In his inaugural address, President Biden declared that his administration would spend more than $ 2 trillion to upgrade US roads, public transport and broadband. He will cover the tab with a tax increase on the highest-income earners, which the Republicans are categorically opposed to. One way to help break the funding deadlock is to use the lesser-known immigration program, the EB-5 visa (called an investor visa).
EB-5 was created in 1990 to promote foreign investment in the United States. Under initial conditions, immigrant investors who invested $ 1 million in US businesses that created or maintained jobs for at least 10 people were eligible for legal permanent residence. If the project is based in rural areas or areas with high unemployment (target employment areas (TEA)), investors only need to earn $ 500,000.
Initially slow to capture, Congress passed a bill in 1992 to create a regional center where investors could pool funds to invest in projects. The program grew exponentially when bank loans were depleted in the aftermath of the Great Depression.Almost there 700 regional centers nationwide And over the last decade, demand for EB-5 has often exceeded the annual visa limit of 10,000.
visa Created tens of thousands of jobs, But it also suffers from scandals. Vermont’s major development projects It turned out that it was the Ponzi scheme that was funded by EB-5 funding. Most of the money did not land in poor rural areas, even when foreign cash was invested in reputable projects.Perhaps the most notorious example is how affiliates Used EB-5 for over $ 1 billion Funding for the Hudson Yard development in New York City. Foreign investors only had to invest $ 500,000 in the project as the creative gerrymander TEA passed through Central Park to cover Harlem’s public housing estate.
These stories spurred the federal government Make changes in late 2019.. TEA can no longer be made in such a biased way, and investors must invest more money to qualify. Even with these reforms, visas can quickly disappear altogether. The approval of the EB-5 Regional Center only lasts until June 30, and it is not clear whether Congress will pass a bill to renew it.
It makes more sense than abolishing the program to restructure it so that it directly benefits the federal government. EB-5 applicants, many of whom are Latin American investors relocating to South Florida, are refurbishing their hotels not because they expect a big return on their investment, but because they could lead to a green card. I’m investing money. It’s a federal perk. Now that the Biden administration is serious about starting projects, it makes sense to directly take advantage of the cheap foreign funding that the government encourages through immigration policy.
Governments can loosen investor terms on infrastructure initiatives. The minimum investment amount can be low. Applicants can benefit from only half of their investment, and the government has access to funds that do not need to be repaid. Many EB-5 investors are Chinese citizens, and each country faces visa caps each year, so Chinese applicants are considering a green card wait time that could exceed 10 years. The federal government can provide for people investing in federal infrastructure projects to obtain legal permanent residence in a faster way. You may also have access to more capital by increasing the number of visas available above the 10,000 threshold per year.
Creating a program this way makes you a monetization company for a clearer visa. It can cause a hackle at Capitol Hill, where you have to approve these changes. Still, the effects of aging roads and bridges, underfunded mass transit, and aging drinking and wastewater systems are increasing. EB-5 reforms could be part of funding a highly necessary and costly infrastructure upgrade.
Journalist Alexandra Star, who writes about immigration and Latin America, is the author of a special report by the Council on Foreign Relations on the entrepreneurial spirit of Latin immigrants.