The Real Deal Miami

Sen. Dianne Feinstein calls for an end to EB-5

Top Democrat says program sends “terrible message” that US citizenship is for sale
By E.B. Solomont | November 05, 2015 01:00PM

From left: Sen. Dianne Feinstein and Sen. Chuck Grassley

From the New York website: Sen. Dianne Feinstein, one of the Senate’s most senior Democrats, is calling for an end to the popular EB-5 visa program, which awards green cards to foreigners in exchange for economic investment in the U.S. and has become a key source of financing for New York developers.

“The bottom line is that the EB-5 regional center program sends a message that American citizenship is for sale, and the program is characterized by frequent fraud and abuse,” Feinstein wrote in an Op-Ed in Roll Call published Wednesday.

The California lawmaker, who sits on the senate’s appropriations, judiciary, and rules and administration committees, described the program as a “special path toward citizenship” that is riddled with problems.

The EB-5 program has been used for a handful of major South Florida projects, most notably the contentious SkyRise Miami tower and Tibor Hollo’s Panorama Tower. Some smaller developments, like the $9 million renovation of Miami Beach’s Hotel Astor, have also employed the program as a way to fund projects.

Though popular among developers, EB-5 funding has faced stiff criticism from lawmakers.  For instance Sen. Charles Grassley, the Iowa Republican who is chairman of the Senate Judiciary Committee, says that some developers use the EB-5 program to build glitzy condos instead of funding projects in rural areas with low unemployment.

Unless it’s renewed by Congress, the EB-5 program is set to expire in December. Most stakeholders believe there’s little chance the program would end altogether, although there are a number of changes under consideration, including higher financial requirements for investors and added transparency measures.

A recent report by the Government Accountability Office “confirms the difficulty of substantiating sources of investors’ funds, which may come from illegal activities in their home countries,” Feinstein wrote in the Op-Ed. “The report says these difficulties pose a significant risk of fraud, particularly since the number of visas issued under the program increased from 3,000 to 9,000 between 2011 and 2014.”

Feinstein wrote that even as the U.S. Citizenship and Immigration Services is approving a record number of EB-5 visas, it has a backlog of family-related visa applications going back 23 years. “Simply put, EB-5 sends a terrible message to the millions of immigrants patiently waiting their turn to enter the United States legally,” she said. “It says that American citizenship is for sale.” [Roll Call]