EB-5 visa
The United States EB-5 visa, employment-based fifth preference category or EB-5 Immigrant Investor Visa Program was created in 1990 by the Immigration Act of 1990. It provides a method for eligible immigrant investors to become lawful permanent residents—informally known as "green card" holders—by investing substantial capital to finance a U.S. business as long as it creates at least 10 new, full-time jobs for Americans and work-authorized immigrants. The EB-5 program is intended to encourage both "foreign investments and economic growth." The EB-5 Immigrant Investor Visa Program is one of five employment-based preference programs in the United States.
Based on the EB‐5 Reform and Integrity Act, which was signed into law on March 15, 2022, the minimum investment requirement to qualify under the EB-5 program is $1,050,000. The investment requirement is reduced to $800,000, however, if the investment is made in a qualifying infrastructure project or Targeted Employment Area. Most immigrant investors who use the EB-5 program invest in a TEA—a rural area or area with the high unemployment rate in order to invest less capital. Investors who make a TEA investment or an infrastructure investment for the $800,000 investment minimum qualify for EB-5 "set aside" visas, which are broken down into three categories: infrastructure projects; projects in high-unemployment areas; and projects in rural areas.
Applicants have the choice of investing directly or through a "larger investor pool via regional centers ", which are federally approved investment issuers that "connect foreign investors with developers in need of funding, and take a commission." Regional centers are usually private, for-profit businesses that are approved by the U. S. Citizenship and Immigration Services which is part of the Department of Homeland Security.
As of April 4, 2023, there are 640 USCIS-approved regional centers, and as of March 2023, the "vast majority" of EB-5 visas were "granted through regional center." By 2015, the EB-5 program had become an "important source of capital for developers" and for the regional centers. If an EB-5 investment is made in a regional center, the jobs may be created indirectly through economic activity, as opposed to a direct investment.
As of April 23, 2020, 78,278 investors have applied for the EB-5 program. Nationals from a relatively small set of countries dominate participation in the EB-5 program. In fiscal year 2022, nationals from China, India, and Vietnam comprised more than three-quarters of EB-5 admissions, with China alone representing 56.3% of all admissions. On December 20, 2019, President Donald Trump signed a law extending the Regional Center Program through September 30, 2020. On March 15, 2022, President Joe Biden signed a law extending the regional center program through September 30, 2027.
Overview
The EB-5 visa provides a method of obtaining a green card for foreign nationals who invest in a "new commercial enterprise" in the United States. The EB-5 program "affords foreign nationals and their spouses and unmarried children under age 21 the ability to obtain a U.S. visa based solely upon a minimum investment in a for-profit enterprise that creates or retains a specified number of jobs". To obtain the visa, individuals must invest $800,000 or $1,050,000, creating or preserving at least 10 jobs for U.S. workers excluding the investor and their immediate family.If the foreign national investor's petition is approved, the investor and their dependents will be granted conditional permanent residence valid for two years. Within the 90-day period before the conditional permanent residence expires, the investor must submit evidence documenting that the full required investment has been made and that 10 jobs have been maintained, or 10 jobs have been created or will be created within a reasonable time period.
Commercial real estate projects result in job creation through construction work at first and eventually in the service industry, for example in hotels, restaurants, resorts and/or stadium development. For that reason, many of the EB-5 visa investments "target commercial real estate".
According to a 2022 study, most recipients of EB-5 visas are Chinese millionaires. Individuals from less developed countries and from authoritarian states were more likely to obtain the visas. According to the study, these findings suggest that "investor visas are used by elites in less developed countries to hedge against the risks associated with authoritarian rule. Such elites perceive investor visas as a foothold in a stable and democratic country that can provide an insurance policy or exit option."
2019 regulation
The US Citizenship and Immigration Services, published regulations making major changes in the EB-5 Immigrant Investor Program, effective November 21, 2019. The rules say that states can no longer designate regional centers; this duty now belongs to the Department of Homeland Security, which manages USCIS. This rule is intended to eliminate gerrymandering of TEAs.Sen. Chuck Grassley, who, along with Sen. Patrick Leahy, sponsored a bill in 2015 to curtail the fraud he found in the EB-5 program, supported the 2019 rule changes, particularly as the rule affected TEA designations.
Barron's reported that the November EB-5 changes would "likely result in some developments moving from wealthy hubs into more rural and distressed areas," as the EB-5 program finances various high-end condominium developments. Barron's also reported that the program generated around $5 billion a year for 10,000 visas.
