Expert: Low-Cost Funds Make EB-5 Attractive to Developers

Eric Lipton, Jesse Drucker, New York Times, May 8, 2017- "It was the first major piece of legislation that President Trump signed into law, and buried on Page 734 was one sentence that brought a potential benefit to the president’s extended family: renewal of a program offering permanent residence in the United States to affluent foreigners investing money in real estate projects here. Just hours after the appropriations measure was signed on Friday, the company run until January by Mr. Trump’s son­-in-­law and top adviser, Jared Kushner, was urging wealthy Chinese in Beijing to consider investing $500,000 each in a pair of Jersey City luxury apartment towers the family­-owned Kushner Companies plans to build. Mr. Kushner was even cited at a marketing presentation by his sister Nicole Meyer, who was on her way to China even before the bill was signed. The project “means a lot to me and my entire family,” she told the prospective investors. The sequence of events offers one of the most explicit examples to date of the peril of the Trump and Kushner families maintaining close ties to their business interests and creates an impression they stand to profit off Mr. Trump’s presence in the White House. It also illustrates the problems of the so-­called EB-­5 visa program that prominent Republican and Democratic members of Congress want changed. ... The $1 billion Kushner project at the center of the current controversy is a set of high­rise towers — including 1,730 apartments and 89,000 square feet of retail space. The company is seeking $150 million through the EB­-5 program. Traditional lenders can charge interest of 12 to 18 percent, said Gary Friedland, a professor at New York University who has written extensively about the program. But EB-­5 loans can wind up costing developers as little as 4 percent, he said. “The immigrant investor’s primary purpose is to secure a visa, so they accept minimal interest, as low as half a percent,” Mr. Friedland said. For developers, said Steve Yale-­Loehr, an immigration law professor at Cornell University, the appeal of EB-­5 can be summed up in two words: “Cheap money.” "