Once again Congress is poised to decide the fate of the EB-5 program that enables foreign investors - many of whom are Chinese - to pump between $500,000 and $1 million into US projects that create jobs in return for visas.
EB-5 is scheduled to expire on Friday unless Congress acts. According to Stephen Yale-Loehr, an attorney and Cornell University law professor, Congress is likely to once again extend EB-5 temporarily as it weighs more pressing matters and agrees on changes to the program.
"I don't think we will have a final package by Friday," he said in an interview. Lawmakers must also deal with measures to fund the government beyond Friday and possibly health care "so a bill that includes a temporary extension of EB-5 along with these other matters is likely to gain approval," Yale-Loehr said.
EB-5 targets foreign investors who invest at least $500,000 in a project that creates a minimum of 10 jobs in an economically-depressed region. In return, investors receive a two-year visa with a good chance of obtaining permanent residency for them and their families. About 10,000 EB-5 visas are awarded each year, and previous estimates indicate that the Chinese account for about 85 percent of recipients.
Yale-Loehr said industry interests seem to have coalesced around three main changes for EB-5: an increase in the minimum investment, a redefinition of a "targeted area" and a certain number of visas (perhaps 2,000 of the 10,000 total) set aside for projects in rural or highly blighted rural areas.
One of the criticisms of EB-5 is that projects in rural areas receive less funding than those in urban areas. Eric Orenstein, an attorney who handles EB-5 matters for Rosenberg & Estis PC of New York, said it's due to several reasons.
"Far more development goes on in urban areas than in rural areas," he said. "There are costs involved in raising EB-5 funds and it's easier to absorb those costs in the larger-scale projects found in urban areas. Many overseas investors are much more familiar and comfortable with investing in a project in New York and Los Angeles rather than one in Boise, Idaho, or Minnetonka, Minnesota."
Previously, the United States Citizenship and Immigration Services (USCIS), an agency of the Department of Homeland Security, proposed raising the minimum investment from $1 million to $1.8 million and from $500,000 to $1.35 million for projects in a targeted employment area.
Yale-Loehr believes that that the current $500,000 threshold will be increased to about $800,000. "The $1 million amount will also be increased, but no one is certain yet what that amount will be," he added.
Orenstein believes that the market could handle an increase from $500,000 to "around $750,000." But the $1.35 million proposed by USCIS could be a problem.
"There is very little justification for an increase that big," Orenstein said. "Even though other countries do charge more for similar programs, you don't have the same hurdles to overcome like you do in EB-5, which has job creation requirements."
Angelique Brunner, the EB-5 Investment Coalition's spokesperson and the founder and president of EB5 Capital, also believes that agreement is near on a reform package for EB-5.
"Over the last month, we have seen broad consensus across the industry on a strong reform package. We believe an agreement is within reach, and we look forward to working with Congress to strengthen this job-creating program," she said in a statement.
Since 2012, the program has brought in more than $8.7 billion of foreign direct investment into the US and created 35,150 jobs, according to USCIS estimates.
- New York
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