EB-5 program extended with no reforms to December

Congress extended the EB-5 visa program on Wednesday night, allowing the program to run until December. 

The program, which grants foreign investors green cards after they invest at least $500,000 in job-producing ventures, was set to expire on Friday at midnight. But industry experts told The Real Deal that the vote is no surprise, especially during an election year.

A number of major South Florida developments have secured and are in the midst of securing capital via EB-5, including SkyRise Miami, Panorama Tower, Paramount Miami Worldcenter, Metropica, the Highlands, One Thousand Museum and restaurant groups like Tap 42 and Meat Market.

Congress passed a continuing resolution, which included EB-5, to avoid a government shutdown before the end of the fiscal year. It was passed with no reforms, which many say it strongly needs. Congress kept the bill afloat in a similar situation last September at the end of the government’s fiscal year, and gave it two extensions before Wednesday’s vote.

President Barack Obama signed the bill containing the continuing resolution into law Thursday – just about 36 hours before the end of fiscal 2016.

Ronnie Fieldstone, an Arnstein & Lehr attorney who represents developers and EB-5 regional centers, expects the new bill to raise the minimum investment requirement from $500,000 to $800,000 in high unemployment areas and from $1 million to $1.2 million for low unemployment areas. The minimum investment hasn’t changed since 1992.

If passed, a new EB-5 bill would likely redefine TEA’s, or targeted employment areas, Fieldstone told The Real Deal.

While interest in the still popular program has waned this year – fewer applications were filed from Oct. 1 2015 to June 30 of this year, compared the same period last year – updated figures for the entire fiscal year aren’t yet available.

Consistently leaving the program’s future in question has spooked some investors. “It’s absolutely had a somewhat negative effect on the market,” Fieldstone said. “We believe the current extension has been a positive, but the market will still be waiting to see what happens.”

Senator Patrick Leahy of Vermont proposed a bill last June that would give it a five-year lifeline. Fieldstone said Leahy’s proposed law, Senate bill 1501, will serve as the foundation for EB-5’s future after December.

Last month, Virginia Congressman Bob Goodlatte sponsored a bill that would severely restrict developers by retroactively raising the minimum individual investment to all applications filed by investors from June 2015.

But long wait lists, little oversight and rampant fraud call for a big overhaul of the visa program, experts say. “Chinese investors who file an application today,” Fieldstone said, “may not get a visa for five, six or seven years.”