Congress is considering major reforms to a visa program that rewards up to 10,000 visas a year to foreigners who invest in new businesses in the U.S.
The EB-5 immigrant investor program has resulted in $8.7 billion worth of foreign investment in U.S. businesses over the past three years and has created more than 35,000 jobs in America, according to U.S. Citizenship and Immigration Services.
Most of this money isn’t invested directly in U.S. startups. Instead it’s invested with nearly 800 USCIS-approved regional centers, public or private entities that promote economic development in certain areas. In this case, foreign investors don’t have to show that their money has created jobs in specific businesses; instead they get credit for jobs created indirectly by the development projects funded by regional centers.
That’s where the program is being abused, according to some members of Congress. To be eligible for visas that can ultimately lead to green cards, foreign investors must invest $1 million in new businesses that create 10 jobs in the U.S. But that threshold falls to $500,000 if the investment is made in a rural area or areas with higher-than-average unemployment.
Some states are gerrymandering the boundaries of so-called “targeted employment areas” to make new hotels and other commercial real estate projects in well-to-do areas eligible for the reduced EB-5 visa investment requirement.
“Census tracts are stitched together to incorporate remote public housing developments so that high rises, hotels, casinos and resorts can attract investors for less than the statutory $1 million requirement,” said Sen. Chuck Grassley, R-Iowa, who chairs the Senate Judiciary Committee.
“How many more projects in midtown Manhattan at the expense of rural America need to be highlighted?” Grassley said at a Tuesday hearing on the issue.
Sen. Patrick Leahy of Vermont, the committee’s ranking Democrat, said the program “too often serves as a corporate subsidy for mega developers.”
Grassley and Leahy failed last year to enact legislation that they say would restore the program to its original intent — “ensuring meaningful incentives to invest in underserved areas,” in Leahy’s words.