by Max Brantley
Created in 1990, the program was intended to help pay for infrastructure projects in rural areas and poor urban neighborhoods. After bank lending dried up in the last recession, developers turned to the program to finance hotels, condominiums and other projects from Manhattan to Miami. As a result, the number of EB-5 visas awarded grew to almost 9,000 last year, from fewer than 100 in 2003. [80 percent to Chinese investors according to another Times article.]Given that the Donaghey Building has languished for years, despite several proposals to renovate it, it perhaps couldn't be classified a "more certain" venture. As with past development proposals, this one will be certain only when apartments become available for lease.
.... Using the EB-5 program, though, can be complicated because the construction site must be in an area with high unemployment. To qualify, boundaries are sometimes gerrymandered to create an economically challenged (but essentially manufactured) neighborhood.
Developers also must spend millions of their own money to start the construction because it can take months and even years for the government to approve each EB-5 visa. Visa applicants must pass a background check and prove that the project is viable and will create at least 10 jobs for each visa issued. The visas can be made permanent after a two-year probationary period.
Some financial advisers recommend that foreigners who are considering putting $500,000 into a real estate project choose a hotel, mall or other more certain venture — anything but a sports stadium, whose main tenant could have unpredictable results.