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Developers Look to Foreign Investors to Fund Brooklyn Projects

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Many developers are turning to the EB-5 program

Developers behind the Macy's building renovation in Downtown Brooklyn are seeking funds for the project through the EB-5 Program, The Real Deal reports.

Through the EB-5 Program, foreigners who invest at least $500,000 into a particular business which will create at least 10 jobs are provided a green card.

Tishman Speyer, the firm that's developing the Macy's building at 422 Fulton Street, is looking to generate $60 million through this program. Those funds will account for about 12 percent of the total cost of the project - the rest is being provided by the developer and through a construction loan.

Tishman Speyer signed a $170 million deal with Macy's last year to redevelop their space in Downtown Brooklyn. Macy's will continue to occupy the first five floors and get a $100 million renovation courtesy the developers. The floors above that will be redeveloped into office space.

Tishman's EB-5 financing plan is not unique and has in fact been increasingly used by developers in the aftermath of the 2008 financial crisis, according to the Wall Street Journal. Just last week it was revealed that Hudson Companies was trying to raise $110 million through the EB-5 Program for its Brooklyn Heights library redevelopment project.

Last year saw the highest demand for green cards through this program, as part of it is set to expire later this year, according to the WSJ. Applications rose to 17,691 from 11,774 the previous year. There's a limit of 10,000 each year, and projects can get delayed for years as a result.

The program has generated controversy because it was created to help rural areas or urban centers with high rates of unemployment, but developers have been able to circumvent those stipulations so far, according to the WSJ.