Originally Posted on  Commercial Property Executive / Michael Halloran  /  April 20, 2017

There is a perception that immigration costs native-born residents their jobs. Congress is working on an idea next week that—if taken to its logical conclusion—would illustrate the opposite phenomena in dramatic fashion within commercial real estate.

THE EB-5 VISA PROGRAM

The EB-5 visa program is well known in property and infrastructure development circles. It was created through the Immigration Act of 1990 to foster foreign direct investment to drive U.S. job creation. Requiring an investment of $500,000 to $1 million into government approved projects—typically large retail, hospitality, residential and infrastructure projects—each investment must create 10 jobs for the immigrant to qualify for conditional permanent residency in the United States. EB-5 has become a popular and highly successful source of capital for development projects throughout the country. Congress is working to beat an April 28 deadline to reauthorize the program before it expires.

1.6 MILLION JOBS

An increase in EB-5 visa allocations to 100,000 annually at the newly proposed investment amounts the government is considering, if fully subscribed, would result in $100 billion of annual capital investment, primarily in real estate development. Based on current Department of Commerce data and projecting forward, that would scale to 1.6 million jobs—at barely any expense to U.S. Taxpayers.

This could also mean a $1 trillion infusion for development and infrastructure in four years. Historically EB-5 capital has been approximately one third of the capital stack used to fund a project, which would equate to an additional $200 billion of private sector capital on top of the EB-5 portion, or $300 billion a year, again if fully subscribed. In order to ensure a high level of EB-5 subscriptions, the country could look to the over-subscribed H1B category where there are approximately 233,000 applications annually. Allowing corporate sponsors as a source of capital for the EB-5 immigrant, excess H1B demand could be directed into the job producing EB-5 category… Continue Reading >>