Congress eyes EB-5 changes

China Daily (USA) - - FRONT PAGE - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

Leg­is­la­tion in Wash­ing­ton to ex­tend an im­mi­grant in­vestor pro­gram that is pop­u­lar with the Chi­nese could af­fect past, present and fu­ture par­tic­i­pants if the pro­posed changes to the pro­gram be­come law.

Known as the EB-5 visa pro­gram, it is de­signed for for­eign­ers who in­vest at least $500,000 in a project that will cre­ate a min­i­mum of 10 jobs in an eco­nom­i­cally-de­pressed re­gion in the US. In re­turn the in­vestors re­ceive a two-year visa with a good chance of ob­tain­ing per­ma­nent res­i­dency for them and their fam­i­lies.

In 2014, the US is­sued more than 10,000 of the visas and about 85 per­cent went to peo­ple from China.

Bills un­der con­sid­er­a­tion in the US House of Rep­re­sen­ta­tives and Se­nate would in­crease the min­i­mum EB-5 in­vest­ment from $500,000 to $800,000 for projects in high unem­ploy­ment ar­eas. In low unem­ploy­ment re­gions, the min­i­mum in­vest­ment would rise to $1.2 mil­lion from $1 mil­lion.

The higher min­i­mums would also ap­ply to ap­pli­ca­tions that were filed as far back as June 1, 2015.

David North, a fel­low at the Cen­ter for Im­mi­gra­tion Stud­ies in Wash­ing­ton, said the min­i­mum in­vest­ment was set back in 1993 and there has been no ad­just­ment for in­fla­tion since then.

“Other na­tions charge much more than we do. For ex­am­ple it is $1.5 mil­lion in the Ba­hamas,” North said. Even at $800,000, “it is a scream­ing bar­gain at that rate,” he said.

Stephen Yale-Loehr, a law pro­fes­sor at Cor­nell Univer­sity and an im­mi­gra­tion at­tor­ney, said the retroac­tiv­ity pro­vi­sion will likely raise le­gal con­cerns.

“The US Supreme Court has held that Congress should not nor­mally change the rules in the mid­dle of the game. Fun­da­men­tal no­tions of fair­ness coun­sel against ap­ply­ing new rules to con­duct that pre­dates the leg­is­la­tion, since in­di­vid­u­als should have an op­por­tu­nity to know what the law is and to con­form their con­duct ac­cord­ingly. The retroac­tiv­ity pro­vi­sion would surely be chal­lenged in court,” said Yale-Loehr.

He be­lieves that most cur­rent in­vestors who have al­ready filed EB-5 pe­ti­tions would at­tempt to com­ply with what­ever new rules Congress en­acts. But if the changes ever be­come law they “would cer­tainly dampen en­thu­si­asm for the EB-5 pro­gram. That would be un­for­tu­nate since the pro­gram cre­ates thou­sands of jobs each year for US work­ers at no ex­pense to Amer­i­can tax­pay­ers,” said Yale-Loehr.

Barry Hersh, a pro­fes­sor at New York Univer­sity’s Schack In­sti­tute of Real Es­tate, said there has been talk about rais­ing the amount re­quired for an EB-5 visa and pre­vent­ing abuses in the pro­gram.

“If these pro­posed rules are put in ef­fect, it will un­doubt­edly im­pact many projects; some will still be able to at­tract EB-5 fund­ing but at a higher cost, oth­ers will find al­ter­na­tive but likely higher cost sources of fi­nanc­ing and still pro­ceed, but other projects are likely to be stalled or even aban­doned,” Hersh said in an email.

“EB-5 has mostly been used in New York, San Fran­cisco and other ma­jor mar­kets, but its use has been spread­ing,” he con­tin­ued. “Tighter rules and higher costs may well dis­cour­age those who have not done EB-5 trans­ac­tions from even try­ing, but New York and other ma­jor EB-5 mar­kets would also be im­pacted.”

Hersh be­lieves de­vel­op­ers will be able to work around what­ever changes Congress makes to EB-5.

“There was real es­tate de­vel­op­ment, even booms, be­fore EB-5 and in to­day’s world there are more sources of fi­nanc­ing for US de­vel­op­ment, in­clud­ing crowd­fund­ing and non EB-5 in­ter­na­tional in­vest­ment from China and else­where into the US, than in the past. Real es­tate de­vel­op­ers find a way,” he said.

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