Changes to the EB-5 Visa Program
- October 12th, 2015
- Russell Weigel
- Comments Off on Changes to the EB-5 Visa Program
Will Changes Be Coming to the EB-5 Visa Program?
The EB-5 visa program has been featured in the news lately. The Regional Center Pilot Program was due to expire last week, but Congress extended its expiration until December 11, 2015.
Last year, for the first time since the program’s creation, the EB-5 program ran out of its allotment of just over 10,000 visas. The program has already reached its quota for visas this year. Comparatively, only 700 visas were issued in 2007.
To obtain a two-year visa through the EB-5 visa program, foreign nationals must invest $1 million in a U.S. business (or $500,000 in a high unemployment area) that creates or preserves 10 full-time jobs. The investment can be made directly to a business that will create ten full-time jobs, or the investor may invest through a regional center in which indirect jobs can be counted as part of the minimum of ten full-time jobs.
A Brief History of the EB-5
The EB-5 visa program was created in 1990 to attract foreign investment. In 1992, Congress created the Immigrant Investor Program, also known as the Regional Center Program. This allows state economic development agencies, public-private partnerships, as well as private sector investment companies to apply to be “regional centers.” Regional centers permit investors to put money into a “Targeted Employment Area,” which allows for a $500,000 investment in business located in less affluent areas with high unemployment.
One complaint from critics has been that regional centers help build projects in wealthy areas by including bordering poor urban areas in the calculations for their proposals.
Another complaint is that the Regional Center Program allows for “indirect jobs.” One of the 1992 EB-5 program changes was that Congress allowed regional centers to count the number of indirect jobs their project might create, rather than only accounting for direct jobs. For instance, a hotel investment may provide business for a local clothing boutique, and because of that increase of business, the boutique will need to hire additional staff.
How EB-5 Investments Have Enriched the U.S.
According to U.S. Citizenship and Immigration Services, since the program’s inception, the EB-5 program has created 73,000 jobs and provided $11 billion in funding. Because administrative costs associated with the EB-5 visa program are paid for by applicant fees, these jobs were created at no cost to taxpayers.
Here are a just a few development projects that were successful due to investments through EB-5 Regional Centers:
- Washington -Development of assisted and retirement living communities, creating 800 jobs
- Pennsylvania – Transformed closed Navy yard into a dynamic, multi-use development now home to 130 companies and 10,000 employees
- Texas– Transformed 100 year-old building into a hotel, creating 161 jobs and started a revitalization of a historic neighborhood.
Proposed Changes to the EB-5 Visa Program
Bills introduced to Congress propose changes to the EB-5 program that will be discussed between now and the December deadline. Some proposed changes include increasing the minimum investment requirement and allowing for expiration or complete reform of the Regional Center Program.
Many countries, including the United Kingdom and Australia, use programs like EB-5 to attract foreign investments. Some critics of the proposed changes label the U.S. investor program as a higher risk than similar programs of other countries, and they are concerned that the proposed changes would lower EB-5 participation.
For now, the program will remain unchanged, but many are expecting Congress to make some adjustments to the program in December.