EB-5 investor visa program may face dramatic change
After years of short-term extensions, the fate of the EB-5 investor visa program is still unknown among local and national experts, but most agree that dramatic changes to the program are more likely than expiration.
The EB-5 immigrant investor visa program was designed to create jobs and spur national economic development by incentivizing foreign investment in commercial enterprises in return for a Green Card.
To participate in the program, investors must have a minimum investment of $1 million, or $500,000 in areas with high levels of unemployment – at least 150% above the national unemployment average.
The future of the program is uncertain, as Congress has had trouble passing a long-term extension, and continue pushing back the expiration date.
On Sept. 30, Congress yet again delayed the expiration to Dec. 8, and local and national experts are unsure what’s up next for the program.
“It’s a huge toss-up in Congress,” said Mikki Canton, managing director of the City of Miami EB-5 Regional Center, the only municipally run regional center in the nation.
“We have been waiting on it, extension after extension, and there is a sense of exhaustion and inevitability,” Ms. Canton said.
Though the continued short-term delays are designed to buy Congress more time to draft reforms, most people believe Dec. 8 will bring another short-term extension.
“Congress is really struggling with this issue, and the default position is to defer,” said Julián Montero, a partner in the Miami office of Saul Ewing Arnstein & Lehr and a member of the firm’s Immigration Practice Group. “Expiration is the least likely scenario, and the most likely is another short-term extension.”
“The Senate and the House will most likely incorporate the extension of the program into whichever appropriations bill is happening at the time,” said David North, a senior fellow at the Center for Immigration Studies, a Washington think-tank.
Critics of the program say there needs to be additional transparency, a higher investment requirement and more regulations.
“At this point, it is benefitting the developers,” said Ms. Canton. “But on the other hand, has is helped developers boost the economy and create jobs? Absolutely.”
Though many people believe the program has gotten out of control, Ms. Canton said more regulation can help get it back on track.
“We’ll see more integrity measures in legislation and a great deal of oversight and due diligence,” Ms. Canton predicted.
Though developers do not favor regulations, Ms. Canton said she believes it could reconnect the program with its original intent to drive economic growth in underserved areas.
“It’s going to make developers build incredibly wonderful things in areas they’d prefer not to,” Ms. Canton said about new EB-5 regulations. “Developers will develop where the need is and where they can; it will be more focused and we will have a renaissance.”
The Targeted Unemployment Areas (TEA) that reduce the minimum investment are not regulated nationally, and many critics of the program say developers are gerrymandering to take advantage of the EB-5 investment money and avoid directly investing in impoverished communities.
“The TEA concept is being studied more carefully to create one standard for every project, rather than states using census tracts” to connect economically diverse areas, Ms. Canton said.
“If gerrymandering is a problem, then it is up to Congress to fix it,” she said. “As you grow, you need to take a prudent look at where you are and what changes you need to make; the banking industry does it all the time.”
The program also has moral objections, as many believe that the US shouldn’t be selling visas to benefit already-rich developers.
“Morally, we shouldn’t be selling visas,” Mr. North said. “And if we’re going to sell our visas, we might as well make sure that the money received is going toward a public purpose, and this never does.”
If the program expires come December, nobody is certain about how it would play out.
“It wouldn’t stop abruptly,” Mr. North said. “It would protect the interests of the developers.”
Though Mr. North said he believes an end to the program would not hurt developers, Ms. Canton says they are the only party at risk if the program expires.
“Private developers are relying on the money to get the projects off the ground,” Ms. Canton said. “But [expiration] wouldn’t hurt any of the local projects or Miami’s industry.”
Though roughly 80% of immigrants entering the US using EB-5 visas are Chinese nationals, Mr. Montero said that South Florida industry is unique. “The overwhelming percentage of investors in our market represent Latin America,” he said.
“Perhaps the South Florida market is a model of what a health EB-5 market is moving forward,” he said. “South Florida has a more diversified EB-5 market, and that makes it a healthier market.”
Miami’s market departs even farther from the national market in the operation of its regional center. Miami has one of the only publicly run regional centers in the US, and it can designate EB-5 projects in Miami-Dade, Broward and Palm Beach counties.
“Our center has been very careful to do projects in areas that are important to the city and to provide for the citizens’ needs,” Ms. Canton said. “We’re looking to provide workforce housing, elderly housing, medical buildings and mixed projects.”
“As a government run regional center, we are – and should be – held to a higher standard of transparency and compliance,” Ms. Canton said.
The planned Miami Marine Stadium renovation is to be partially funded using EB-5 money through the locally run regional center.
“The marine stadium is a perfect project because it’s an iconic jewel that defines our community and it will create a great deal of jobs in restoration and management,” Ms. Canton said.
As for future EB-5 projects, Mr. Montero said his team is active with several hospitality and restaurant related projects.
Ms. Canton said her team has been moving forward with the proposed Miami Veterans’ Village project and is looking at a number of new infrastructure programs.
“We’re excited about affordable housing and new multigenerational concepts that can bring together people from all walks of life,” Ms. Canton said.
“I welcome the changes,” she said. “With creativity and caution, this could be an extremely exciting time.”