Credit the Real Deal, whose Kevin Sun went to Shanghai and delivered “We’re the elite”: What backlogged Chinese EB-5 investors are planning next, published 2/20/20.
The seven EB-5 investors had never met in person, only virtually on WeChat, and are described by their handles, not names:
EB-5 seemed to offer certainty and expediency, with a lower investment ($500,000, plus fees, per family) than similar programs in the United Kingdom, Australia, and Quebec. This investment threshold, which as the Real Deal notes was "unchanged since 1990," allowed many investors to simply rely on their own domestic real estate investment.
None of the investors realized they'd have to wait so long:
What now?
The upshot: billions of dollars will have to be "redeployed"--moved to another investment, likely on different terms, to meet the requirement of an "at risk" investment. That has unnerved investors.
The investors told the Real Deal that the migration agencies in China, which earned significant fees (by, I might add, often deceptive promotions), kept information from investors, and made it hard for them to organize.
What can investors do? Some are lobbying regarding the backlog; others are filing lawsuits. It's put many in a difficult limbo; they can't get their money, while their children are getting too old to qualify for residency as dependents under EB-5.
The kicker:
Meanwhile, the interest of the public in a program that truly generated public benefits, and the interest of investors in a program that treated them fairly, has been far less of a priority.
The seven EB-5 investors had never met in person, only virtually on WeChat, and are described by their handles, not names:
The urbane Chinese citizens were all members of a group that called itself EB5 Association of Investors, or EB5AI, which formed last spring to represent the interests of investors lobbying for EB-5 reform...Though EB-5 investment started growing as financing grew tight after 2008, and the first (of three) round of Atlantic Yards fundraising began in 2010, the article says Chinese interest in EB-5 took off in 2014, when Canada ended its own Immigrant Investor Program.
Each had invested $500,000 — with that money going into a wide variety of projects across the United States — and they all faced a common dilemma: a decade-long backlog. Following a few boom years in the mid-2010s, the expected wait time for a Chinese investor who applies for an immigration visa through the EB-5 program today has ballooned to 16 years, according to the latest statistics from the U.S. State Department.
EB-5 seemed to offer certainty and expediency, with a lower investment ($500,000, plus fees, per family) than similar programs in the United Kingdom, Australia, and Quebec. This investment threshold, which as the Real Deal notes was "unchanged since 1990," allowed many investors to simply rely on their own domestic real estate investment.
None of the investors realized they'd have to wait so long:
The “final action date” for mainland Chinese EB-5 investors was Nov. 22, 2014, as of this January, according to the U.S. State Department’s latest monthly visa bulletin. That means someone who invested on that date, just a few months into the boom, might have become eligible to apply for an immigration visa only recently, more than five years down the line.Yet investors still arrived, as marketers stressed that the investment threshold would rise, as it did last year.
What now?
The upshot: billions of dollars will have to be "redeployed"--moved to another investment, likely on different terms, to meet the requirement of an "at risk" investment. That has unnerved investors.
The investors told the Real Deal that the migration agencies in China, which earned significant fees (by, I might add, often deceptive promotions), kept information from investors, and made it hard for them to organize.
What can investors do? Some are lobbying regarding the backlog; others are filing lawsuits. It's put many in a difficult limbo; they can't get their money, while their children are getting too old to qualify for residency as dependents under EB-5.
The kicker:
“When we chose to invest in the EB-5 program, we were assured by the fact that this was a federal program operated by a well-run government whose values we admired,” [investor] Julie said. “For many of us, the mismanagement of EB-5 has led to a lot of disappointment and disillusionment with the United States.”That's unfortunately idealistic, and naive. The federal program has long been loosely overseen, rather than operated, and in many ways "captured" by the interest groups--loan packagers and lawyers--slated to make money from it.
Meanwhile, the interest of the public in a program that truly generated public benefits, and the interest of investors in a program that treated them fairly, has been far less of a priority.
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