How to Improve the EB-5 Investor Visa Program
In a recently released study the Brookings Institute analyzes the EB-5 Investor Visa program, specifically the regional center program, detailing its effectiveness and making recommendations for improvement. The program has been around since the early 1990s, but interest in it has dramatically increased in the past few years due to the Great Recession, which made access to traditional bank funding more difficult, as well as the rise of wealthy investors in developing countries. In particular, the rise of investment from China corresponds directly with increased use of the program, possibly from those who made fortunes in China’s real estate boom. The purpose of the Investor Visa program is to create American jobs through foreign investment and should be a win-win for both the immigrants and local communities. The investor obtains a green card and the communities receive a new source of funding for various projects in a time of economic uncertainty and more jobs in the region.
Yet, as the report demonstrates, the EB-5 program suffers from disorganization and opacity which hinders its overall impact.
Regional centers are essential to the EB-5 program as they are the entity which coordinates with investors, government agencies, and local communities to manage the investment. There are about 400 of them throughout the country but their composition varies throughout. Some are public entities, most are private and a few are public-private partnerships. Some coordinate with local and state development agencies and some don’t. Most regional centers share similar goals to public development initiatives, such as job creation, but the two organizations don’t often work together
USCIS adjudicates the regional centers by examining their economic models, marketing plans, and industry acumen. However, there is no government agency tasked with regulating and overseeing regional centers to make sure they are complying with the program’s standards and are not involved in fraud. In the past, the EB-5 program and regional centers have been susceptible to fraud. The burden falls on the investor to prove that the funds were legally obtained and if the regional center is found to mishandling investments or involved in fraud, the investor’s visa will be revoked- even if she had no knowledge of any misuse.
Additionally, there is a dearth of publicly available data about the program and its overall economic impact. For example, it is unknown exactly how many jobs have been created in the past two decades and which industries are supported by the program. This lack of available data only makes it harder to effectively monitor the program and make it accountable.
The report’s authors make recommendations on how to improve the EB-5 program in order to increase its efficacy, cohesion, and transparency.
- Designate an oversight role for the Department of Commerce
- Create incentives for partnerships between regional centers and EDA’s (Economic Development Administration)
- Generate high-quality, multi-variable public data on regional centers
The Department of Commerce already has extensive experience in promoting economic development and job growth in American communities which could greatly help regional centers direct their investments and achieve their goals. The Department could also connect regional centers with state and federal development agencies, which have parallel goals. Finally, with the cooperation of the Department of Commerce, the EB-5 program could produce more reliable data about its overall economic impact, making the program more transparent and easier to analyze and evaluate.
“Improving the EB-5 Investor Visa Program: International Financing for U.S. Regional Economic Development”. Audrey Singer and Camille Galdes. The Brookings Institute, Project on State and Metropolitan Innovation. February 5, 2014.