Sunday, June 18, 2017

How Jared Kushner gets Rich off of the Backs of the Poor

You probably never heard of the ‘EB-5 Visa Investor Program’, but it is a favorite of real estate developers who are looking to fund their projects with low cost capital. The Program was created in 1990 and provides a method for Immigrant Investors (the majority are Chinese) to obtain to obtain United States visas as a path to permanent residence. By investing upwards of 1million dollars into a commercial enterprise, wealthy foreigners and their families are granted green cards, so long as the investor can prove that 10 U.S. jobs have been created as a result of his or her investment.

Originally intended to benefit poor and rural communities, called a Targeted Employment Area (TEA), where the jobless rate is 150% of the national average, it is now being used and abused by wealthy urban developers like Jared Kushner, the President’s son in law, as a way to finance real estate projects at a below market price. This is exactly how ‘Trump Bay Street’, on the Jersey City waterfront was financed at below market rates, through EB-5 investments. Kushner secured $50 million in funding from about 100 investors from China, South Korea and Vietnam.

That would already be cause for ethical concern, considering how Trump and hence his chief advisor, Jared Kushner, are railing against the Chinese takeover of our economy, but Kushner wanted to sweeten the deal. His investors, he announced, would only have to pay half of that million dollar to get a path to citizenship.

How do you do that, if your project is located in a booming, water front district like Trump Bay Street? By connecting census tracts that stretch nearly 5 miles and include some of the city’s poorest and most crime-ridden neighborhoods, Kushner (with the help of some local officials), finagled it so that Trump Bay Street was now in a ‘Targeted Employment Area’. His investors therefore, qualified for the lowered minimum investment requirement. This is called gerrymandering, just like they do with legislative districts. Even though it is not against the law, it certainly isn’t ethical.

Red dot represents 65 Bay St. Blue area is zone of high unemployment. (View full-scale map here.)
Since there is a limited amount of EB-5 visas issued, by abusing this loophole, investment money goes to lavish areas that do not need it. Kushner and his friends are taking away badly needed investment from the poorer areas, without giving anything back. Their sole purpose is to provide cheaper financing for the developer.

PBS News hour has a detailed expose on this subject: Kushner family’s real estate dealings land foreign-investor visa back in the spotlight

All of this is enough to make you wonder about this man’s ethical standards, but an in-depth article in the New York Times Magazine by Alec MacGillis: Jared Kushner’s Other Real Estate Empire, shows beyond any doubt that Kushner is nothing more than a predatory capitalist and a slumlord.

Charles Kushner, Jared’s father, who had been in federal prison for tax evasion and witness tampering, expanded the Company’s holdings to commercial and industrial spaces, but the empire’s bread and butter is still low income residential properties.

In 2011 Jared Kushner stealthily targeted thousands of units of working-class housing in the inner-ring suburbs of cities like Baltimore and Pittsburgh. Those were what are called ‘distress-ridden class-B apartment communities’, whose owners are in financial difficulty. This meant that he could buy them for half the value of the mortgages on the properties.

This is what Kushner describes the low-end multifamily market. “It was a lot of construction and a lot of evictions, but the communities now look great, and the outcome has been phenomenal.”

A company called JK2 Westminster L.L.C runs the Baltimore-area housing developments that Kushner bought. They are pursuing tenants over virtually any unpaid rent or broken lease, often for several years, even unpaid rent from before they purchased the property. Repairs are virtually non-existent and McGillis describes at length how tenants have to put up with mold, broken appliances, toilet leaks and raw sewage flowing into apartments.

Do these people know their landlord is the president’s son-in-law? Probably not. Did they vote for Trump? Definitely. Baltimore County was a Trump stronghold.

Kushner’s ugly history in the low-income housing market and his willingness to fleece the poor to build luxury apartments for his own enrichment is a reminder of how this entire administration is based on predatory capitalism that is rapidly dismantling any semblance of a decent society. leave comment here