The EB-5 Immigrant Investor Program allows those living in other countries to obtain a U.S. visa by investing a minimum of $500,000 into a new business venture that must create or preserve at least 10 full-time jobs for U.S. workers. This 25-year-old program has raised more than $4.2 billion in private investments and created upwards of 77,000 jobs. The businesses can be as simple as starting a trucking company or as complex as developing a multimillion-dollar project that includes dozens of investors. These larger projects are organized by EB-5 regional centers.
In December, amid a budget battle in Congress, the EB-5 program was re-authorized through September of this year. There was talk of addressing the fraud concerns at the time, but instead EB-5 was re-authorized with no changes.
Now that the dust has settled, members of Congress are debating the merits of the popular program. Senator Patrick Leahy (D-Vt.) recently published an opinion piece in the Vermont paper, the Stowe Reporter. Leahy has been a longtime supporter of the program, but said that without reforms he supports dismantling the EB-5 program:
“It is a fair question whether a program that faces such daunting challenges should even be extended at all. I still believe that, if meaningfully reformed, EB-5 can promote development and create jobs in areas that desperately need both. Attracting significant investment is all but impossible in many communities. If functioning properly, EB-5 can help fill that niche, as it did with Sugarbush and Country Home Products.
Sen. Leahy is not alone. Democrat California Senator Dianne Feinstein has been vocal about her opposition to the program. Sen. Feinstein said that while the program allows wealthier individuals to essentially buy a visa for themselves and their families, “At the same time, individuals unable to buy their way into the country remain trapped in seemingly endless visa backlogs that often last more than 20 years.”
Others, however, believe that the program’s integrity can be saved with reforms that would make it more difficult to acquire an EB-5 visa.
Rep. Jared Polis (R-Colo.) introduced the EB-5 Integrity Act of 2016, also known as HB 4530. It follows the EB-5 Integrity Act of 2015 that was brought before the Senate late last year. A half-dozen other EB-5 bills have been brought before Congress.
Some of the notable changes in the wide range of bills introduced include:
- Expanding reporting requirements for regional centers
- Additional oversight of third party groups and promoters
- Redefining Targeted Employment Areas (TEA). TEAs allow applicants to invest as little as $500,000 in areas where employment is low. However, developers have been able to have lower unemployment areas labeled as TEAs.
- Increasing the minimum investment amounts for EB-5 applicants.
In the coming months, the Senate Judiciary Committee will continue to debate the EB-5 program’s future. Committee Chairman Chuck Grassley (R-Ia.) supports amending the program, and his bill last year would have brought significant changes. For now, the EB-5 program continues, but it appears by the end of September that the program will either be overhauled or expire.
During one committee meeting in February, Senator John Cornyn (R-Tx.) said, “Mend it, don’t end it.” What changes do you expect to see in the EB-5 program? Do you think the program should continue on unchanged or expire? Let us know in the comments.