The Real Deal New York

Did lawmakers flub the temporary renewal of EB-5?

Congress may have accidentally allowed the regional center program to lapse

October 04, 2016 07:00PM
By Katherine Clarke

eb5-red-flags-1Congress thought it extended the EB-5 visa program at the end of September — but did it?

A letter from the Congressional Research Service, which serves as a research arm for Congress, questions whether the EB-5 Regional Center Program, which earmarks green cards for investors in development projects, was lawfully extended. The continuing resolution, issued Sept. 30, was slated to keep the program up and running until Dec. 9, and lawmakers could hash out terms for a potential long-term authorization during that period.

But in the letter, dated Oct.3 and reviewed by The Real Deal, CRS cites a legal technicality which may mean the program is no longer legally funded. The program, it says, was subject to certain “sunset provisions” that see it expire unless explicit legislative action was taken to extend it. Since no legislation was technically passed to extend the program, it may have lapsed. That means the Regional Center Program, which helps developers raise billions of dollars for real estate projects, may no longer be active.

The letter was sent in response to a request from legislators, who were unclear on the status of the program.

If that is, in fact, the case, the government could have opened itself up to litigation from thousands of investors who wouldn’t get the green cards they were promised, sources said.

“If it has expired, it means they can no longer process regional center investors filings,” said one EB-5 expert, who spoke on the condition of anonymity. “There would be no more issuing of green cards. The ramifications would be huge.”

Representatives for both the Senate Judiciary Committee and CRS did not immediately respond to requests for comment.

A botched renewal would just be the latest in a long line of controversies related to the program, which many have argued is rife with fraud and abuse.

Detractors claim it favors projects in wealthy parts of the country and can be used to bring dirty money into the U.S., while proponents say it promotes development and creates jobs. Real estate developers, who’ve tapped the program for cheap capital, have actively lobbied to keep it alive.