Key EB-5 program faces deadline of next month
Updated: 2015-11-16 12:44
By Paul Welitzkin in New York(China Daily USA)
A key part of the EB-5 initiative that extends US citizenship and has funded a host of projects in the country will expire in less than a month unless extended or reauthorized by Congress.
EB-5 is an alternative way for immigrant investors to obtain a US visa. It was created in 1990 to help stimulate the US economy through job creation and foreign investment. With a minimum of $1 million - or $500,000 in low employment or rural areas - an EB-5 investor must create at least 10 full-time jobs through the project they are working toward completing. In return, the investor is eligible for permanent US residency.
In 1992 Congress added the regional-center program. There are more than 800 approved EB-5 regional centers in the US. About 90 percent of EB-5 investments are made through the centers, according to Stephen Yale-Loehr, a law professor at Cornell University in Ithaca, New York. The regional center part of EB-5 has funded such projects as the Hudson Yards real estate development in New York City and a ski resort in Vermont.
That part of the EB5 program faces a Dec 11 deadline to be extended or reauthorized by Congress, Yale-Loehr said. That deadline does not apply to the part of the EB5 program by which investors directly fund their own business projects in the US.
"However, Congress could use a reauthorization of the regional centers to make changes in the overall EB-5 program, including changing the investment amounts and the requirements for projects eligible for EB-5 funds," he said in an interview.
In June, Senators Patrick Leahy, a Democrat from Vermont and Charles Grassley, a Republican from Iowa, introduced a bill in the US Senate to reauthorize the regional center part of EB-5 with changes that could ultimately affect the EB-5 program.
Currently, EB-5 investors put up $500,000 if their investment is in a targeted employment area (TEA) and $1 million for other areas. The Leahy/Grassley bill would increase the minimum investment amount to $800,000 for investments in a TEA and $1.2 million for investments not in a TEA.
Yale-Loehr said a recently revised version of the Leahy/Grassley bill has been circulated in Washington. It would include changes in the way a TEA is determined. "They want to direct more EB-5 funds to rural areas, although they would not totally exclude urban areas," he said.
Projects in an urban area with high poverty would qualify for EB-5, Yale-Loehr said.
The new version would seek to direct more EB-5 funding to infrastructure and manufacturing projects. "They want to see more factories and sewer projects built rather than hotels and office buildings," said Yale-Loehr.
If Congress does not act by Dec 11, people would not be able to file a new EB-5 application through the regional centers, said Yale-Loehr. It is not clear what will happen to applications that have already been filed with the centers.
Yale-Loehr expects some action from Congress by the deadline. "Even if they can't agree on changes to the program my guess is they would at least authorize some sort of short-term extension," he said.
Immigration is developing into a major issue in the presidential campaign but Yale-Loehr said that the debate is unlikely to affect EB-5.
"The candidates are talking about illegal immigration. EB-5 is legal immigration and is popular with both parties," Yale-Loehr said. "EB-5 is the only immigration program that creates jobs in the US for US workers at virtually no cost to the taxpayer."
Yale-Loehr said most of the participants eventually move to the US. "They come here and buy a house and send their kids to college in the US. The economic impact goes beyond just the project that is funded," he added.
At a real estate conference in New York last week. the pending expiration of the EB-5 centers was discussed.
"Many of the proposals to change EB-5 would diminish the ability of New York developers to use EB-5 in a meaningful way," said Jeffrey Dvorett, executive vice-president at Kuafu Properties.