Let's Eliminate EB-5 & Golden Visas

The EB-5 visa program, created by a 2009 Congressional Act to stimulate the economy, may have served its purpose after the financial crisis, but today’s economic conditions tell a different story. With consistent GDP growth since 2009, the US economy is doing well without relying on foreign investment.

However, the influx of foreign investors, particularly through EB-5, is contributing to housing affordability issues. Real estate, the second-largest investment sector after hotels, has been heavily targeted, with California receiving the most funds and 94% of those coming from China. What began as a recovery tool may now be driving up real estate costs, complicating the housing market for many Americans.

Investment Pathways to US Citizenship

Each year, around 140,000 visas are issued to individuals seeking to immigrate to the US based on their job skills, allowing them, along with their spouses and children, to establish permanent residency.

These employment-based visas fall into five categories. The highest priority, EB-1 visas, are designated for individuals with extraordinary talents in fields like science, arts, education, business, athletics, and research, as well as for multinational executives and managers.

Another notable category is the EB-5 visa, reserved for investors who contribute to US job creation. To qualify, applicants must invest $1.8 million in a new commercial enterprise that creates at least 10 full-time jobs for US workers. This investment threshold is lowered to $900,000 if the investment is made in a targeted employment area.

The EB-5 program has long been a powerful tool for boosting economic growth without taxpayer funding. Though EB-5 visas make up less than 1% of all US visas, they have a significant impact on job creation and community development. In just one recent two-year period, EB-5 projects generated more than 355,000 US jobs through $11 billion in capital investments.

Recent Changes to the EB-5 Program

Like all visa programs, the EB-5 program has encountered instances of fraud, often through certain Regional Centers authorized by USCIS to manage investment projects and attract EB-5 investors.

To address these issues, the bipartisan EB-5 Reform and Integrity Act was introduced by Senators Grassley and Leahy in September 2019. If passed, this bill would:

• Extend the EB-5 program through September 2024.
• Strengthen the Department of Homeland Security’s (DHS) ability to deny or terminate applications linked to fraud, criminal misuse, or threats to national security.
• Establish an "EB-5 Integrity Fund."
• Implement background checks for Regional Centers and project principals.
• Increase transparency with investors through additional disclosures.
• Require stricter oversight of projects to ensure securities compliance.
• Improve job calculations to confirm projects meet the 10 jobs per investor requirement.
• Boost accountability and decrease petition processing times.

Current Developments

The National Association of Realtors (NAR) supports the proposed reforms, though the bill has yet to pass. The current EB-5 program, which was due to expire in September, has been temporarily extended through December 11, 2020, as part of a Continuing Resolution to fund the government.

The EB-5 and other "golden visa" programs, originally created to boost the US economy after the 2009 financial crisis, have arguably outlived their purpose. With steady GDP growth since then, it's clear that the US economy is strong without relying on foreign investor programs.

These visas are now contributing to rising real estate costs, exacerbating housing affordability issues. Real estate, the second-largest investment sector after hotels, has seen significant foreign investment, particularly in California, with 94% of funds coming from China.

Eliminating the EB-5 and similar visas could help reduce pressure on the housing market and ensure better access to affordable homes for Americans, rather than continuing to prioritize foreign investment in an already competitive real estate sector.

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