Developer Money Crosses the Lines?Real Estate: Projects draw ‘low-income’ maps to tap EB-5. Monday, November 4, 2013
Many of the neighborhoods claimed by the project bear little resemblance to Marina del Rey. They include Chesterfield Square, south of Leimert Park, which has the highest crime rate in the county and ranks in the bottom 12 percent in median household income, according to data from the Los Angeles Times, as well as a section of Jefferson Park where the unemployment rate tops 40 percent.
By averaging more than 150 census tracts, Hardage was able to claim its project was in an area of 15 percent unemployment last year, qualifying it for benefits.
Hardage officials did not return repeated requests for comment. Neither did the principal of Invest L.A. Regional Center, the business that helped it secure EB-5 funding.
Invest L.A. also facilitated the funding for a project in Pasadena, where developer Singpoli Group is planning a two-phase, $76 million hotel restoration and retail project at the busy commercial intersection of Colorado Boulevard and Lake Avenue. Invest L.A. shares an office with Singpoli in Pasadena, and William Chu, Singpoli’s chief financial officer, is listed as Invest L.A.’s president.
The map drawn for the Singpoli project to qualify for benefits marks a straight shot down to Compton, connecting seven cities and one unincorporated part of the county between Pasadena and the historically depressed southeastern city: Lynwood, South Gate, Bell Gardens, Commerce, East Los Angeles, Monterey Park, Alhambra and South Pasadena.
Four of those cities had unemployment rates higher than 17 percent last year, including Commerce, which at 20.5 percent had the highest rate of any city in the county. The map does not include the wealthier cities of San Marino, Arcadia, La Canada Flintridge or Glendale, each of which directly borders Pasadena.
Since receiving approval, the project has secured $38 million in EB-5 investments.
Philip Kim, head of real estate services at Singpoli, defended his company by saying that determining what areas need jobs is “not an exact science,” and noted that both state and federal officials had signed off. He added that it was possible that the Pasadena project would create jobs in Compton and South Gate, nearly an hour and a half away by train.
“The type of jobs at a hotel are a lot of low-end jobs and manual work,” he said. “I would think that people in those poorer areas would probably apply for those positions since they’re at different levels.”
In California, projects must be certified every year. Both the Pasadena and Marina del Rey projects were recertified by the Governor’s Office of Business and Economic Development in May. Brook Taylor, a spokesman for the office, said the projects were first certified under former Gov. Arnold Schwarzenegger’s administration, which allowed developers to link an unlimited number of census tracts.