On March 23, 2018, President Trump signed (and Congress passed) a spending bill that extended the EB-5 Visa Program until September 30th, and then subsequently until December 7th. While there continues to be rancor among lawmakers that it represents a “pay to play” scheme, there is no doubt that it has significantly contributed to the economic development of both rural and metropolitan areas in the United States, contributing over $15 billion of foreign investment since the financial crisis in 2008. The primary objections to the program include the lack of proper vetting of investors, the actual job-creation mechanism and the type of projects that ultimately receive investor funds – and, of course, not to mention the “citizenship for sale” argument. While there are aspects of the program that need reform, it’s important to understand a few key elements that often get overlooked.
The EB-5 immigration regulation stipulates that a part of the program requires funding to serve a targeted employment area (TEA) – this involves job creation and economic development in rural or high-employment areas in the U.S. The minimum amount of investment required for these types of projects is $500,000. Many people don’t know that another part of the program allows for foreign investment in any project that contributes to overall economic development and job creation – the minimum amount of investment for these types of projects being $1,000,000. At issue here is that sometimes TEA-designated funds are actually being channeled to non-TEA projects. We believe proper regulation and oversight are required for an immigration-based program that encourages millions (if not billions) of dollars to be funneled into the U.S. economy by foreign investors. Additionally, multiple stakeholders, from government agencies to investors themselves have requested outright reform of the program. We support that.
The EB-5 Visa Program has had its challenges, and in some cases these have been detrimental when the program has not been properly regulated. But, for the most part, the positives have outweighed the negatives for the U.S. economy, regional development and the American worker. We have talked about the successes of the program, particularly when the public and private sectors work together, in our most recent blog post. In the greater San Diego-CaliBaja region, one that now works relatively seamlessly between the U.S. and Mexico, it is absolutely critical that the EB-5 program be active and utilized to the fullest, and most ethical, extent.
It’s also important for Congress and local communities to keep in mind that foreigners who have $500,000 or more to invest are considering many other countries -- they have chosen the U.S. A green card may or may not be a motivating factor, but what is a factor is getting a good, stable return on investment. The U.S. still leads in that category and this alone provides a benefit to both the investor, the community in which that investment is being made and the U.S. economy as a whole.