New EB-5 rules targeting abuse may be eased

Senators Lindsey Graham and Chuck Schumer are co-sponsoring the bill, only two months after the new rules took effect, and which were meant to curb fraud

National /
Jan.January 14, 2020 03:00 PM
Sen. Lindsey Graham and the Hudson Yards development (Credit: Getty Images, iStock)

Sen. Lindsey Graham and the Hudson Yards development (Credit: Getty Images, iStock)

EB-5, the federal visa program that helped fund development projects like the massive Hudson Yards in New York, has been fading recently and on the ropes, a result of fraud and its own popularity. But it still has supporters, and they are now looking to U.S. Sen. Lindsey Graham, Chuck Schumer and other powerful elected officials to help ease newly-passed rules, according to the Wall Street Journal.

The rules took effect in November, and were meant to crackdown on abuse and pull the 30-year-old program into the 21st century.

Sen. Graham of South Carolina and Sen. Schumer of New York are its co-sponsors; its sponsor is Sen. Mike Rounds of South Dakota. The bill would lower the minimum amount that foreign investors have to pour into some projects in order to receive a green card. It would also allow some investors to stay in the U.S. as they wait for their visas, according to the Journal.

EB-5 allows foreign investors the ability to obtain a green card in exchange for investing and creating jobs in the U.S. Developers latched onto the program as a way to obtain cheap financing for ground-up construction, but investor demand has waned due to visa backlogs and fraud and misuse in the program.

Under the new EB-5 regulations, investment requirements rose to $900,000 from $500,000 for a project in a low employment zone, which are known as targeted employment areas. The investment amounts also climbed to $1.8 million from $1 million in all other areas.

The new rules also prohibit developers from what had become a common practice of tacking on a sliver of a targeted employment area to a project that is in a wealthier area in order to qualify for the lower amount.

But opponents of the new rules say that it will discourage investment and ultimately cut down on development. A Florida regional center recently went to federal court to seek in order to halt enforcement, alleging the new rules violate the U.S. Constitution, were not property reviewed for potential fallout and would end up killing his business.

Nicholas Mastroianni II, chief executive of U.S. Immigration Fund — an EB-5 regional center — gave Graham a $5,000 campaign contribution in September and Aaron Grau of the EB-5 trade group Invest in the USA, donated $2,000 to the senator, according to the Journal, citing the Center for Responsive Politics. [WSJ] — Keith Larsen


Related Articles

arrow_forward_ios
Colin Behring (Getty Images, Behring Companies)
EB-5 groups settle lawsuits, allow program to permanently restart
EB-5 groups settle lawsuits, allow program to permanently restart
Yitzchak Tessler with 390 Concord Ave , Judge, Lawsuit
Judge rules Tessler must pay back EB-5 lenders on Bronx project
Judge rules Tessler must pay back EB-5 lenders on Bronx project
Parkview’s Paul Rahimian and 1800 Avenue at Port Imperial (Parkview Financial, Handel Architects, Illustration by Kevin Cifuentes for The Real Deal)
Chinese developer Hongkun faces foreclosure on luxury NJ condo
Chinese developer Hongkun faces foreclosure on luxury NJ condo
A photo illustration of 112-51 Northern Boulevard (Fleet Financial Group, iStock)
SEC looking into EB-5 fraud allegations against Queens developer
SEC looking into EB-5 fraud allegations against Queens developer
(Loopnet, iStock, Google Maps)
Bronx nabbed February’s biggest outer-boro property loans
Bronx nabbed February’s biggest outer-boro property loans
Hudson Yards (iStock)
EB-5 is back: Cash-for-visa program returns with tweaks
EB-5 is back: Cash-for-visa program returns with tweaks
Behring Companies CEO Colin Behring (LinkedIn, iStock / Photoillustration by Priyanka Modi)
Lawsuit aims to bring EB-5 back from the dead
Lawsuit aims to bring EB-5 back from the dead
Pier A at 22 Battery Place and Drew Spitler of the Dermont Company (Battery Park City Authority, Dermont Company)
Foreign investors demand repayment after “false promises” at Pier A
Foreign investors demand repayment after “false promises” at Pier A
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...