07 May Summary of EB-5 Program Report by the Congressional Research Service
The Congressional Research Service released a comprehensive report on the EB-5 Immigrant Investor Visa dated April 22, 2016 (“Report”).
The Report provides an in-depth overview of the EB-5 visa category and the Regional Center Program, and serves as an objective analysis of the positive benefits of the EB-5 visa category and the Regional Center Program, while identifying program weaknesses that should be improved either through legislative or regulatory action.
The Report begins by giving an overview of the EB-5 visa category, including a brief history of the category’s creation by Congress. The Report also explains that 10,000 EB-5 visas are available annually to immigrant investors and their family members. In FY2015, there were 9,764 EB-5 visas used, with 93% going to investors from Asia. More specifically, 84% were granted to investors from China and 3% were granted to those from Vietnam.
The Report further details that in FY2014, 97% of all EB-5 visas were issued based on investments in regional centers.
Unlike the standard EB-5 visa category, which does not expire, the Regional Center Program is set to expire on September 30, 2016. Different policy issues surrounding the EB-5 visa have been debated. The Report recognizes that providing visas to foreign investors benefits the U.S.
economy, in light of the potential economic growth and job creation it can create. In addition, the Report notes that many EB-5 stakeholders have voiced concerns over the delays in processing EB-5 applications and possible effects on investors and time sensitive projects.
Additionally, the Report details federal agencies’ analysis of the Regional Center Program, including fraud and national security issues, the Program’s efficacy, and potential changes to the Program.
The Report highlights the TEA debate, explaining that some stakeholders have pointed to the inconsistency in TEA designation practices across states and how it could allow for possible gerrymandering (i.e., all development occurs in an area that by itself would not be considered a TEA).
The Report also explains that current regulations allow states to determine what area fits their economic needs and allow for the accommodation of commuting patterns.
The Report concludes by detailing legislation that has been introduced in the 114th Congress that would, among other provisions, amend the program to try to address concerns about fraud, and change the manner in which TEAs are determined.
Other bills would create an EB-5- like visa category for foreign national entrepreneurs who do not have their own capital but have received capital from qualified sources, such as venture capitalists.
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