EB-5 Prescription for Reform: Legislation or Regulation?

This might seem counterintuitive to those who follow the EB-5 visa program reform efforts: the publicity surrounding the Kushner Company (“Kushner”)

controversy is likely to play a major role in saving the EB-5 visa program (sometimes the “Program” or the “EB-5 Program”). Certainly, Kushner’s EB-5

fundraising activities in mainland China raise serious legal and ethical issues. But more importantly, from the Program’s perspective, a spotlight has been cast on TEA4 abuse - how the special incentive intended by Congress to promote business development in areas that are unable to attract conventional capital is not working; it is being abused to attract most EB-5 immigrant investor capital to those projects that need it the least and were never intended to benefit from this incentive. 

EB-5 capital flows primarily to the largest real estate projects in affluent areas and is diverted from the areas that need it the most, rural and economically distressed urban areas. In fact, Kushner’s Jersey City projects represent merely routine examples of TEA abuse; the classic, most egregious examples include real estate development projects located in the most affluent urban areas in the country, such as in Beverly Hills and along Billionaires’ Row in New York City. Notably, the states that benefit the most from TEA abuse are New York and California, states that did not support President Trump in the 2016 election. The states that stand to benefit the most from TEA reform – those with vast rural areas and that lack major affluent urban areas – represent his base of support.