The United States Congress gave new life to a controversial program that provides green cards for foreign investors, which economists say is good news for Southern California.
“I think it will be a very good thing for Los Angeles and Orange County," said William Yu, an economist with the UCLA Anderson Forecast. "It's not a trivial boost."
Under the EB-5 program, foreigners who invest at least half a million dollars get a path to citizenship if they employee at least 10 workers.
“Most of the applicants are from China, and Southern California is one of their most favorite places to invest," said Yu.
The number of EB-5’s issued every year is capped at 10,000, a number that has been quickly reached in recent years.
Real estate projects are popular investments, such as the new Metropolis condos in downtown Los Angeles, but EB-5's support a wide range of industries, according to Kevin Klowden, managing director of the Milken Institute's California Center.
“There have been a number of cases where films have been financed with EB-5 money," said Klowden. "There has also been a lot of money that’s gone into the tech industry, including in Silicon Beach.”
Though EB-5's have a significant temporary benefit, the long-term effect is unclear, according to Klowden.
“The catch about E-5 is whether they create lasting impact, or whether they are something that just creates a flash in the pan for a little bit,” said Klowden.
Critics like Senator Dianne Feinstein say the program is not fair because it allows the wealthy to jump ahead in line.
"Simply put, EB-5 sends a terrible message to the millions of immigrants patiently waiting their turn to enter the United States legally to be reunited with their families or for legitimate employment," Feinstein wrote in an editorial last month.
An August report from the U.S. Government Accountability Office said the program is susceptible to fraud.
Fans of EB-5 wanted a five-year renewal. Instead Congress punted, authorizing the program only until September, when the fight over EB-5 will likely be hashed out again.