Eb-5 Visa Program Was Introduced

EB-5 visa program was introduced in 1992 to facilitate foreign investment in the country in exchange for permanent residence status to the visa seekers and their families. The program required an investment of $1,000,000 to establish business in the United States which must create at least 10 full time jobs. According to the authorizing legislation, 10,000 visas could be granted each year under this category but since 1992, the participation in this investor visa program has been much lower than the cap. There are several restrictions attached to this visa program such as investment in "regional center" or in "targeted employment" areas. The program sets aside 3,000 visas for those investing in targeted employment areas and additional 3,000 are granted under special pilot program. These should also be made in the regional center.

Regional center is defined as "any economic unit, public or private, that is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation and increased domestic capital investment." (Section 8, C.F.R.)

Targeted employment area is defined as "an area that at the time of the investment is either a rural area or an area that has experienced unemployment of at least 150% of the national average rate." (Section 8, CFR: Burgess: p. 218)

Statement of the problem

Changes in EB-5 visa have not exactly been favorable to the investors and hence EB-5 program has not been able to attract as many investors as it may have originally anticipated.

Objectives:

In this research, we plan to uncover the most basic reasons for EB-5 slow performance. We presume that some of the key reasons are slow application processing, ambiguities in adjudication process, inefficient Regional centers and presence of other means of attaining Conditional and Lawful Permanent Resident status.

Methodology:

The research will investigate the problems by utilizing primary and secondary sources available on the issue. We will be studying the various clauses of the original legislation and the amendments made since. We will also be utilizing important legal opinion pieces on the subject to see how the legislation has been applied and interpreted. The main source of information will thus be the literature available on EB-5 visa issue.

Recent changes in the law:

EB-5 visa legislation has undergone many amendments. The first set of changes came in 1998 that made the adjudication process even more time-consuming and ambiguous, putting off many potential investors. Second set of changes came in 2002 and then again in 2005 which focused more closely on investing in regional center and job-creation aspects of the EB-5 program. The amended legislation stated:

"A regional center shall have jurisdiction over a limited geographic area, which shall be described in the proposal and consistent with the purpose of concentrating pooled investment in defined economic zones. The establishment of a regional center may be based on general predictions, contained in the proposal, concerning the kinds of commercial enterprises that will receive capital from aliens, the jobs that will be created directly or indirectly as a result of such capital investments, and the other positive economic effects such capital investments will have." (Pl 107-273 Sec. 11037 -- 2002):

If investors want to avoid creating jobs, or cannot afford to invest $1 million, they can choose to invest in an already approved business in the regional center of their choice. This way they do not need to create ten full time jobs but their investment must directly or indirectly create ten jobs. By investing in regional center, they can automatically gain exemption from $1 million requirement and can invest half that amount. However if they invest in their own business, they would need to create ten valuable jobs instead of simply contractor or part time jobs.

Due to the problems with EB-5, USCIS had been rejecting more applications than in any other category. This is because of the history of fraud associated with EB-5 applications and the very narrow eligibility criteria. "In fact, some lawyers encourage their clients to use their wealth to fit themselves into another category with a greater chance of success. For example by investing in a company outside the U.S. that has a U.S. affiliate, the person might qualify to immigrate as a transferring executive or manager." (Bray, p. 250)

The problems that people had been having with EB-5 in the 90s did not vanish with the amendments in the law. Literature review indicates that even after the changes in 2002 and 2005, EB-5 continues to perform poorly as people seek other avenues to get LPR status in the U.S.

Literature Review:

Despite the initial enthusiasm and expectations, the EB-5 visa has not seen equally enthusiastic participation. Since its inception in 1992, the program has not even been able to meet the number of visas allocated for one year. According to USCIS, some of the most obvious reasons for lack of enthusiastic response to EB-5 visa program included the following:

1. The application process is very vigorous and often complex compared to some other employed-based visa categories. The USCIS feels that there are other easier routes to attaining residency or immigration to the U.S. that do not involve such complex application process.

2. Adjudicators trained to review applications lacked the required expertise needed to correctly assess an investor's eligibility. Prior to the changes in 1998, this was a significant factor in the poor performance of EB-5 visa.

3. People are also uncertain of the outcome of their residency application after the initial 2-year period. The program doesn't automatically grant residency to all the investors coming under this category. They are initially given a 2-year conditional residency in the U.S., after which they need to apply for permanent residency but they cannot be certain of the outcome. After the changes in the law in 1998, this uncertainly has increased significantly as so many cases are already pending and INS is now working with new interpretations of the EB-5 regulations. (Jones, p.8-9)