Posted by GCBI Team on March 25, 2020
With the coronavirus challenging the U.S. economy, Trump is said to be thinking about major changes that would make EB-5 more enticing to investors and developers: possibly increasing the program’s annual visa limit from 10,000 to 75,000, as well as halving the Targeted Employment Area (TEA) investment amount from $900,000 to $450,000.
EB-5 became a factor in the last recession as a source of inexpensive capital for real estate developers. Now that the U.S. faces another financial crisis, the program is said to be a topic of discussion in the White House. If the program were to be revised to make it more attractive to investors, as well as simply multiplying its scale, it could potentially bring billions of development dollars into U.S. economy.
program’s regulatory changes, implemented in late November of 2019, have been
said to be the reason for decreased investor interest after investment amounts
jumped up 80%, from $500,000 to $900,000 for TEA projects and from $1,000,000
to $1.8 million for standard projects. In addition, new TEA regulations making
such designation much harder in urban areas have resulted in less developer
Both EB5 regional centers and developers would be excited about the possibility of new changes to the program that would likely skyrocket participation in the program. A Florida developer who has used EB-5, Bernardo Rieber, says that such a change would give him the green light on new projects: “It will allow me to launch one or two other construction projects, and each project employs 1,000 people. It’s only positive.”
Major developers who have relied on EB5 investment capital for their projects support such a dramatic increase in visas: Big-market developers would be favorable to new proposals that would increase liquidity. Many of them believe that such a change in the EB5 Green Card program could bring the industry back to its heyday of around 2013.
Currently, COVID-19 anxiety and uncertainty have caused some lenders to pause their practice. Billy Meyer, a manager with a Seattle real estate investment firm, says this, “We are taking a 30-day pause. No one knows what the hell is going on here. The virus is massively outbreaking and we don’t know how bad it will get.” Other lenders have adopted a similar wait-and-see response to the pandemic. For developers looking to finance for new construction projects, options are limited, including private lenders who demand higher interest rates.
Any decrease in investment amounts and an increase in visa numbers for EB-5 would be all the more attractive during this current financial maelstrom. And it would certainly be huge EB5 news.
times call for innovative solutions,” states Stephen Yale-Loehr, an immigration
professor at Cornell University and an EB-5 expert. “This could be one way to
jumpstart the economy.”
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