EB-5 2.0? Not Even 1.1-For Now..
Thursday, December 17, 2015
Posted by: Brenda Kenny
EB-5 2.0? Not Even 1.1 - For Now,by Jeanne Calderon & Gary Friedland, December 17, 2015, Commercial Observer.
New York City developers and regional centers are breathing a collective sigh of relief as Congress granted a “one-year” extension of the EB-5 Regional Center Program until September 30, 2015, without any changes. The development community had braced for the worst since the leading bill was introduced in June 2015 by Senate Judiciary Chairman Chuck Grassley and ranking Democratic Senator Patrick Leahy. Various drafts of the bill that circulated over the course of the past few weeks reflect that deals were struck behind closed doors in Congress to protect different pieces of the program — deals were made, resurrected in different forms, and ultimately died. In one form or another, the bill would have tied a longer extension period to the imposition of sweeping reforms. The negotiations pitted a battle between lawmakers from rural states, like Senator Grassley’s Iowa and Senator Leahy’s Vermont, and states with thriving urban areas, like New York’s Senator Charles Schumer.
Some of the proposed reforms were controversial. The most controversial issue centered on a revised definition of Targeted Employment Area (TEA) for projects located in urban areas. Immigrant investors prefer to invest in TEA projects so they can qualify for a minimum investment amount of $500,000, rather than $1,000,000, particularly given the less than 1 percent return they earn for the investment that qualifies them for a visa. Critics have been outraged that projects in thriving urban areas that would have been developed in any event, albeit with more expensive capital, qualify for the lower amount even though the lower threshold was intended to create an incentive for investments and jobs in rural areas and high unemployment areas. These urban projects have commanded the lion’s share of EB-5 investment due to their size and the attraction that Chinese investors have to bi-coastal real estate. continue with article