EB-5 Visa: Immigrant Investor Program
In addition to increasing the statutory limits on immigration, among other policy changes, the Immigration Act of 1990 led to the creation of a new employment-based, fifth-preference visa category: the EB-5 visa, otherwise called the Immigrant Investor Program. The legislation marked the first time a visa category specifically served to facilitate the admission of investors as lawful, permanent U.S. residents, and since its inception, the EB-5 remains the only category with this end. Each year, a maximum of 10,000 EB-5 visas are allocated to eligible intending immigrants.
Purpose and History
Congress justified establishing the EB-5 visa as an effort to stimulate economic growth and domestic job creation. By allowing alien entrepreneurs a more seamless pathway to lawful permanent residency in the U.S., the program sought to catalyze investment in American enterprises. Shortly after the category’s debut, legislators created the Immigrant Investor Pilot Program, with the goal of increasing interest in the program. Authorized in 1992, this pilot program designated certain business entities as eligible for special designation from U.S. Citizenship and Immigration Services (USCIS). These entities, more commonly known as EB-5 regional centers, are approved to administer EB-5 investments on the basis of proposals indicating their ability to promote job growth. Regional centers are given special designation principally because the areas in which they’re located would otherwise find it difficult to attract domestic investment based on current regional economic trends, including high unemployment. As of June 2017, USCIS designated more than 850 regional centers.
Over the subsequent years, compelled by fraud and lax administration of EB-5 investments, USCIS overhauled the Immigrant Investor Program, implementing requirements including applicants’ showing proof that investment monies originated from lawful sources, prohibiting guarantees of investment returns, and clarifying the types of commercial enterprises that are eligible under the category. As a consequence of the new regulations, the number of EB-5 applicants sharply decreased. Accordingly, in 2003, Congress passed the Basic Pilot Program Extension and Expansion Act to institute additional reforms and reinvigorate interest in the EB-5 program. This legislation created the Investor and Regional Center Unit, which, starting in 2005, centralized auditing, oversight, regulation, and policy changes related to EB-5 administration. Originally, EB-5 petitions were processed and adjudicated at two centers, one located in California and the other in Texas. As of 2009, however, EB-5 processing has been centralized at the California Service Center. A multi-year transition to relocate the EB-5 processing center to Washington, D.C. is currently underway.
Notably, the EB-5 regional center pilot program has yet to become a permanent fixture of immigration law, and instead has been prolonged by way of successive reauthorizations. The most recent reauthorization occurred in May 2017, and allows for the program to continue without changes through September 30, 2017.
Visa Program Overview
EB-5 visas are reserved for immigrants who have invested, or are in the process of investing, at least $1 million in a new commercial enterprise that employs at least 10 full-time U.S. workers no later than two years after the petitioner receives an approved Form I-526, Immigrant Petition by Alien Entrepreneur. The investment requirement is cut in half for aliens investing in regional centers and targeted employment areas (TEAs), which are rural locations or areas with unemployment rates greater than 150 percent of the national average. Investment in regional centers, moreover, allows for a less restrictive job creation requirement, with USCIS accepting “indirect” jobs, or employment opportunities arising ancillary to the investment but not a product of the enterprise invested in itself (e.g., those created by other businesses servicing the enterprise or generally part of the supply chain). Of the 10,000 EB-5 visas allocated annually, 3,000 are reserved for TEAs, and 3,000 are reserved for regional centers.
For more detailed information on EB-5 requirements, click here.
Trends
Nearly 30 years after its creation, it’s safe to say the EB-5 program is no longer hampered by a lack of interest. While no more than several hundred EB-5 petitions were filed in the early 1990s, demand currently exceeds statutory capacity. The past decade in particular has featured an uptick in interest. In 2008, USCIS awarded a total of 1,360 EB-5 visas; by 2012, the agency had issued more than 4,000. In addition to a series programmatic overhauls and improvements, an underlying reason for the increase has been China’s economic growth, which has led to the rise of hundreds of thousands of independently wealthy individuals. (In 2016, mainland-born Chinese entrepreneurs alone accounted for more than 75 percent of EB-5 visas issued.) An additional factor was Canada’s termination of its analogous foreign investor program in 2014, which effectively reduced the pathways available specifically to international investors to immigrate to Western countries. Take a look at the table and graph below, which demonstrate the growth in the EB-5’s popularity.
