Seattle-Area Developers Tap Chinese Investors, But Key Program Faces Possible Expiration
Stadium Place in Seattle is one development that's courted EB-5 investors
The strong economic ties between China and Washington state are in the spotlight this week with the upcoming visit by China’s president. Real estate development has gotten a boost from Chinese investors in recent years, but one key program that facilitates that investment is set to expire this month.
That program is called EB-5 and under it, foreigners invest a minimum of $1 million in a project, or $500,000 if it is in an area targeted for economic growth. If they can prove it created 10 jobs here in the U.S., they get a green card. EB-5 has been popular in Washington state and a majority of investors in the program come from China.
David Bovee is managing director of Seattle-based Zenith Capital, which arranges financing to build assisted living centers and has used the EB-5 program. He won’t disclose how many of those investors are from China, but he says it’s a lot and that’s because many of them already have ties to this region.
"I surmise that part of the demand that we’re seeing in Seattle from and among Asian investors and immigrants is the fact that they already have family on the West Coast," Bovee said.
But the EB-5 program has gotten a lot of negative attention lately. The Securities and Exchange Commission has warned about the risks of foreign investors getting defrauded out of their money. Locally, the SEC is going after a Bellevue developer for allegedly taking money from Chinese investors for his personal use.
Bovee of Zenith Capital says now there’s a cloud hanging over the program.
"It is frustrating because it’s hard to convince immigrant investors that they’ll be successful in following all the way through the program and arriving at their goal, at their point of success," Bovee said.
Authorization for a key part of the EB-5 program expires at the end of this month. Some U.S. Senators have proposed reauthorizing it, but only with tougher oversight. Bovee says he’s hopeful Congress will keep open this pipeline of foreign investment dollars.
- New York
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