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Controversial immigration for jobs program may end

December 10, 2015

NBR, CNBC – excerpt

An increasingly popular and controversial program that trades green cards for foreign investment in U.S. real estate is set to expire this week, and billions of dollars for potential commercial development are at stake.

The EB-5 “Immigrant Investor” program, originally designed to spur job growth, has come under fire due to several cases of fraud and misuse of funds. Many U.S. developers and foreign investors have lost. Still the program has also fueled hundreds of projects that are revitalizing neighborhoods across the nation.

Congress first passed EB-5 in 1990 as part of new immigration standards. A foreign investor could obtain a U.S. visa by investing $1 million in a project which created at least 10 jobs. The program was later modified to allow an investor to spend $500,000 in a rural or high-unemployment area.

The expiring program has already been extended once and could be again, without reforms, depending on the outcome of the Congressional budget negotiations.

The program was not very popular at first, so Congress created the “regional center” part of the program. Developers could apply to be part of a “center,” so foreign investors could then pool money for much larger projects. The centers were supposed to identify “targeted employment areas,” where jobs were needed most.

This last part is what has come under fire because some contend that “regional center” projects can be jiggered around with, allowing developers to build swank new projects in wealthy areas, using EB-5 money. New York City’s Hudson Yards, being developed by Related Cos., and San Francisco’s Hunters Point Shipyard, developed by Miami-based Lennar, are examples cited by critics. Related and Lennar did not immediately respond to requests for comment…

U.S. Sen. Diane Feinstein, D-Calif., has called for an end to the regional center program. In an open letter to Roll Call, Feinstein wrote, “I believe the program is deeply unfair, sends the wrong message about this country’s values, and is prone to fraud and abuse.”.. (more)

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