Through the investor immigrant visa program - or EB-5 - Chinese investors have already had a big impact on the Big Apple, including the Barclays Center at the Atlantic Yards Project in Brooklyn and the Kingsbridge Armory redevelopment plan in the Bronx.

Now, as a surge in demand from wealthy Chinese for the green cards for cash offer is threatening to overwhelm the program, EB-5 money from China is behind what's being billed as the largest private real estate development in the history of the United States and the largest development in New York City since Rockefeller Center - Related Companies' Hudson Yards.

The 28-acre site on Manhattan West Side between 34th and 30th Streets and 10th Avenue and the West Side Highway, will include 17 million square feet of commercial and residential space, more than 100 shops, 20 restaurants, 5,000 residences, 14 acres of public open space, a public school and a luxury hotel. Related says it will draw more than 24 million visitors a year and create more than 23,000 construction jobs.

Related is planning to set-up an in-house EB-5 center to help raise funds for the Hudson Yards project, Crain's reported last fall. A Related Companies spokesperson told China Daily Wednesday the project involved EB-5 investors, but declined to give specific numbers.

New York City developers have been utilizing the EB-5 program for a while, as sourcing cheap debt from foreign markets is becoming ever-more popular and developers try to establish their own programs to fund new projects.

Any foreigner can apply for an investor immigrant visa by committing at least $500,000 to a project that creates at least 10 self-sustaining, on-going jobs in America.

EB-5 investors can invest either directly to finance projects or go through regional centers.

"An EB-5 regional center is an 'umbrella' under which investment projects that are EB-5 funded are managed and processed," BoBi Ahn, a partner at New York law firm McCormick & O'Brien LLP, told China Daily.

EB-5 investors align themselves with regional centers, she said, because under the regulations, "investments made through regional centers can count 'indirect' jobs created toward the required job creation element in order to qualify", said Ahn.

According to the US Citizenship and Immigration Service (USCIS), which administers the EB-5 program, approximately 90 percent of EB-5 visas come through regional centers. Last year, 90 percent of them were issued to Chinese nationals.

According to the Real Deal, last fall Related Companies was in the process of requesting approval to open their own EB-5 regional center, instead of having to rely on state-sponsored sites, as developers had in the past.

"More developers who are handling large projects are looking to utilize this source of financing," Steven Polivy, head of law firm Akerman Senterfitt, told Crain's. Polivy estimated there were roughly a dozen regional centers operating in New York at the time and he expected that number to double over the next six months.

By having a regional center in-house, builders like Related will be able to more efficiently and flexibly raise EB-5 funding, said Mr. Polivy. "Developers are getting senior construction financing from traditional sources like banks and then using EB-5 to supplement that, normally a mezzanine loan in today's market is about 15 percent but you can get the same capital from EB-5 and pay a 5 percent return," Polivy told Crain's.

Hudson Yards is a partnership between New York University's Center for Urban Science and Progress, Related Companies and Oxford Properties. The project will incorporate the High Line phase, which will be finished in September this year.

The EB-5 visa program, created by Congress in 1990 to help stimulate the economy by creating jobs and opportunity for foreign investment, is limited to 10,000 visas per year.

Last year, 6,895 Chinese nationals were issued visas through the EB-5 program.

The USCIS estimates that the EB-5 program has created more than 57,000 jobs and raised close to $9 billion.

For China Daily

(China Daily USA 08/22/2014 page2)