EB-5 Visa Program Becomes Important Source of Project Funding in NYC

In parts of NYC, it feels like 2006 again with construction projects on every block. How is this possible at a time when lenders still shying away from construction loans and equity investors demand 20% returns? One popular source of relatively cheap financing is the so-called EB-5 visa program that is available to foreigners who invest in job-creating projects in the United States.

Under the Citizenship and Immigration Services’ Immigrant Investor Program, foreigners can obtain  temporary residency status (the EB-5 visa) by investing $1 million in a commercial project that generates 10 jobs over two years. For projects in low-income areas, the threshold is only $500K. The program had been shut down from 1998-2003 because of concerns over fraud but has come roaring back. Thus far,  3,002 temporary visas have been issued in 2012 through the EB-5 program compared to 640 in 2008. Most of the EB-5 Visas have been issued  to Chinese followed by immigrants from Britain , India, and South Korea.

Typically, developers only have to pay about 4% for financing obtained through EB-5 program.  In essence, foreigners are renting visas. The program has been used in NYC for brownfield projects that also obtain grants from the NYC Office of Environmental Remediation.

According to a recent article in the NY Times, the EB-5  program has been especially popular for hotel financing since they generate lots of temporary and permanent jobs. See http://dealbook.nytimes.com/2012/09/06/visas-for-dollars-program-a-boon-to-hotel-developers/

Click on the following link for a list of state EB-5 Regional Centers

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