The EB-5 visa program, pursued by countless wealthy foreign investors, is being revived to restrict abuses.
A US visa program that has attracted $37 billion in foreign investment for projects such as New York's Hudson Yards and Trump Bay Street in Jersey City since 2008 is making a comeback — and the line of wealthy applicants is growing from China to India.
The resurrected EB-5 program is set to fund projects ranging from a golf resort in the Utah mountains to condos in rural Florida — all while allowing some new overseas investors to bypass years of waiting. The contentious initiative, which offers a green card in exchange for investing large sums in a US business and creating at least 10 permanent jobs, had a nearly decade-long backlog before being suspended in June 2021 when Congress failed to reauthorize it.
A settlement of lawsuits involving so-called regional centers, which allow foreign investors to pool their funds, was reached last month, putting the program back on track for new filings. Earlier this year, the Biden administration signed legislation that increases audits and site visits to deter fraud while allowing some companies to bypass the backlog of cases if they are willing to invest in rural areas or areas with high unemployment. According to the trade group Invest in the USA, approximately 100,000 EB-5 visa applicants with approximately $15 billion in committed investments have been left in limbo since the program expired.
Meanwhile, US law firms are preparing tens of thousands of new applications.
"It's like people lining up for movie tickets," said Sam Silverman, founder of EB5AN, an affiliate network with projects in more than a dozen states. “There’s a giant line with a limited number of tickets with a long wait, but then they just opened up two new showings with literally no one in line.”
China and India
The program's relaunch coincides with an increase in wealthy Chinese attempting to flee the country or looking for a backup plan. According to investment migration consultant Henley & Partners, 10,000 high-net-worth residents are planning to withdraw $48 billion from China this year, while another 8,000 Indians are planning to leave. After Russia, the two Asian countries are expected to have the largest outflows of wealthy residents this year.
According to a Department of State bulletin issued earlier in September, high demand for visas means that cases of more Indian and Chinese investors who applied previously may not advance due to shifting cutoff dates.
According to Ali Jahangiri, the group's founder and CEO, EB5investors.com held its first event in three years last week in Vietnam, attracting hundreds of investors, migration agents, lawyers, and capital seekers who set up booths advertising investment projects from Montana to Florida.
“The attendance was probably better than we’ve ever had in the past,” Jahangiri stated. “This thing had kind of been on hold, but the line has shortened.”
The program's restoration will benefit the US economy because, unlike other investment visa programs, it is fixated on job creation, particularly in less-developed areas outside of cities, according to Miami attorney Ronald Fieldstone, who has managed EB-5 projects worth billions. “A lot of the interesting things are going on in rural areas,” he added. “It's not just building skyscrapers.”
Nonetheless, the initiative, which began in 1990, has had its share of challenges. One of the numerous legal challenges brought by groups of Chinese investors, EB-5 investors requested arbitration in 2020 after Related Cos. informed them that payments from their Hudson Yards project on Manhattan's west side would be delayed because of pandemic-related losses. Others, such as the $600 million Staten Island Ferris wheel, have never materialized. Last month, two New York State citizens were charged $27 million in fraud after promising visas, large profits, and connections to then-President Donald Trump. Three defendants were jailed earlier this year in connection with a fraud operation that duped immigrants who invested in a biotechnology project in Vermont.
The initiative "is a complete and unmitigated disaster" that has generally failed to create jobs in vulnerable areas, according to Doug Litowitz, a lawyer who has represented a group of Chinese investors who invested millions of dollars into a condo and hotel project in Chicago that was never developed.
Such criticisms have heightened worries about the government's reluctance to prioritize development in low-income regions, such as the opportunity zones bill signed by Trump in 2017. Critics claim that while it was intended to aid disadvantaged areas, it ended up mostly benefiting affluent investors. According to Jahangiri, EB-5 projects are frequently located in opportunity zones.
The legislation enacted by Congress in March, according to a spokesman for US Citizenship and Immigration Services, "made significant changes to the program, including a requirement for the agency to directly review and determine the designation of high-unemployment" regions.
“USCIS will continue to ensure that each request for an EB-5-related immigration benefit complies with the statutory and regulatory framework,” the representative said.
Note: This website's content is meant to be general; it does not constitute legal or financial advice. Only a licensed expert with a total understanding of all the information and circumstances of your specific situation can provide legal or financial advice. Before enrolling in the EB-5 program, you should contact a visa attorney with legal, immigration, and financial knowledge.