One of the programs Trump extended with his Friday signature was the fraud-plagued (see also here, and literally here!) EB-5 visa investment programs. Trump said something two years ago about ending EB-5 (which his own son-in-law sought for funds), but this July, the Trump Administration approved revised versions of rules proposed by the Obama Administration to tighten up the EB-5 program against fraud. The investments required to buy a green card under EB-5 will increase November 21 from $500,000 to $900,000 in “targeted employment areas” (zones that states declare are in economic distress and often gerrymander to help pump money into already-wealthy areas) and from $1 million to $1.8 million elsewhere. Those investment thresholds will get an inflation adjustment every five years. And states will no longer get to designate “targeted employment areas”; Department of Homeland Security will draw those maps.
New York City real estate developers tried to get Trump to back down from the higher investment thresholds, saying they would kill EB-5 investment in big-city projects. EB-5 promoters don’t want to get stuck in rural areas, so they are beating the bushes to get foreign investors to pony up under the current slacker rules. Applications from India surged right after the final rule was posted:
“LCR Capital’s local offices in Mumbai and Dubai have never been busier,” said Rogelio Caceres, co-founder and CCO of LCR Capital Partners, An EB-5 Regional Center. “We anticipate an increase of 300 per cent in the number of new Indian EB-5 investors over last year’s already record-breaking levels. Indians know the value of a great deal when they see one. The ability to invest at the same amount as the program cost in 1990 is definitely worth considering seriously before the price increases to $900,000 to $1.8 million,” he said [Hemani Sheth, “Rise in Indian Applicants for EB-5 Visa Ahead of November Fee Hike,” The Hindu Business Line, 2019.08.09].
Applicants are also up from the Persian Gulf:
“I have seen almost more than 100 percent surge in applications as it has been out there now for nearly a month,” Preeya Malik, managing director of Step America, a Dubai-based firm which offers the EB-5 visa scheme, told Arabian Business in an interview on Wednesday.
“People are getting to know about it and it is the first time since 2015 they have written a price increase into legislation. If we were getting five applications every week, now we are getting five people almost every other day. People who have been sitting on the fence, this has been the deciding factor to move forward,” she added [Shane McGinley, “Surge in Gulf Applicants for US Scheme Offering Citizenship amid Price Increase,” Arabian Business, 2019.09.04].
Hiking the investment threshold and taking the map-rigging power away from states will likely defuse demand after November 21:
While the new rule aims to address certain long-standing issues, such as the use of the programme’s money for projects outside distressed areas, worries abound that the increased threshold will dry up demand for its projects.
“The market is definitely going to shrink,” said Mitchell Wexler, an immigration lawyer at Fragomen. While acknowledging the programme needs an overhaul as it “hasn’t really matured over time”, Wexler said “the near doubling of the minimum amount right out of the gate is catching the market off guard” [Jodi Xu Klein, “Reprieve for Controversial US Immigration Visa Programme Fails to Ease Investors’ Worries,” South China Morning Post, 2019.10.02].
Yet another EB-5 immigration lawyer speaks optimistically about sustaining demand:
“EB-5 applications may surge until November as investors will rush to apply before the fee hike comes into force,” Vivek Tandon, founder and CEO of immigration law firm EB5 BRICS, told Quartz.
The hike won’t really change the demand for the visa though, Tandon thinks. “Investors from China, India, or Vietnam are unlikely to be deterred by the fee hike because the benefits of a US green card far outweigh the higher investment requirement,” he said. What might change with DHS being the central designation authority for TEAs is that projects under the $500,000 category today may end up in the $1.8 million category under the new rules, leaving fewer cheaper options available [Ananya Bhattacharya, “After H-1B, the US Now Turns Its Attention to the Coveted EB-5 Investor Visa,” Quartz, 2019.07.24].
Whatever demand remains after the Trump Administration enacts these Obama-inspired reforms won’t be seen in South Dakota, as we showed that we’re too corrupt to be trusted with selling rich immigrants green cards.