As the 4th of July approaches, EB-5 attorneys are reflecting on the significant impact of the EB-5 investor visa program on the U.S. economy and the ongoing challenges it faces ahead of its potential revamp in 2027.
The lawyers consider that since its establishment in the late 1990s to stimulate economic development in the U.S., the program has not only fulfilled its original purpose but exceeded expectations by creating a significant number of jobs, thereby contributing to the country’s prosperity.
“It has worked to do just that,” says Bobi Ahn, managing member at Ahn Law Group LLC. “The EB-5 Program has become an increasingly important socio-economic stimulus tool that delivered capital investment to U.S. businesses and created jobs for American workers.
Johanna Keamy, EB-5 immigration attorney at Keamy Tavares & Associates, APLC, adds: “Fortunately, the Reform and Integrity Act [RIA] passed in March 2022 re-established the EB-5 regional center investor immigration program, making it possible for foreign investors to immigrate to America.”
Charles Foster, the chairman of the Houston-based Foster LLP and leader of the firm’s EB-5 practice group, emphasizes the program’s distinctive investment requirements. “At its best, it allows significant projects to be developed and individuals and companies to be employed that otherwise would not happen. It also helps save significant historic properties through development.”
Meanwhile, Matthew Kolodziej, an immigration attorney and a Jia Law Group (JLG) partner, highlights its capacity to drive economic growth if implemented properly. “It can attract bright, accomplished, high net-worth entrepreneurs who want to invest in and develop new businesses and projects in the U.S. and can incentivize that type of growth/infrastructure development in areas that need it most (rural, high unemployment, etc.).”
Carolyn Lee, principal and founder of Carolyn Lee PLLC, adds: “All of us involved in the EB-5 ecosystem have a bit of fairy dust we’re stewarding. We’re mixing U.S. job creation and economic development with the opportunity for investors to weave uniquely into our vibrant and expansive culture. It’s a privilege to be a part of this.”
Due to its unique investment nature, the EB-5 investor visa program has evolved into more than an immigration program. It has become a vital tool for economic development, a factor that Congress and government authorities would consider as the industry prepares for its potential update in 2027.
What is the EB-5 investor visa program’s contribution to the U.S. economy?
Several studies show that the EB-5 investor visa program significantly benefits the U.S. economy by attracting foreign investment and creating jobs, especially in underserved rural areas.
EB-5 trade organization Invest in the USA (IIUSA) says it has generated $52 billion in capital investment since its inception, “all at no cost to the taxpayer.”
However, IIUSA notes a significant decrease in the program’s activity between 2016 and 2022, based on the number of Form I-526 petitions received by the U.S. Citizenship and Immigration Service (USCIS). This decline has reduced EB-5 capital investments in the U.S., arguably due to program instability, longer processing times, and visa availability issues. The organization is currently commissioning a new study to analyze the economic impact of these factors on the U.S. economy.
Overall, EB-5 attorneys agree that the contribution has been significant beyond this massive capital inflow into the U.S. economy.
“With the changes introduced by the [RIA] in 2022, which introduced reserved visas for investors preferring rural, Targeted Employment Areas (TEAs), and infrastructure projects over other EB-5 projects, and concurrent filing for adjustment of status, demand for EB-5 visas increased,” Ahn Said. ”More foreign EB-5 investors are choosing to invest in the rural/TEA areas after the COVID slowdown and resurgence of normalcy in 2023 and 2024.”
Keamy points out several collateral benefits of this direct investment in low-unemployment areas. “This leads to significant local economic development in designated areas, from elderly care homes and real estate projects to transportation, schools, and public facilities that enhance services. New businesses are increasing spending and benefitting the mom-and-pop stores. Foreign investment allows the U.S. to maintain its competitive edge as a world power and not become stagnate. Entwined in the economic boost are diverse perspectives, skills, and cultures. Investors participate in local communities and exchange innovative ideas, enriching many Americans with new business partners and friends for a lifetime.”
KLD LLP partner Phuong Le affirms that many communities and cities across the U.S. have been transformed through the EB-5 program. “Throughout the years, we’ve worked on deals ranging from charter school campuses throughout the southwest to Bay Area multifamily housing, a free public wifi utility infrastructure project in New York, and everything in between. We see the transformative power EB-5 continues to have today as we see more projects in rural areas than ever before. Hopefully, by the time reauthorization comes around, we’ll be able to point to a wide variety of infrastructure, urban, and rural projects to show that the program’s versatility is unmatched.”
Foster exemplifies the particular contribution the program has made in recovering historic buildings in Houston, Texas, where he’s based. “Interestingly, the two most exciting real estate projects in recent history have, to one degree or other, been made possible by partial funding through the EB-5 program […] A beautifully designed high-rise hotel and condominiums with award-winning restaurants and the best views of our dramatic downtown skyline, and […] project involving a complete gutting and remodeling the shell of the former regional U.S. post headquarters site, which was the largest undeveloped property in downtown. The EB-5 program also funded and helped save the historic 1914 Texaco building, which had long been abandoned.”
Immigration attorney Tahmina Watson also points out the program’s contribution to rejuvenating areas in collaboration with local real estate developers and business leaders. “For example, in Seattle, Washington, several hotels initiated bustling business neighborhoods through EB-5 investments.”
