Facing an impending expiration, a controversial federal program designed to attract wealthy immigrants has federal lawmakers at an impasse, leaving its long-term future uncertain.
A key provision of the EB-5 program, which gives permanent U.S. residency to foreigners who invest at least $500,000 in certain businesses, is due to lapse Sept. 30, although Congress on Tuesday appeared to be ready to give it a short-term extension until after the presidential election.
The program has surged in popularity in recent years among real-estate developers who have tapped it to help finance some of the most high-profile projects in the U.S., including the giantHudson Yards development rising on the west side of Manhattan. The main draw is the low-cost loans provided by the foreign investors—who are mostly from China—which can save the developers tens of millions to hundreds of millions of dollars in borrowing costs.
But the program has drawn criticism. Allegations of fraud have marred numerous projects that have left investors with neither their money nor a visa amid loose regulations, including a high-profile Vermont ski resort. In addition, the program has become dominated by high-end developments in prosperous urban neighborhoods that are using a piece of the program meant for rural and high-unemployment neighborhoods. This practice, known as gerrymandering because the developers draw special districts that link their projects with high-unemployment neighborhoods that are sometimes miles away, has made it harder to raise money in economically struggling areas, EB-5 professionals say.