We have written extensively about the expiration of the EB-5 visa and regional center programs last September 30th and the temporary reauthorization measure that provided the program with a much-needed lease on life. However, the extension was merely a short-term measure that did not address many of the concerns regarding the EB-5 program. While some critics have attacked the program as being wasteful, others have called for the expansion of the EB-5 program since it brings capital investment to the United States. While many people get caught-up in the minutia of the program, it is important to recognize that the EB-5 program allows some of the world’s best and brightest to invest in the United States while making the country their permanent home. This program attracts entrepreneurs and other successful job creators to the United States from abroad which is likely to reinforce the American entrepreneurial spirit while creating much-needed full-time jobs for American citizens. Senator Jeff Flake’s reform is one of many bills competing to become part of the final EB-5 reauthorization and reform bill. We have already looked at competing proposals from Senator Paul and from Senators Leahy and Grassley. Here, we will look at some of the changes this reform would bring.
Flake’s EB-5 Reform Would Re-Define “Areas of High Unemployment” & “Rural Areas”
One of the concerns raised by proponents of EB-5 reform has been that the program’s drafting permits gerrymandering targeted employment areas into existence. For many investors facing strict capital controls, like Chinese investors, targeted employment areas (TEAs) are preferred because of the reduced levels of investment required. Whereas an EB-5 investor would typically be required to place at least a $1 million investment “at risk”, investors who invest into a project situated within a TEA are required to invest only $500,000. However, critics contend that gerrymandering has robbed rural regions of the promised economic benefit. Senator Flake’s reform measure would attempt to fix this concern by defining a “high unemployment area” as a “census tract or group of census tracts that are economically integrated”. Furthermore this tract or these tracts must also account for commuter traffic flow patterns and satisfy the 150 percent of the average national unemployment rate requirement.
However, critics have already attacked Senator Flake’s proposal stating that the language in the bill would not make a significant difference compare to how the system is currently arranged. They charge that this approach would be open to the same types of abuses that currently occur since a clever statistician or sociologist could theoretically use commuter data in a way that gerrymanders a “high unemployment area” into existence. If our centuries of difficulties addressing political gerrymandering is any guide, it will be difficult to craft a perfect solution to human ingenuity. Furthermore, the bill would redefine the term “rural areas.” Rural areas would now include any zone that is outside of a metropolitan statistical area. Rural areas would also include cities or towns with a population less than 20,000 located within a metropolitan statistical area, a city or town with fewer than 20,000 people within a state with less than 1.5 million citizens, and areas with a population density less than 500 people per a square mile.
Other Aspects of EB-5 Visa Reform Bill
Senator Flake’s Eb-5 reform would also include a number of additional measures and changes to the program. These changes include:
- Once authorized TEAs would remain valid for up to five years.
- If an immigrant investor makes an investment into a TEA but the TEA later loses that status, the immigrant would no longer be required to increase his or her investment.
- 5,000 of the 10,000 total EB-5 visas would be reserved for those who invest into TEAs.
- Targeted employment areas would be expanded to also include those areas negatively impacted by a military base closure contingent upon recommendation by the Defense Base Closure and Realignment Commission.
These reform provisions would address some of the concerns regarding the EB-5 program and the need for reform. However, this is merely one of the many competing reform bills currently introduced in the House and Senate. The final law is likely to have significant differences in comparison to the above.
Rely on our EB-5 Guidance in Miami & Orlando
If you are seeking guidance prior to engaging in the EB-5, contact the experienced immigration lawyers of Colombo & Hurd today. To schedule a private immigration legal consultation call 800-659-7142 or contact an Miami investor visa lawyer online today.