EB-5 applications surge in 2015
Updated: 2016-03-29 10:52
By Paul Welitzkin in New York(China Daily USA)
Concerns about possible major changes to a visa program used mostly by Chinese investors/immigrants seeking entry into the US caused a surge in applications last year, observers said.
The EB-5 program received applications from 17,691 investors in 2015, up from 11,744 in 2014 and 6,554 in 2013, according to the US Citizenship and Immigration Services (USCIS).
"(USCIS) announced last week that the number of EB-5 petitions currently pending is 21,988, a jump of 63 percent compared to the same time a year ago," said Stephen Yale-Loehr, a law professor at Cornell University and an immigration attorney. "At the current adjudication rate of around 1,700 petitions per quarter, it would take USCIS 38 months to adjudicate the current backlog of EB-5 petitions. The pending EB-5 petitions with USCIS equate to roughly $11 billion of capital investment waiting to be injected into the US economy."
Yale-Loehr believes that EB-5 applications increased significantly in 2015 because Congress was considering major changes to the program, such as increasing the minimum investment amount to $800,000 from $500,000, and making it harder to invest in certain urban areas.
"Investors wanted to file their applications before Congress made changes. In the end, Congress was unable to agree on any changes, and instead just extended the program until Sept 30 of this year," said Yale-Loehr.
Nicholas Mastroianni, president and CEO of US Immigration Fund, a company that facilitates foreign investment in American real estate via EB-5, told The Real Deal that the rapid increase in applications last year was fueled in part by concerns that key parts of the program wouldn't be renewed by lawmakers.
China accounts for more than 80 percent of EB-5 visas issued.
EB-5 is an alternative way for immigrant investors to obtain a US visa. It was created in 1990 to help stimulate the US economy through job creation and foreign investment. With a minimum of $1 million or $500,000 in low employment or rural areas, an EB-5 investor must create at least 10 full-time jobs through the project they are working toward completing. In return, the investor is eligible for permanent US residency.
David North, a fellow of the Center for Immigration Studies in Washington, believes that the surge in interest in the EB-5 program was caused by two independent forces: the Obama administration busily promoting the program in a number of different ways, and a lot of worried rich people in China.
The surge in EB-5 applications came as immigration and trade became major issues in the US presidential campaign.
"The changes in EB-5 policy have nothing to do with national trends, or trade issues," North wrote in an e-mail. "Most people investing in the EB-5 program are more interested in getting a fistful of visas for their families than in the financial return; hence they are the source of what the middlemen call 'patient capital.'"
Yale-Loehr acknowledged that it is possible the political dialogue in the US on immigration and trade may have had something to do with the increase in EB-5 applications, but he said none of his firm's EB-5 clients mentioned that.
EB-5 financing is common in large commercial projects like the Hudson Yards development in New York City, the Silverstein World Trade Center 2 building in New York, and the Century Plaza hotel in Los Angeles.
EB-5 has become controversial, as the Government Accountability Office, the investigative arm of Congress, found last year that many EB-5 applications contained a high risk of fraud. The GAO also discovered cases of counterfeit documentation.
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