Laura D. Francis, Bloomberg, July 23, 2019

Immigrants seeking a green card via investment will have to pay a lot more under a new Homeland Security Department regulation that has been years in the making.

The final regulation overhauling the EB-5 immigrant investor program, released July 23, bumps up the minimum investment amounts required for a green card for the first time in nearly 30 years. The minimums, currently at $500,000 and $1 million, will rise to $900,000 and $1.8 million when the regulation becomes effective Nov. 21.

The lower investment amount is less than the DHS’ original proposal of $1.35 million in January 2017, a particular area of concern for EB-5 stakeholders.

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It also reworks how the government determines those areas of the country where the lower amount can be invested and the investor can still get a green card. Under the program, the lower amount is allowed in rural areas or areas of high unemployment, known as “targeted employment areas.”

The regulation doesn’t do anything to relieve a growing green card backlog, which has resulted in Chinese nationals — the biggest users of the program — facing a 16-year wait for the roughly 10,000 visas available each year.

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Congressional Action Possible

The EB-5 program allows immigrants to invest a minimum amount in a U.S. commercial entity that creates at least 10 jobs for U.S. workers. The regional center portion — which makes up about 95% of the EB-5 program — allows immigrants to pool their investments and count indirect job creation toward the visa requirements.

The program has attracted more than $27 billion in investments since fiscal year 2008, according to Invest in the USA, a trade association representing regional centers.

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The program is set to expire Sept. 30, nearly two months before the regulation is set to go into effect. Each time the program comes up for renewal, “the ever-elusive deal” to overhaul EB-5 visas “is always punted” in favor of the status quo, said Doug Rand, a former assistant director for entrepreneurship in the Obama White House who worked on the EB-5 proposal.

“But this time it’s going to be looming under these new rules,” so “there’s an extra incentive” to make changes because the regulation ensures that the status quo is no longer an option, said Rand, co-founder and president of Seattle immigration services company Boundless Immigration Inc.

Senate Concerns

Sens. Charles Grassley (R-Iowa) and Patrick Leahy (D-Vt.), who previously led the Senate Judiciary Committee, have been the primary opponents of maintaining EB-5 in its current form, going so far as to propose ending it entirely. Sen. Dianne Feinstein (D-Calif.), currently the committee’s ranking Democrat, also has expressed similar concerns.

The regional center program has come under fire as a magnet for fraud in the wake of a series of Securities and Exchange Commission enforcement actions against various regional centers and their operators. That includes the Jay Peak ski resort in Vermont, which previously had been held out as a gold standard for the program.

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Redirecting Investments

The regulation removes the states’ authority to designate TEAs, a practice critics say has led to gerrymandering in order to attract investments. Instead, the DHS will determine TEAs, using a formula based on census tracts.

The regulation also allows any city or town with high unemployment and a population of at least 20,000 to qualify as a TEA, as long as the city or town is outside what the government considers a metropolitan statistical area.

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