By all accounts, the EB-5 program, which provides foreign investors with lawful permanent residency and a path to US citizenship in exchange for qualifying investments in job-creating U.S. enterprises, has had a positive impact on the U.S economy. From FY 2008-2015, EB-5 attracted over $13 billion in foreign direct investment, supporting more than 30,000 jobs per year, according to IIUSA, the EB-5 industry trade association There are currently over 22,000 EB-5 investor applications pending with the federal government, representing an additional $11 billion in capital investment ready to be injected into the U.S. economy.
While these achievements are impressive, recently, the program has experienced some growing pains. Soaring application receipts have outpaced the ability of the U.S. Citizenship and Immigration Services (USCIS) to timely adjudicate petitions resulting in longer wait times. There are only 10,000 visas allocated annually for this visa category, and considering the program’s popularity, this supply has proven to be clearly deficient. Chinese investment in EB-5 projects, which previously comprised more than 80 percent of the market, has cooled due to substantial backlogs and prominent project failures. Consequently, the market has experienced a shift to countries such as India and Brazil. There is also a fierce worldwide competition to attract foreign investment via similarly structured visa programs.
A consensus within the industry was reached on how to improve the program and the need to make it permanent. There, in fact, have been several legislative attempts to reform the program. These initiatives include allocating more visas, providing greater oversight and transparency from the regional centers which sponsor projects, increasing the investment amount, and creating visa set-asides to incentivize investment into rural and urban distressed projects. Thus far, all legislative efforts have failed, ensnared in the larger immigration debate. These legislative failures have resulted in a series of short-term program extensions, casting a shadow of uncertainty over the regional center program, which is currently set to expire on March 23, 2018. It is possible that in lieu of a legislative fix, USCIS will implement onerous regulations, which would not be healthy for the long-term.
The future of the regional center program therefore remains unclear. This, of course, has not stopped developers from continuing to use the program to raise capital nor has it prevented regional centers and offshore agents from aggressively marketing their projects. Irrespective of the looming program changes, there still remains a healthy investment appetite for EB-5. Hopefully, a solution will be reached that will ensure the future of the EB-5 program – a powerful job creation tool and economic engine for direct foreign investment into the United States.
Roger Bernstein is a partner at Saul Ewing Arnstein & Lehr LLP and Vice –Chair of the Global Immigration and Foreign Investment Practice Group He also is a principal of EB-5 for Florida Regional Center, LLC, a federal USCIS designated regional center located in South Florida.