From the New York website: New York’s developers
are still dealing with the emotional pain of losing the 421a tax abatement
program, and now they may have to wave good-bye to another beloved subsidy:
EB-5.
A key provision of the
visa program, which allows foreigners to invest upwards of $500,000 in U.S.
real estate projects in return for a green card, is set to expire Sept.
30. Although Congress could temporarily extend the program until after the
November election, the program’s future remains in limbo.
EB-5 investors are a
popular source of (relatively) cheap cash for New York’s developers, and have
helped fund major projects like Related Companies’ Hudson Yards. Reformers
headed by Iowa Sen. Chuck Grassley want to bar condo projects in high-income
neighborhoods from receiving EB-5 funds, which are in theory intended to
support underdeveloped areas in the suburbs or rural America. But New York Sen.
Chuck Schumer heads a group opposing such changes, creating a stalemate.
Last month, Virginia
Congressman Bob Goodlatte sponsored a bill that would severely restrict
developers’ ability to tap into EB-5 funds by raising the minimum individual
investment. As The Real Deal reported, the proposed bill would
require the minimum investment for EB-5 applicants be $800,000 in
high-unemployment areas. In areas with low unemployment, the investment amount
would rise from $1 million to $1.2 million. The bill
would apply retroactively to all
applications filed by investors from June 2015.
Many believe it would
effectively kill the EB-5 program in Manhattan.
In 2016, the program
has lost popularity among investors for the first time in years. A total of
8,638 foreign investors applied for EB-5 visas in the first nine months of the
fiscal year, on pace for an annual drop from the 14,373 applications recorded
in the entire prior fiscal year. Possible explanations are uncertainty over the
program’s future and long wait lists. [WSJ] — Konrad Putzier
Original Content The Real Deal
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