A U.S. visa program that gave green cards to investors and was popular among real estate developers, is set to expire, with no clear plan for an extension.
As it stands, the EB-5 program allows foreign investors in the U.S. who put at least $900,000 into a business that creates 10 or more jobs to apply for permanent residence. It’s now due to expire at the end of June.
Created in 1990, the so-called “cash-for-visa” program was created to stimulate foreign investment and job creation, and became particularly popular in the real estate industry. But some lawmakers representing more rural constituencies say it is too vulnerable to fraud and promotes urban development at the expense of rural investment.
“Make no mistake, this program cannot continue in its current form,” Senator Chuck Grassley, R-Iowa, told the Wall Street Journal. Grassley teamed up with Senator Patrick Leahy, D-Vt., to propose a bipartisan restructuring of EB-5.
Their bill defines more narrowly which projects and investors qualify for the program and would preserve for five years regional centers, which let businesses pool money from many EB-5 investors. Regional centers have become popular in real estate, contributing millions of dollars to projects including the Barclays Center, the Brooklyn Navy Yard redevelopment, and City Pier A in Battery Park.
So far, the bill hasn’t won bipartisan support.
Senate Majority Leader Chuck Schumer, D-New York, doesn’t support the Grassley-Leahy proposal. He and Leahy held a call with representatives from industries including real estate that have taken advantage of EB-5 and said they aimed to find a compromise, according to the Wall Street Journal. Industry representatives have threatened to withdraw their support from any bill that does not make it easier for developers to raise money.
Even some in real estate support the Grassley-Leahy proposal, as they fear the program expiring altogether more than the senators’ restructuring of it. Others proposed shortening the program’s reauthorization period from five years to one, giving them another crack at negotiating a better program within the next year.
While EB-5 became popular in the past decade as developments proliferated, a 2019 federal regulation that raised EB-5 investors’ minimum contribution from $500,000 to $900,000 took some wind out of its sails.
In past years, the program has passed Congress cloaked in massive spending bills. By nudging the program’s expiration date up this year, Senators Grassley and Leahy managed to keep EB-5 out of any upcoming spending bill. However, if Congress fails to strike a deal, Schumer could just let the program die and bring it back when the chamber negotiates its next spending package in the fall.
[WSJ] — Joe Lovinger