Concerns over the EB-5 “Gold” visa have been revived since Senior White House advisor Jared Kushner’s sister pitched the prospect of EB-5 immigration visas to Chinese investors. While the program may appear an easy path to permanent residency, any business banking on this program should fully understand the risks.
The EB-5 visa is an employment-based immigrant visa that enables foreign nationals to qualify for green cards based on investment and job creation in the United States.
Congress created the EB-5 program in 1990 to stimulate the U.S. economy through employment creation and capital investment by foreign investors. In order to promote employment in the United States, the EB-5 program provides foreign nationals with the opportunity to obtain lawful permanent residence in the United States for themselves, their spouses, and their minor unmarried children by making a certain level of capital investments and associated job creation or preservation of domestic business.
There are two distinct pathways for an EB-5 investor to qualify for lawful permanent residence in the United States—the Basic Program and the Immigrant Investor Program. To qualify under the Basic Program, foreign nationals must invest at least $1,000,000 in a U.S. business that will create or preserve at least 10 full-time jobs for U.S. citizens or employment-authorized immigrants in the United States. Alternatively, the program allows foreign nationals to invest $500,000 in exchange for permanent residency if the investment is made in a targeted employment area, defined as certain rural areas or high unemployment areas.
The “Immigrant Investor Program,” established by Congress in 1992, allocates EB-5 visas specifically to investors in designated “Regional Centers.” Regional Centers are businesses and development projects approved by USCIS that have jurisdiction over a limited geographic area and serve the purpose of concentrating pooled investment in defined economic zones. Federal regulations define a Regional Center as “any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.” Originally enacted as the “Immigrant Investor Pilot Program,” the Regional Center Program was initially designed as a pilot program set to expire after five years, but Congress has continued the program to the present day. As of May 1, 2017, USCIS has approved 883 Regional Centers. More information can be found online by clicking here.
While the Immigrant Investor Program is a key aspect of our immigration laws, it has yet to become a permanent fixture in the United States. The Regional Center Program is subject to a sunset provision, making it available only for a temporary period of several years, unless Congress opts to extend it. Congress has regularly reauthorized the program on a bipartisan basis, most recently on May 5, 2017, when Congress extended its authorization until September 30, 2017 through the FY 2017 Omnibus appropriations bill.
Despite its popularity, concerns regarding investment integrity have cast doubt upon the EB-5 program. In two recent reports, the Government Accountability Office said that the program was subject to fraud and the economic benefits questionable. A bipartisan group of legislators proposed changes this year that would have focused on the original intent to encourage investment in rural and distressed urban areas, and curb fraud.
In addition to those issues, the process for extending the immigration program creates anxiety for investor businesses that rely on future funding, as well as foreign nationals’ ability to create at least 10 full-time jobs in the United States. Congress often announces the extension of the sunset date at the last minute, causing cases to be filed hastily before the deadline, while each new sunset date raises the possibility of the programs’ expiration.
Employers should be aware that the process to secure permanent resident status as an EB-5 investor can easily take five years or longer. This time frame can fluctuate dramatically depending on visa availability and retrogression of priority dates that are determined on a month-to-month basis by the Department of State. Furthermore, foreign investors must undergo background checks and medical evaluations to qualify. More importantly, investors are responsible not only for making the significant capital investment, but also for creating the requisite number of jobs for U.S. workers within two years of the investment.
Overall, the number of green cards issued through the EB-5 program is relatively small, with up to 10,000 immigrant visas available to qualified investors annually, 3,000 of which are devoted to those who invest in a federally regulated Regional Center. Government oversight plays a critical role in ensuring the program avoids the risk of fraud.
Although the ‘Golden Visa’ has been subject to criticism, advocates believe that employers and U.S. workers would equally benefit from the advancement of the EB-5 program and its potential for stimulating positive changes to U.S. immigration policies and the employment landscape. Akerman’s immigration attorneys can provide further guidance and details for investors wanting to explore this option.