With the end of year extension, policymakers and stakeholders have six months to figure out a way forward for the EB-5 visa investor program, which offers a path to US Citizenship to people who lend a minimum of $900,000 to a U.S.-based project that creates or retains at least 10 US jobs.
But over the past years, there has been a lot of controversy surrounding the program. In September 2019, Senators Chuck Grassley and Patrick Leahy introduced legislation to tackle fraud, abuse and national security threats in the EB-5 Investor Visa Program. Their bill was not passed into law.
Ron Klein, a lobbyist and former Florida state representative, says the industry supports anti-fraud measures. It also doesn't have a problem with specific fixes that would incentivize EB-5 investment in more rural areas, which senators like Grassley want.
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But Klein says minimum pricing limits on projects are a problem.
"There's a differential right now in the rule between the projects within the urban core areas, or the areas that are considered the more desirable ones, and the less desirable ones for doing development or manufacturing," Klein says.
Klein also says the prices of the visas in attractive areas are getting too high for investors. "There's no market for $1.8 million for these visas," he says. "You can do these for $500,000 or $700,000 around the world. So they're pricing this thing out of existence."
Right now, there is also a backlog of visas to get into the program. Traditionally, if an investor were approved, they would bring their family with them, which would require multiple visas.
"If there is the investor, plus three family members, that's four visas right there," Klein says. "That just gobbles up the whole thing."
If a family of four, for instance, was given one unit instead of four visas, Klein thinks that could fix the problem.
In the original law, Klein says 10,000 units should have been set aside instead of 10,000 visas. "The number of units is really just driving up the number of visas," he says. "That's another way of expanding out the number of visas that are available in the program."
Another alternative would be to allocate the number of visas not used in previous years to the backlog. "There is, at least on paper, a cumulative number of visas that you don't have to allocate to newbies," Klein says. "These are just visas that were previously approved, but never used. You can use those visas to retire the backlog."
Another way to handle the backlog would be to have investors pay an extra premium to the government for expedited processing of a visa versus waiting in the backlog for years. "You could pay an additional $100,000 per visa, and that will allow you to get processed immediately," Klein says. "This is just a way of creating a lot of cash for the government to use on immigration, whether the Republicans want to build a wall or Democrats want immigration judges or processing or whatever it may be."
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
