A popular senior housing finance program that was previously under fire will live another day—but lawmakers continue to discuss dismantling or reforming it.
The EB-5 financing program has been extended exactly as is until September 30, 2016, but calls to reform the program with stricter regulations have remained. The provision to extend the program without major changes was approved within the federal funding Omnibus Bill by Congress on December 15. But in early February, the program was back up for debate.
The program, which has been around for 25 years and provided billions in real estate financing, enables foreign investors to invest in real estate developments that provide at least 10 permanent jobs in targeted employment areas (TEAs), in exchange for U.S. residency visas.
The extension paused regulatory changes being considered to overhaul the program on grounds of its ability to meet its goals within targeted employment areas, and amid talk of widespread fraud stemming from the infrastructure of the program’s regional centers. The extension also undermines the efforts of advocates seeking to increase the base investment from foreign investors to $800,000—up from its current value of $500,000 in TEAs.
However, the Senate Judiciary Committee is still calling for reforms. In a hearing in early February, committee chairman Senator Chuck Grassley (R-Iowa), Sen. Patrick Leahy (D-Vt.) and Sen. Dianne Feinstein (D-Calif.) even went so far as to question if the program should be nixed entirely.
“Yet despite the need for reform, the fiscal year 2016 omnibus appropriations bill included a straight and clean extension of the program,” Sen. Grassley said during the hearing. “This was a disappointment, given the alarm bells and whistleblower allegations. It was a missed opportunity. So, we will have to make a decision—should the program be fixed or should it be nixed?”
Senators Leahy and Grassley previously introduced a bill that would have reformed the program and extended it through 2020. The bill was not acted upon.