Manufacturing Distress: Race, Redevelopment, and the EB-5 Program in Central Brooklyn

Abstract

Gentrification’s racial consequences are garnering increased attention as the process advances into majority–minority urban neighborhoods. This study examines the EB-5 Immigrant Investor Program’s implementation in Brooklyn, New York to ground these trends in policies through which gentrification is promoted, histories of racism and uneven development against which they are unfolding, and their disparate impacts on Black communities. While the program purports to use foreign investment to promote job growth in high unemployment areas, its financing of multimillion and billion-dollar development projects facilitates the displacement of longtime residents of the very places the initiative was designed to improve. Central Brooklyn and its outlying areas, home to one of the largest contiguous Black communities in the United States, are host to numerous EB-5 projects that have failed to produce sustainable job growth for existing residents and heightened the growing crisis of unaffordability. My analysis shows how EB-5 projects have enabled investors to use distressed areas disproportionately inhabited by poor and working-class Black communities to qualify for funding, while redistributing benefits upward to wealthy developers and affluent residents and consumers. Ultimately, the EB-5 program and other neoliberal, colorblind urban development policies exacerbate existing racial inequalities in the organization and operation of urban space.

Introduction: What Does Racial Capitalism Have to Do With Cities and Communities?

“…Yet, after the 2000 edition of Black Marxism and the social movements of the 2010s, a growing number of urbanists are applying racial capitalism to their work. This scholarship has covered a broad range of topics including, but not limited to, incarceration (Gilmore 2007), real estate (Fields and Raymond 2021;Korver-Glenn 2021;Taylor 2019), evictions (Immergluck et al, 2020Raymond et al 2021;Michener 2022), gentrification (Boston 2021), urban agriculture (McClintock 2018), the environment (Chari 2021;McCreary and Milligan 2021;Pulido 2016), public health (Laster Pirtle 2020), urban governance (Hackworth 2019; Ponder 2021), and even alternative models to capitalism (Bledsoe et al 2019) What unites these applications of racial capitalism is their compliance with two tenets: (1) racism and capitalism are mutually constitutive systems of exploitation and expropriation, and (2) urbanization processes are rooted in constructions of race, racialization, and differentiation. Bringing these insights together, racial capitalism reveals how urban processes produce and maintain race-based pursuits of profit (Burden-Stelly 2020; Dantzler 2021).…”

Theorizing Gentrification as a Process of Racial Capitalism

“…In this section, I explain how the theory of racial capitalism is useful for understanding gentrification. I draw on both the literature on racial capitalism and prior applications of racial capitalism and racial economies, 3 as well as prior applications of racial capitalism, racial economies, and critical race theory in the gentrification literature (Anderson and Sternberg 2012;Boston 2021;Brahinsky 2014;Dantzler 2021;Hightower and Fraser 2020;Huante 2019;Lipman 2012;Moore 2009;Powell and Spencer 2002;Summers 2019;Zimmer 2020).…”

“…Disinvestment is evoked to explain that neighborhoods that lacked an influx of capital and experienced a population loss developed the preconditions to produce profit from investment for developers and city governments (D. Rose 1984;Smith 1987Smith , 1996. These explanations of gentrification allude to processes like redlining, but never connect the disinvestment processes to race despite the fact that processes of investment and disinvestment (like redlining) were highly racialized (Boston 2021 (Anacker 2010;Korver-Glenn 2018, 2020;Perry et al 2018). However, non-Black innercity neighborhoods also faced a degree of disinvestment that produced opportunities for profit in subsequent decades as gentrification began (Smith 1987(Smith , 1996.…”

“…Thus, while White gentrifiers often resist affordable housing preservation with NIMBY (Not In My Back Yard) tactics (Berrey 2005;Perez 2004), Black and Latinx gentrifiers sometimes support affordable housing developments that will allow long-time residents to stay in the community, decreasing fears of displacement (Bader 2011;Moore 2009). 10 While gentrifiers tend to focus on neighborhood aesthetics and amenities, city government officials, developers, real estate investors, and large employers are more focused on profitable land use that will meet demands for housing and economic growth with little to no interest in non-economic worth (Adelman, Balta Ozgen, and Rabii 2019;Betancur 2002;Bose 2015;Boston 2021;Bridge et al 2012;Florida 2017;Gotham 2010;Hightower and Fraser 2020;Hyra 2008;Landis 2015;Lees 2010;Loughran 2014;Mele 2013;Mumm 2008;Pattillo 2008;Smith 1996;Summers 2019;D. Wilson and Grammenos 2005).…”

“…In Chicago, almost 17,000 public housing residents were displaced from one neighborhood alone, the predominately Black neighborhood of Bronzeville (Hyra 2012). Similarly, (re)development projects can involve a larger geographic area than affected at one time by individual in-movers, creating an immediate and simultaneous impact on the surrounding community (Boston 2021). Through these interventions, governments can also influence assessments of value among potential middle-class in-movers, businesses, developers, and real estate investors, potentially leading to additional investments.…”