Witkoff defends EB-5, says changes are imminent

Developer notes "a lot of misnomers" in public perception of program

Rendering of 111 Murray Street in Tribeca (credit: KPF) (inset: Steve Witkoff)
Rendering of 111 Murray Street in Tribeca (credit: KPF) (inset: Steve Witkoff)

Steve Witkoff expressed support for the EB-5 federal visa program at a panel discussion Monday morning, while expressing his belief that the program “is going to change” when up for renewal before Congress this fall.

The developer noted “a lot of misnomers” in the public perception of the program, which came under fire from former New York governor Eliot Spitzer last week and could face political obstacles in its reauthorization process this September.

While Witkoff said he’s “not dependent” on EB-5, the program helped fund his residential tower at 111 Murray Street in Tribeca and created 1,500 jobs through the construction of the development. The 157-unit building, which Witkoff co-developed with Fisher Brothers and Howard Lorber’s New Valley, launched sales this week.

“It’s actually a smart program,” he said at Michael Stoler’s New York Real Estate Summit, held at the CUNY Graduate Center in Midtown. “Why in the world would you change a job-creating program?”

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Referring to misconceptions surrounding EB-5, Witkoff pointed to the fact that the program has “been in existence for 20 years” and employs a limit of 10,000 visas awarded annually — as well as its status as a loan, rather than an investment vehicle.

Still, he forecast changes to the minimum investment required to become eligible for the program – to $800,000 from the current $500,000 – and potentially to “deployment zones” where projects funded by EB-5 can be built.

Witkoff also described mezzanine lenders as “the natural enemy” of the EB-5 program, citing how it allows a cheaper cost of capital for project funding.

“The [1,500] jobs didn’t get subsidized by EB-5; I would have gotten the mezz loan anyway,” he said, referring to 111 Murray Street as an example. “[But] I haven’t been constricted by a 15 percent rate on mezzanine money.”