In a huge win for real estate developers, Congress extended the popular, controversial and widely-debated EB-5 visa program for another year with no changes. Not a one. The program, which gives foreign investors a green card in exchange for a $500,000 investment in the U.S. economy, was part of the omnibus spending bill passed by Congress on December 15.
Here’s a rundown of the issues that tied up EB-5 for another year.
1. Targeted employment area
The definition of TEAs – low-income neighborhoods where investors only have to spend $500,000 (instead of $1 million) – is one of the most contentious parts of the EB-5 program. New York developers historically benefited from TEAs by drawing special districts to link their glitzy condo projects with poor areas, a practice critics say is gerrymandering. A proposal would have restricted the definition of TEAs.
Developers – and their supporters – say their projects qualify as TEAs since they hire workers from low-income areas. The proposed restriction would have eliminated most projects in New York, said Klasko.
2. “Reserved” visas
Introduced last week, the proposal would reserve 6,000 visas – out of a total of 10,000 awarded each year – for investment in three categories. The categories included rural areas, urban impoverished areas and areas outside of TEAs.
But critics said the system would leave just 4,000 visas for projects outside those categories, leading to a 10- or 15-year waiting list for EB-5 investors. “It would have killed the program, a lot of us felt,” Klasko said.
3. Limits on indirect jobs created
In an effort to ensure the EB-5 program creates jobs, the measure would require 10 percent of the new jobs created to be directly tied to a specific project.
But critics said there was not a clear way to calculate direct versus indirect jobs. And it was possible that condo projects, where construction could last two years, would not meet the proposed standard.
4. Foreign agents
With the goal of having better oversight of the foreign agents who bring investors to developers, a proposal would have established qualifications for those agents and set standards for the fees they charge.
But critics questioned whether it was the place of the U.S. government to tell foreign agents how much they can charge.
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