A new proposal to reform the controversial EB-5 visa program is causing alarm among real estate developers who’ve used it as a source of cheap capital for years. Some say its conditions would spell doom for the program, which has brought in billions of dollars for New York projects in recent years.
The new bill, sponsored by Congressman Bob Goodlatte (R-Va.), would raise the minimum amount investors would need to pump in to get a green card. That in itself was expected. But what makes it unusual is a provision that would require existing investors to retroactively cough up the additional amounts. It is this provision, real estate insiders say, that could cause investors to pull their money out of U.S. real estate projects, leaving developers in the lurch.
It could, they say, even spell the end of the popular program, which allows foreign investors to plow funds into real estate projects and has been one of the most popular sources of alternative financing for projects in New York, Miami and Los Angeles.
“It cannot go through,” said Mona Shah, an EB-5 immigration attorney. “If it goes through in its current form, it ends the EB-5 program. It’s as simple as that.”
The bill, proposed Sept. 9, would up the minimum investment amount for EB-5 applicants from $500,000 to $800,000 for projects in high unemployment areas. In areas with low unemployment, the investment amount would be hiked from $1 million to $1.2 million.
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