For years, members of the House of Representatives and a number of members of the Senate have expressed concern over the EB-5 visa program. These concerns are generally premised on the belief that the EB-5 program is being abused by developers. This is creating a scenario where individuals in rural areas believe that the promised benefits of EB-5 investment are not being delivered. Rather, they charge that the practice of gerrymandering is allowing EB-5 regional centers and developers to construct luxury projects in urban high-wealth areas. 

Over time, general concern and anxiety over the state of the program have developed into specific calls for changes and amendments. While the program has been extended without changes in the past, the current process and developments suggest that changes to the program or the end of EB-5 are more likely that ever. Therefore, interested parties are encouraged to explore the possibility of a protective EB-5 filing with an experienced investment visa lawyer.

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House Committee Held an EB-5 Visa Hearing on March 8, 2016

As previously announced, a hearing regarding the perceived problems impacting EB-5 and the Regional Center Program was held on March 8, 2016. The hearing included the testimony of a number of long-standing critics of the current EB-5 approach such as Senators Chuck Grassley and Patrick Leahy. In additional, representatives from affected government agencies and private companies were also present to testify at the hearing.

In his remarks, Senator Patrick Leahy emphasized the fact that “Only three percent of EB-5 investors now invest in rural areas…Less than 10 percent invest in true high unemployment areas.” Leahy states that nearly all other EB-5 and regional center projects make use of a process known as gerrymandering to locate EB-5 projects in high-wealth areas.

When Leahy refers to gerrymandering, he is borrowing a political term. In the 19th century, the term gerrymandering was coined to describe practices by politicians that drew voting districts on the basis of likely electoral success and not common sense factors like town borders, shared culture, or other logical factors. These practices resulted in oddly shaped voting districts where, in some cases, only a thin strip of land connected two non-contiguous areas. Applied to the EB-5 program, Senators charge that developers are able to locate EB-5 projects in urban, affluent areas by connecting a small wealthy tract where the project will be located with a larger economically distressed area.  

Furthermore, a Congressman Darrell Issa posed this question to a witness:

“For such a small program that is so over-subscribed … why would we have two tiers of investment at all? …  We wouldn’t we require that you invest in underserved areas?”

This suggests that perhaps revisions to the law will restrict projects to being located in targeted employment areas (TEAS). It is unclear how investment levels would change if the program was amended to a single tier, however, many industry watchers do expect an increase in minimum investment levels. This statement once again indicates a willingness to tweak EB-5 such that more or all of its benefits are delivered to rural areas or economically distressed areas of high unemployment.

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What Do These Comments Mean for EB-5 Immigrant Investors?

These comments seem to indicate that members of Congress from both parties seem to agree that some changes need to be made to rules regarding where EB-5 and regional center projects can be located. During the hearing, various individuals praised the proposed EB-5 geographical reforms published in a rule-making document by the Department of Homeland Security and previously discussed on this blog. The geographical rules may be limited to defined census tracts or other practices intended to limit the impacts of gerrymandering.

While these changes may be positive for American society at large, they are likely to have a negative impact on the appeal of an EB-5 investment. Under the current system, developers and immigrants can carefully plan to provide for a high likelihood that the job creation requirement will be satisfied. If EB-5 and regional center projects are pushed into only the most distressed or least developed areas, the job creation requirement and other aspects of the program may be significantly more difficult to satisfy. It is important to note that the failure to satisfy the job creation or other requirements can mean that you will not be able to receive the permanent green card and a path to citizenship.

Work with Strategic EB-5 Visa Lawyers of Colombo & Hurd

If you are considering an EB-5 investment to provide a path to a green card and U.S. citizenship for yourself and qualifying family members, the guidance of immigration lawyers is essential. While USCIS has not announced a protective filing program or grandfathered status, the only way to be positioned to benefit from such a procedure is to have filed an application before program changes are introduced.

To discuss how the immigration attorneys of Colombo & Hurd can help you approach EB-5 and the immigration process tactically, please call (407) 478-1111 to schedule a confidential consultation.