walk you through the process that played out here in Jersey City.

TERRENCE MCDONALD: We’re about one mile away from Trump Bay Street.

PAUL SOLMAN: But we’re still in the EB-5 district.

TERRENCE MCDONALD: Yes, we are.

PAUL SOLMAN: EB-5 visa investors can pay half-price if they’re investing in an area with a jobless rate one-and-a-half times the national average.

I can see that we’re gradually getting into dicier territory here.

TERRENCE MCDONALD: We’re about two miles away from Trump Bay Street now in an area of the city that has struggled with violence and with crime and with poverty.

PAUL SOLMAN: In 2014, when the Kushners and their partners were pitching Chinese visa seekers, the national unemployment rate was just over 6 percent.

So now we’re how far away from downtown?

TERRENCE MCDONALD: We’re about three, a little more than three miles away from Trump Bay Street now, on Ocean Avenue.

PAUL SOLMAN: And we’re in a substantially worse neighborhood now.

TERRENCE MCDONALD: Yes, yes, businesses that are closed. And this area does struggle with violence even more than the neighborhood we were just in.

PAUL SOLMAN: We’re walking the so-called targeted employment area the developers created, with an average jobless rate of more than 9 percent.

TERRENCE MCDONALD: The unemployment rate where Trump Bay Street is, about four miles away, is so low that they have to include a huge swathe of the inner city and lower half of the city to make the rate work.

PAUL SOLMAN: The only requirement, the employment area has to be made up of neighborhoods that border each other.

TERRENCE MCDONALD: So, we’re about at the end of the line here. That’s Bayonne on the other side of the train tracks.

PAUL SOLMAN: About five miles and a whole lot of shoe leather south of Trump Bay Street, a gerrymandered, but legal district made up of 16 different census tracts, with an overall unemployment rate of 9.8 percent, when the national average was 6.

The claim is that Trump Bay Street created more than 1,280 jobs. But did it actually help the poor parts of town that made its financing attractive?

So, you work in construction.

JIHAD DARNELL GAESDEN, Construction Worker: Absolutely.

PAUL SOLMAN: Did you try to get a job downtown?

JIHAD DARNELL GAESDEN: Several of us tried to get a job downtown. But they’re not hiring us. I don’t know no one at all who has no type of job from downtown at Trump Towers or who informed anyone else about the jobs.

TERRENCE MCDONALD: Do you think that the construction of these luxury high-rises downtown has benefited this area of the city at all?

JIHAD DARNELL GAESDEN: No. Look around. People — a lot of people need help around here.

PAUL SOLMAN: Any of the contractors you know work downtown?

WOMAN: No. No.

PAUL SOLMAN: You either?

WOMAN: No.

PAUL SOLMAN: What do you think of the idea, though, of you being included in this area that then allows them to get the foreign money to build the towers?

WOMAN: I don’t think that’s fair.

MAYOR STEVEN FULOP, Jersey City: The intention of the EB-5 program are to subsidize areas in a city or community that are lower-income, in needs of jobs, and don’t have development.

PAUL SOLMAN: Not to subsidize areas that don’t need it, says Jersey City Mayor Steven Fulop.

STEVEN FULOP: The media scrutiny on this stuff has brought a lot of that to light, and there will probably be policy changes in Washington as a result of it.

PAUL SOLMAN: Well, there’s been legislation to try to reform EB-5 for years.

STEVEN FULOP: I think now you’re in a unique moment in time where there’s more scrutiny and more awareness around it.

PAUL SOLMAN: Mayor Fulop, a Democrat up for reelection this fall, is also more aware. The day after the story broke about Nicole Kushner Meyer’s efforts in China, he withdrew his support for a usually standard 30-year tax abatement and $30 million municipal bond that the Kushners and their partners had applied for to build one Journal Square.

So, where’s the mayor right now?

STEVEN FULOP: We’re not giving the subsidy. We have clearly said that, and they say they can’t move forward without it. So we will see where it goes from here.

PAUL SOLMAN: Where it’s gone is that, just yesterday, the Kushner consortium withdrew its tax break request. According to the private company helping raise $150 million in EB-5 money, 6,600 new jobs are now on hold. But they would be in a prospering part of town with just a 4 percent jobless rate.

The poorer neighborhoods to the south? Their job was to boost the average unemployment rate high enough to qualify investors for the half-price visas.

For the PBS NewsHour, this is economics correspondent Paul Solman reporting from Jersey City.

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