The Department of Homeland Security published Friday new proposed rules for the popular EB-5 visa program that allows foreign investors to put money into a job-creating U.S. project in exchange for a green card.
The proposed new rules would modernize the program, which was established in 1991 and seen few updates since then. The biggest change would be to raise the minimum allowable investment amount for certain “targeted employment areas” from $500,000 to $1.35 million. The minimum investment amount for areas that are not specifically designated as low employment jurisdictions would be bumped up from $1 million to $1.8 million.
The EB-5 program has been widely utilized in Los Angeles by developers to help finance projects around the region. For example, the Inglewood stadium development has drawn on funds from the program, as has the Century Plaza Hotel in Century City.
The department, which oversees U.S. immigration and citizenship services, also proposed to change how these targeted employment areas are designated. It is widely believed by insiders that the system is frequently gamed by developers who string tenuously-related parcels of property together in order to qualify a project for TEA-restricted funds. The new rules are meant to help prevent this type of abuse and direct EB-5 monies toward areas where unemployment is a documented problem.
If adopted, the changes would, in some instances, also allow candidates to keep their priority position in the EB-5 visa queue even if issues arise with projects related to their applications. This change is noteworthy because the program has experienced massive growth since 2008 and has a backlog of applicants, according to department statistics. There are 10,000 EB-5 visas available each year and last year officials received 17,691 applications.
Deals & Dealmakers reporter Henry Meier can be reached at email@example.com. Follow him on Twitter @henry_meier.