By Eliot Brown
A controversial federal immigration program offering green cards to some foreign investors had record demand in 2015, as concern that a key provision of the law might expire fueled a surge of aspiring immigrants.
The program, known as EB-5, received applications from 17,691 investors in 2015, up from 11,744 in 2014 and 6,554 in 2013, according to figures released last week by U.S. Citizenship and Immigration Services.
In all, there were 21,988 investor applications pending at year-end, and given that the program allows just 10,000 visas a year, that means a backlog of at least five years for most investors. Typically each investor secures two to three visas, including family members.
That backlog could make it harder to find future investors, said Nicholas Mastroianni II, chief executive of the U.S. Immigration Fund, a company that pools together investors in real estate that use the program for financing.
While applications have consistently grown in recent years, demand was particularly strong at the end of 2015 because a key portion of the EB-5 program was expiring, he said, and the inflow has slowed some since the law was extended in December for another 10 months.
“It was a flood to the market,” he said, adding that there is also a dropoff in demand because of the slowing economy in China, which accounts for more than 80% of EB-5 visas issued.
The EB-5 program offers green cards to aspiring immigrants who invest at least $500,000 into certain businesses that have been determined to create at least 10 jobs per investor.
First created in 1990, EB-5 was barely used until the aftermath of the 2008 recession, when real-estate developers realized it offered a cheap and accessible form of financing when banks were reluctant to lend. The program has since become mainstream within the real-estate development world, particularly among high-end developers in New York, who recruit heavily in China.
Users include Hudson Yards—the nation’s largest private development, in Manhattan, which is using more than $1 billion of EB-5 funds—and numerous high-end condominium towers.
But these projects have come under fire because they are using a provision of the program meant to aid rural areas and urban neighborhoods with high unemployment—a stark contrast given that many sit on some of the most valuable real estate in the country. This practice is legal because the law allows developers to draw special districts that link their projects with poor neighborhoods that hit the unemployment threshold.
Lawmakers tried to stop this practice and make numerous other alterations to the program late last year, including changes meant to reduce the possibility of fraud.
But developers and their allies in Congress resisted attempts to change the rural and high-unemployment provision, and the law was renewed with no changes through September.