Congress extends EB-5 ‘visa for investment’ policy until Sept. 30
The controversial EB-5 visa-for-investment-program will be extended, with no changes, to Sept. 30, 2016 as part of the omnibus spending bill Congress reached Tuesday night.
The program lets foreign nationals get a green card for themselves and their families if they invest at least $500,000 or $1 million (depending on the area) in a business that creates or preserves at least 10 jobs for U.S citizens or permanent residents.
About 90 percent of investors come in through regional centers, which are private-sector entities that pool investor money to develop hotels, ski resorts and other projects.
The regional center part of the program was set to expire last Friday, and lawmakers had come close to a compromise that would have reauthorized it for another five years, but with many changes designed to addresses myriad criticisms.
A Government Accountability Office report this year said that U.S. Citizenship and Immigration Services, which oversees the program, can’t effectively detect investment-related fraud or assess the program’s economic benefits. California Sen. Dianne Feinstein called for abolishing the regional center program.
The program, is relatively small, granting up to 10,000 visas per year for investors and their family members. In the past two years, most have gone to Chinese applicants.
The vast majority of investors come in at the $500,000 level, which requires an investment in either a rural area or a “targeted employment area,” defined as an urban area with an unemployment rate of at least 150 percent of the national average.
These areas, however, are poorly defined.
Developers have been getting EB-5 funding at the $500,000 level to build luxury condos and other projects in affluent urban neighborhoods by expanding the boundaries of their targeted employment to area to include low-income communities, which critics say is gerrymandering.
California has tightened this loophole by defining a targeted investment area as 12 or fewer contiguous census tracts with a total average unemployment rate of 150 percent of the national average. A census tract can be as small as a city block to as large as a county in sparsely populated areas.
The compromise bill that almost passed would have adopted the California definition nationwide and raised the minimum investment required in such areas to $800,000 from $500,000. That would have reduced, but not eliminated, the ability to fund projects in affluent urban areas at the lower investment level.
It also would have imposed a new $10,000 filing fee per investor. Those fees would have been used to fund other government programs. It also would have imposed new monitoring responsibilities on the immigration service.
The compromise fell apart when, at the last minute, another provision was added, said H. Ronald Klasko, a Philadelphia immigration attorney who represents regional centers and developers.
It would have reserved 2,000 of the visas per year for investments in rural areas and 2,000 for investments in “urban priority areas, basically impoverished areas,” he said. But there aren’t many projects in those two areas. It also reserved 2,000 for investments in non-targeted areas at the $1 million level.
That would have left only 4,000 visas for the type of projects most investors and developers wanted to fund. “By most estimates, people would have a wait in excess of 15 years,” for those types of visas, Klasko said.
“In the end, almost all of the industry groups thought the changes could potentially destroy the program and we were better getting the extension through Sept. 30 and dealing with the changes next year,” he added.
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