EB-5 regional center investment projects
Hotel and multi-use developments financed with EB-5 investments include Hilton, Hyatt Hotels, Marriott's, Starwood's SLS Hotel & Casino. In 2016 Forbes cited Hudson Yards, Manhattan as a "fine example" of one of the "very successful projects" resulting from EB-5 investments.In southern California, EB-5 projects include Europa Village, in Temecula, the Hilton Garden Inn in El Monte, and the JW Marriott hotel at L.A. Live in downtown Los Angeles.
One of the major infrastructure projects in the EB-5 program is the recently completed I-95/Pennsylvania Turnpike connector, which completed the longest north–south route in the Interstate Highway System. Interstate 95, running from Maine to Florida, serves over 110 million people and 10 percent of the total US land area. The development began as part of the Federal-Aid Highway Act in 1956.
EB-5 direct investment projects
Select investors, especially from India, elect to invest in their own investment project. EB-5 direct investment projects include franchised restaurants, hotels, healthcare providers, preschools as well as other independent businesses. Funds can be pooled but it is more common for investors to have a controlling, majority interest in the business.It is possible to invest in a franchise for the E2 visa then convert to an EB-5 visa as long as the job requirement and investment thresholds are met.
History
1990–99
Congress created the employment-based fifth preference category visa program in 1990 to "create jobs for U.S. workers and to infuse new capital into the U.S. economy". At that time the program was directed towards "alien entrepreneurs" who would not only invest $1 million or $500,000 in a "new commercial enterprise" but would also "engage in the management of the new enterprise" creating ten full-time jobs for U.S. citizens or lawful permanent residents. In order to make the program more investor-friendly, Congress enacted the 1993 Appropriations Act which amended the EB-5 program to create the "Pilot Immigration Program" — the Immigrant Investor Pilot Program. Under the IIPP, foreign nationals could invest in a pre-approved regional center, or "economic unit , public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, or increased domestic capital investment". Investments within a regional center provide foreign nationals the added benefit of allowing them to count jobs created both directly and indirectly for purposes of meeting 10-job creation requirement. This was intended to help potential investors to meet "the program's stringent requirements" through passive investment. With the IIPP, the EB-5 visa became an investor's visa as opposed to an entrepreneur's visa.In c.1995 former Immigration and Naturalization Service officials formed a company called AIS that acted as an intermediary between INS and immigrant entrepreneurs in the EB-5 program. Whereas EB-5 required an investment of $500,000 AIS only required $125,000 cash with the rest — $375,000 in the form of a promissory note. AIS claimed the promissory note would "be forgiven once the immigrant's permanent residency application was approved". The U.S. immigration agency, which was then known as the Immigration and Naturalization Service, had interpreted the regulations regarding financial qualifications in a way that accepted this arrangement until c. 1998 when they were under investigation by the Government Accountability Office. There were allegations that the INS was giving preferential treatment to AIS in EB-5 matters. The INS changed their "interpretation of regulations regarding financial qualifications" as a result of the probe. In 1997 and 1998 two owner-operators of Interbank, Herndon, Virginia had "filed 320 false applications on behalf of 270 EB-5 immigrant investors. The INS raided Interbank in August 1998. The EB-5 program was temporarily suspended.
2000–09
Although no one in AIS or INS was charged, in 2000 the two Interbank operators were arrested, then convicted and imprisoned on dozens of counts of "money-laundering and fraud" in the largest case of EB-5 fraud. INS District Director Warren A. Lewis said, "Visa fraud whether done on the streets by selling fraudulent cards or through an elaborate financial scheme is against the law and will be investigated and prosecuted." Hundreds of immigrant investors "lured" to the United States had their permanent residency applications denied. Because of the INS investigation, the processing of 900 EB-5 cases was suspended, leaving immigrant families in limbo for years. When the GAO tabled their report in 2005 they concluded that immigrant investors were not utilizing the program because of the 900 EB-5 suspended files—some of which dated to 1995—as well as the "onerous application process" and "lengthy adjudication periods".According to a Brookings Institution and Rockefeller Foundation 2014 report, starting in 2008 there was a renewed interest in the "under-utilized" EB-5 visa program as the number of "wealthy investors" and "ultra-wealthy individuals" in emerging markets abroad increased and the access to "traditional domestic financing" in the United States had decreased because of the Great Recession.