Kolodziej emphasizes that the EB-5 visa offers a more efficient alternative for entrepreneurs facing delays in other application processes. “Immigration processes are not available to entrepreneurs, or there are backlogs of 10-20 years or more on top of lengthy DOL [Department of Labor] processing times, or strict limitations on allowable employment that just don’t work for this pool of individuals.”
Watson highlights the particular contribution EB-5 direct investments make to struggling communities. “Direct investments into businesses in the U.S. are particularly admirable. These investments not only create jobs and economic improvements for the areas where funds are invested but also often keep alive beloved community hotspots that might otherwise not survive”
She adds: “Direct investments can provide local businesses with funding that they might not otherwise receive from banks. These businesses are the backbone of American cities and neighborhoods, helping to build and maintain a sense of community. Through such investments, America gains new, hardworking, and visionary business leaders who keep the American Dream alive.”
Attorneys see current and future challenges to the continuation of the program
Tammy Fox-Isicoff, co-founder of Rifkin & Fox-Isicoff, P.A., says that the EB-5 program will continue drawing foreign capital despite the recent fee hike that tripled the cost of applying, mainly due to high interest rates.
“With interest rates high, EB-5 money is cheap and desirable money. The RIA separated the men from the boys. Many EB-5 Regional Centers will cease to exist or cease to operate because of the onerous administrative and financial burden. This leaves behind the more successful Regional Centers willing to jump through the new administrative burdens created by the RIA because EB-5 money provides them with cheap capital to engage in projects. EB-5 money often makes projects that would not have come to fruition because of the cost of money doable.”
According to Keamy, this high interest rate opportunity is particularly attractive for foreign investors in backlogged countries and entrepreneurs already on another visa in the U.S., thanks to concurrent filing allowed by RIA. “At the present time, foreign nationals, particularly those subject to long visa wait times from countries such as China and India, have a tremendous opportunity. For those foreign nationals presently in the U.S. in valid nonimmigrant statuses such as student status (F-1) or H-1B (Skilled labor) or another nonimmigrant status that want a plan for a green card, [there’s] an unprecedented opportunity to file an I-526 in the EB-5 program and simultaneously file for adjustment of status with work and travel document because the categories in rural, high unemployment and infrastructure are current. The best idea for those in the U.S. is to file the I-526 and get a spot in line with travel and work authorization with a potentially long wait for the green card, but at least the place in line is secure, and the applicant can work and travel.”
However, Keamy emphasizes that there is a deadline for this timing. “It will not last forever, so foreign investors looking for a green card under EB-5 should take this opportunity while it lasts.”
As more applications are expected due to this more advantageous scenario, many EB-5 attorneys also underline pending issues that must be solved for the program to take on this higher number of applications.
“As with all investments, foreign nationals must be cautious and aware of fraud and mismanagement of EB-5 funds. They should employ strong due diligence practices and be aware of red flags to watch for in projects and regional centers,” Keamy adds.
Jason Feldman, an immigration attorney and a partner at Feldman Feldman & Associates, is adamant that if the USCIS maintains the current slow processing times, the program could lose its appeal. “The lengthy processing times have been a major deterrent for many prospective participants in the program. Wealthy businessmen typically don’t want to make a large investment into a business and then have to wait years to be able to come to the U.S. to oversee and run that business.”
The current arbitrary application of adjudication standards by the USCIS reportedly contributes to the slower processing times issue, according to Ying (Elissa) Lu, an EB-5 attorney and managing attorney of the immigration law firm of the Law Office of Lu & Associates.
“These changes create uncertainty and unpredictability in the outcome of EB-5 cases, making it challenging for investors to navigate the process confidently. In addition, the super long processing times are a major concern,” she adds. “This extended period of uncertainty affects the investors’ financial planning and disrupts their personal lives, leading to significant emotional and psychological stress. The inconsistency in adjudication standards and prolonged processing times undermine the attractiveness and reliability of the EB-5 program, potentially deterring future investors and harming the U.S. economy.”
Meanwhile, Kolodziej summarizes key challenges into two main categories: lack of clarity in the implementation of RIA and the absence of clearer procedures for pre-RIA EB-5 investors. “If we want to stay competitive with attracting high-net-worth individuals to bring fresh development and reinvigorate businesses and projects here in the US, especially in areas where no one else is investing in, as EB-5 incentivizes them to do, we need to make the process more efficient.”
Lastly, securities attorney Robert Cornish Jr. notes that the program’s future success also hinges on better investor education and high-quality projects. “If EB-5 is to have a lasting impact by creating high-paying jobs, whether blue-collar or white-collar, investors need to be more educated about their options. The question is whether industry participants have the patience to do that and whether the projects with significant financial strength are ready. The wild card, in my view, is infrastructure. If the industry can figure out how to structure infrastructure deals, EB-5 financing could very well be the savior of communities that do not wish to be crushed by rising interest rates in the municipal bond markets.”
As to the future renovation of the program, Le concludes: “It’s more important than ever to maintain a standard of integrity and professionalism in our EB-5 industry. Our industry has, thankfully, matured much more rapidly in the last few years, and many of us treat it as seriously as any other finance/investment program, complete with the investor protections and oversight that’s needed. Let’s keep it that way as we inch closer to reauthorization.”
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