Cost of Visas May Rise

0

A controversial federal visa program that allows foreign investors to sink big money into U.S. job-creating projects in exchange for green cards could be in jeopardy if rules proposed this month by the Department of Homeland Security are adopted.

The rules proposal, submitted to the Federal Register on Jan. 13, would bump up the baseline investment from $1 million to $1.8 million. A break would be given to certain jurisdictions, known as “targeted employment areas,” which meet specific unemployment criteria. However, the minimum investment would also rise in those areas from $500,000 to $1.35 million.

While the filing is part of a much larger debate about the program, the proposed changes have raised alarms among local players who help connect applicants to the EB-5 program to U.S. developments looking for investment.

“The numbers thrown out by the (Department of Homeland Security) would effectively kill the program,” said Jim Butler, a partner at Century City’s Jeffer Mangels Butler & Mitchell who works with developers on EB-5 funded projects.

The rules proposal would also close certain loopholes pertaining to the targeted employment areas. Under the existing program, some developers link projects in multiple areas to qualify for a lower investment minimum even though the bulk of the work doesn’t occur in a high unemployment zone.

Los Angeles has seen many recent projects funded with the help of EB-5 money, including the Century Plaza Hotel in Century City and some of the development surrounding the new Los Angeles Rams stadium in Inglewood.

Butler said part of the proposed changes ties into the larger debate about the merits of the program and where the investment money should be flowing.

“It is part of the rural versus urban tension,” Butler said. “Is this a rural investment program only, or is it a ‘create jobs for Americans anywhere’ program? I don’t think these are mutually exclusive.”

Congress will ultimately have to vote on any changes to the program, and the new rules are not likely to be adopted verbatim, said Butler, as numerous stakeholders are expected to weigh in over the coming weeks.

Legislative bickering over this issue has frozen reform efforts for several years as representatives from rural areas complained the system was being gamed by big city developers to drive EB-5 money to their projects. The program, which was implemented in 1991 and barely used until 2008, has only survived as part of a series of continuing resolutions tied to the federal budget. The last was passed in December but will expire in April.

Despite lingering uncertainty over the program’s fate, observers have voiced some optimism that the Trump administration would be amenable to keeping a healthy EB-5 program on the books. For example, the president’s son-in-law and adviser, Jared Kushner, helped finance a New Jersey project with EB-5 funds.

Butler said he’s hopeful a solution will be worked out soon despite lingering questions.

“Things are a little more uncertain than they were last September, or even December, but there’s still a reasonable risk profile,” Butler said. “No investor likes uncertainty – but hopefully this gets worked out soon and doesn’t drag out until April.”

No posts to display