Buying a green card is about to get a lot more expensive.
A new federal rule, which takes effect Nov. 21, will nearly double the minimum amount a foreign investor must put toward an EB-5 visa, from $500,000 to $900,000.
The Trump administration’s measure is an attempt to reform a controversial program that had become popular with wealthy Chinese citizens looking for U.S. permanent residency in exchange for an investment — and one that is now plagued by very long waits for visas and instances of fraud and abuse.
“Certainly one of the prime goals of this administration was to raise the investment amount in order to limit the number of investors,” William A. Stock, an immigration attorney and a founding member of Klasko Immigration Law Partners, LLP, said.
The impending rule change has reportedly sparked a flurry of foreign nationals to try to file at the lower investment amount before the new regulations kick in this month. Legislation was also introduced in the Senate on Nov. 5 to overhaul the EB-5 visa program and authorize it through September 2025.
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With roughly 10,000 visas awarded annually, the EB-5 program has allowed investors to receive a green card if they pump between $500,000 and $1 million into projects in the United States that create at least 10 jobs.
The Trump administration rule will raise that outer limit from $1 million to $1.8 million — the first increase since the program began in 1990 — and it will bump up the amount for a targeted employment area from $500,000 to $900,000. Targeted employment areas are defined as rural areas or places where the unemployment rate is 150 percent above the national average.
Inflation adjustments will automatically be made to minimum investment amounts every five years.
The regulation also puts the Department of Homeland Security in charge of designating certain areas as high-unemployment, a task previously left up to the individual states.
The agency said the change is an effort to stop states from gerrymandering boundaries in which they “link a prosperous project location to a distressed community to obtain the qualifying average unemployment rate.”
“This final rule strengthens the EB-5 program by returning it to its congressional intent,” Ken Cuccinelli, the acting director of U.S. Citizenship and Immigration Services, said in a statement earlier this year.
Time will tell how these new regulations will impact future foreign investors.
Stock said that while the EB-5 program had exploded in popularity between 2009 and 2011, as the U.S. emerged from the financial crisis, the biggest factor throttling demand for it now is the very long wait to receive a green card through the program, the result of per-country visa caps.
For people born in China who invested in May, that could be 16.5 years; for India, 8.4 years, according to State Department figures.
Immigrant investors provided around 35 percent of the total $16.7 billion funneled into EB-5 related projects in fiscal years 2012 and 2013, creating more than 174,000 jobs, Commerce Department statistics show.
While big projects such as the Hudson Yards in New York and the Hunters Point Shipyard in San Francisco have benefited from EB-5 financing, the program has also made headlines for scandals.
The demographics of investors, meanwhile, have shifted in recent years. Stock said that although the majority of people waiting for their visas hail from China, there is now much less demand for the EB-5 from that country than in previous years.
From October 2018 through April 2019, Chinese nationals made up just 44 percent of people who were issued EB-5s or had their status adjusted, according to State Department data. The rest came from other countries.
By comparison, Chinese accounted for 85 percent of EB-5s from Oct. 1, 2013 to Sept. 30, 2014.
Stock said that because of the long visa wait times, investors from China who are considering immigrating to the U.S. are exploring avenues other than the EB-5. One such option is the EB-1C visa, which applies to people who qualify as multinational executives or managers.
But some are taking their money elsewhere to countries with programs similar to the EB-5, such as Australia and New Zealand, according to Stock. Turkey and Grenada are increasingly popular choices as well, he said.
Over the years, some lawmakers from both parties have tried to end the EB-5 program, started in 1990 to stimulate the economy.
They’ve argued that it’s been the target of fraud and abuse, and asserted that American citizenship should not be for sale, even as Congress has repeatedly reauthorized the program, which has brought billions of dollars into the U.S.
But others worry that the Trump administration’s new rule, which was first proposed under the Obama administration and increases the investment amounts, could dissuade foreign investors from pumping money into American business projects.
“What’s harder to see is the jobs that will not be created the next time — that foreign direct investment is really needed to spur the U.S. economy — because we’ve raised this barrier to them,” Stock said.