Even as investor visa program has faltered with increased investment floor and pandemic troubles, some see EB-5 as ripe for expansion to boost economic recovery

The election of Democrat Joe Biden is good news for EB-5 investors and promoters, according to an 11/9/20 post on Immigration Daily, a publication for lawyers.

First, the overall temperature on immigration issues will be turned down, as the Biden administration undoes Trump's executive orders on immigration. 

Also, "A clear message sent to USCIS [U.S. Citizenship and Immigration Services] that it is primarily a benefit agency, not an enforcement agency." That, according to Immigration Daily, should speed USCIS processing times. 

And while the reference to enforcement surely referred to priorities from the departing Trump adminsitration, that also could mean that USCIS spends less time enforcing rules regarding EB-5, which allows immigrant investors to get green cards in exchange for investments ($900,000 minimum, now) that purportedly create ten jobs.

I write purportedly because the job-creation math is very generous, as I've argued.

That said, Immigration Daily suggests another agency, the Securities and Exchange Commission,may pursue crackdowns:

SEC enforcement will dramatically increase on unregistered finders fees for EB5 investments, so both issuers and finders who have been operating in the gray area will find themselves on the receiving end of SEC scrutiny and possibly fines.

I suspect there are many opportunities for such enforcement, and the SEC could've done more in the past, such as following up on this 2017 complaint.

In Congress

From Immigration Daily:

There is going to be a large push for economic recovery in Congress and EB5 will be a part of that push. A huge increase in EB5 quota with halving of the investment amount is something that is being talked about in Congress. With the massive expansion of quota (such as doubling or quadrupling), separate sandboxes for urban and rural interests that the industry has been pushing for become workable. 

That would mean cutting the minimum investment from $900,000 to $450,000, less than two years after it had been raised from $500,000--a figure that had stood still for decades, with no adjustment for inflation. 

It would also mean more than 10,000 annual visas, with (likely) increased quotas for each country, thus reducing the wait for investors from China, where the quota has been overscribed for years.

A revival for EB-5 would be good for lawyers, real-estate developers, and the middlemen recruiting investors via "regional centers"--and good for immigrant investors, at least those who get their green cards fast and their money back.

But it's a good question how much the public would gain, given that in many cases the EB-5 funds do not serve as seed money to ensure projects get started but rather profit enhancement.

Pandemic problems?

A Republican Senate (unclear for now), observed program critic David North of the Center for Immigration Studies, would mean Sen. Chuck Schumer (D-NY) won't have sway as "the strongest, and wiliest, of the defenders of the immigrant investor program."

North also pointed to an article in Law360 about how COVID-19 hampers EB-5 projects, because such low-interest financing often funds "high-profile hospitality, retail and office projects," all of which have suffered during the pandemic.

"I don't want to say it has died, but it certainly is in a coma as a source of financing for developers," one lawyer told the publication. "The pandemic is just one more negative factor … on top of all of the blows that have befallen the EB-5 program." Surely one other blow was the increase in required funding, to $900,000.

North also noted that the number of regional centers, approved by the Department of Homeland Security, has actually steadily contracted, from 880 in December 2018 to 678 in early October. As of 12/7/20, the number was 673.

That, I suspect, reflects that most are not doing much, if any, business in the first place, as a few companies--like the U.S. Immigration Fund, involved in both Atlantic Yards and the Nassau Coliseum--are dominant.