A Higher Price Tag for the EB-5 Visa and More Changes
If you’re interested in having a footprint in the United States but are looking for a more stable, longer-term residency option, the EB-5 visa programme has been the American equivalent of the golden visa for nearly three decades. However, on 21 November, the rules to qualify for this visa were tightened. What do you need to know for a successful EB-5 visa application under the new requirements? Here are the details.
But first, what is an EB-5 visa?
The US Congress created the EB-5 visa programme in 1990 to stimulate the economy through capital investments in American corporations from foreigners in commercial enterprises. That means that the venture cannot be in activities like owning or operating a residential home, but many of the EB-5 investments are in hotels and real estate. The US government has moved to make extensions of the EB-5 visa programme since initially enacting it, and has worked to help create tens of thousands of jobs in the United States at no additional expense to American taxpayers.
Those foreign investors who put money into one of the businesses that qualify under the EB-5 rules can lead them on a path towards obtaining a green card, or lawful permanent residency, for them and their spouses and children under the age of 21 in exchange for their investment. This visa status opens the pathway to citizenship as EB-5 visa holders may apply for US citizenship after holding green cards for five years.
How long does it take to get an EB-5 visa?
After making the qualifying investment, the next step in the process is to file a petition for the conditional two-year green card with the I-526 form. The waiting period often takes between 18-24 months. Then, after two years with a conditional green card and upon proof that the project used the capital you invested and the minimum jobs were created, your five-year green card will be approved. Five to six years after your initial investment, you will receive back capital from the project, and after five years with your permanent green card, you can choose to apply for citizenship in the United States.
Now, what are the critical changes to the EB-5 visa?
First off, as the title of the article implies, is that the minimum investment for the EB-5 visa is increasing. The way the EB-5 visa works is that the investment must be high-risk and if the investment is in a targeted employment area (an area that’s rural or has high unemployment, defined as having an unemployment rate 150% higher than the national average), the minimum investment increased from $500,000 to $900,000 on 21 November 2019. The
Another crucial change to the programme is that it is now more difficult for “ ...developers and state governments to gerrymander census tracts together in order to qualify real estate developments located in areas that may not otherwise meet the programme’s unemployment requirements.” States used to be the ones who were in charge of determining which areas qualify for the programme, and now the US Department of Homeland Security will take on that responsibility, and as such, will be much less lenient than the states.
How did this gerrymandering work in practice? In New York City, the Empire State Development economic corporation connected the Hudson Yards development site to West Harlem using a thin strip along the Hudson River. EB-5 visa holders were responsible for a large portion of the $1.2 billion Hudson Yards project, which is considered to be the US’s largest real estate development project ever. The state of New Jersey qualified a project in Jersey City from the Kushner Companies real estate development firm (one of the Kushner sons is President Donald Trump’s son-in-law).
Lastly, before 21 November 2019, most of the EB-5 investments were at the minimum $500,000 threshold, according to Cornell University immigration law professor Steve Yale-Loehr. Now, DHS will only permit fewer than half of those projects to be at that minimum investment level.
As a consequence, some experts are saying that the new rules will cause investments to move away from large-scale development projects such as Hudson Yards to businesses and restaurants. Besides, as Chinese investors are moving away from EB-5 because of visa wait times of over a decade, Indian and Vietnamese investors, as well as Latin Americans, are representing a more significant proportion of EB-5s. Those investors from Vietnam and India are demanding higher returns on their investment, and with some EB-5 projects seeing returns on investment of just a quarter of a per cent, it’s clear those having to put in more money will want more in return than only the visa.
How can I apply for the EB-5 visa?
If you’re looking for information on how to apply for the EB-5 visa, Europe Emirates Group’s team of US residency experts will be happy to help walk you through all steps in the process. We will help you evaluate whether it’s best for you to apply for the EB-5 as a direct investor or through a regional centre and what monetary amount works for your finances and goals. Start your journey investing and residing in the United States with help from Europe Emirates Group today.
Rowena M. Aggabao
Team Leader- International Corporate Services Division