Statement of the Honorable John Conyers, Jr. at hearing on the EB5 Immigrant Visa Investor Program
“Today’s hearing focuses on the EB-5 Immigrant Investor Program. When Congress established the program in 1990, the intention was to create jobs for American citizens and to bring new investment capital to the United States.
“I believe that the EB-5 Program can have a positive impact on distressed urban and rural communities by providing a source of jobs and investment. However, there are fundamental questions about how the Program is currently being used and whether adequate integrity safeguards exist.
“To begin with, the current practices used to draw Targeted Employment Areas must be reformed.
“To help incentivize investment and job creation in rural or high unemployment areas, the EB-5 Program offered a reduced investment level of $500,000 for projects in designated Targeted Employment Areas (TEAs).
“However, as reported by The Wall Street Journal, as well as many other news sources, the vast majority of EB-5 investment funds are going to projects in some of America’s most affluent areas that qualify as TEAs only because of gerrymandering.
“By stringing census tracts together from high unemployment neighborhoods to wealthy ones, project developers have been able to take advantage of the lower Targeted Employment Area investment level while still investing in projects in more desirable and affluent areas.
“This practice has been strongly criticized by the Leadership Conference on Civil Rights. It notes that ‘the EB-5 Regional Center Program has dramatically deviated from its original purpose – to spur job creation and development in rural and high unemployment areas.’
“Steering investments to projects in our cities’ wealthiest neighborhoods – at the expense of the urban and rural communities that need it most – is not what Congress intended when it established Targeted Employment Areas and the lower investment level.
“The Congressional District that I represent, for instance, suffers from an unemployment rate of more than 300% the national average. I am pleased to say that today we are starting to come back. But for those Americans living in urban poverty, in my city of Detroit, and in many other cities across the country, manipulation of Targeted Employment Areas has diverted a potential source of jobs and neighborhood improvement away from those it was intended to help.
“As the Leadership Conference points out, it is not enough to have development in more affluent areas where low- income workers might commute to because the projects will still leave ‘these communities of concentrated poverty no better off in terms of development and infrastructure after their conclusion.’
“Secondly, the EB-5 program suffers from the absence of good data on projects and jobs created.
“In order to receive a green card, a foreign investor must prove that the investment will create at least 10 jobs for U.S. workers. Under the Regional Center program, investors can account for the 10 jobs by counting direct, indirect, and induced jobs. These indirect and induced jobs are calculated by econometric models.
“While some data exist on the more than $13 billion of foreign direct investment since 2008, there is very little hard information on actual jobs created by EB-5 Regional Centers. We don’t know whether these are jobs that pay a living wage, whether they offer long-term employment, and whether they have benefitted workers from distressed communities.
“The AFL-CIO shares these concerns and states that increased data will ‘shed light on whether the program is meeting its mandates - to spur growth and create jobs in underserved areas.’
“Finally, I remain committed to working with Chairman Goodlatte and others to improve the EB-5 Program.
“The reforms that Chairman Goodlatte, Senate Judiciary Chairman Grassley, Senate Judiciary Ranking Member Leahy, and I negotiated last year demonstrate that meaningful bicameral, bipartisan reform is possible.
“Our sensible and widely supported proposal addressed the integrity concerns that we will be discussing today. It raised the minimum investment levels for the first time since the program was created in 1990, and included provisions to protect investors from unscrupulous actors.
“Most importantly, our proposal would have helped to reign in current abuses of the EB-5 investor visa program so that increased investment would be directed to the distressed urban and rural communities that need it most.
“I remain confident that we can accomplish these important legislative reforms this Congress and I look forward to continuing to work with Chairman Goodlatte on this effort.
“I thank the witnesses for their participation today and I yield back the balance of my time.”
- New York
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