BY RUSSELL RIGGS
For a quarter century, the EB-5 Visa Program has helped finance economic development projects across America, sparking job growth and business investment in cities, suburbs, and rural regions throughout the U.S.—all at no cost to the taxpayer. EB-5-funded projects span a diverse range of regions and industries, from charter schools in Utah and manufacturing plants in South Carolina, to mixed-use commercial property in downtown Washington, DC.
Regulated by the U.S. Department of Homeland Security, the EB-5 program provides a path to citizenship to foreign investor-entrepreneurs for up to 10,000 visas each year. The initial application requires proof of investment in a qualified project, evidence of an investment of at least $500,000, and the creation of at least 10 U.S. jobs.
The Brookings Institute estimates the EB-5 program has generated at least $5BB in investment and directly created at least 85,500 American jobs since its inception, with most of these gains realized since 2010.
In addition to direct jobs, the EB-5 program has supported the creation of countless other indirect jobs in communities surrounding EB-5 projects. For example, a manufacturing plant built with EB-5 investment may lead to new growth opportunities for parts suppliers, while a new EB-5 funded hotel can generate more demand for local restaurants and retail shops. That’s a hefty economic punch for a program that represents just 2.9 percent of all employment-based visas.
EB-5 applicants undergo two rounds of extensive background checks administered by the Department of Homeland Security and Department of State. This screening process is more robust than any other employment-based visa program, and pays for itself through fees.
Most EB-5 applications come through one of the approved regional centers, which market the program abroad, pool investment, and often facilitate the development of EB-5 projects. In the past 10 years, the EB-5 Regional Center Program has increased the number of EB-5 applications and supported the development of projects, substantially increasing the number of visas awarded and jobs created by the program.
The EB-5 Regional Center Program has been reauthorized every three years since 1992 by broad bipartisan margins. It is up for reauthorization again in September 2017.
The National Association REALTORS® supports legislation to reauthorize the EB-5 Regional Center Program before it expires. NAR also supports reforms to the EB-5 program that would address national security concerns, deter fraud and put Americans to work. If not reauthorized by Sept. 30, an estimated $6.8BB in foreign investment dollars and as many as 130,000 American jobs will be lost.
Congress has considered reforming the EB-5 program for several years, but has never been able to enact a reform bill. Significant differences on three key issues tend dominate these debates: (1) how to define rural and high unemployment areas; (2) whether the EB-5 program should have special visa allocations for projects in rural and distressed urban areas; and (3) what the minimum investment amount should be. In addition, critics of the program allege widespread fraud and abuse, poor accounting of where these funds come from and no transparency as to how these jobs are created.
Although there is not a lot of time to enact a comprehensive reform bill by September, there is hope that Congress will put integrity measures in place that will provide investors and U.S. officials with much needed certainty and security.
TAKE A DEEPER DIVE
This year may finally see enactment of an EB-5 reform bill. Change could:
• Permanently authorize the EB-5 Regional Center Program.
• Require regional centers to disclose financial statements related to EB-5 projects.
• Institute a screening process of the owners and managers of regional centers.
• Create a new process for evaluating foreign ownership of regional centers.
• Require investors to comply with additional regulations and laws.