House omnibus bill resurrects EB-5 investor visa program, with reforms

The mammoth House omnibus bill that passed the chamber on Wednesday included provisions to resurrect the EB-5 investor visa program -- although coupled with significant reforms to a program that has been dogged by concerns of fraud and abuse, including by Chinese nationals.

The EB-5 investor visa program allowed foreign investors to obtain residency, leading to fears on both sides of the aisle that it amounts to a dollars-for-residency scheme, and raised national security concerns about the use of the program by the Chinese Communist Party. Most of the investors who have used the program came from China or other parts of Asia.

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The program typically required an investment of $1 million, but that could be as low as $500,000 in areas classified as high poverty, and the creation of 10 jobs. In return an investor would be given green cards for not just them, but also their families. That in turn puts them on a track to citizenship.

Prior efforts to reform in both the Obama and Trump administrations had failed. But the new nearly 3,000 page omnibus includes provisions first introduced in legislation by Sens. Chuck Grassley, R-Iowa and Patrick Leahy, D-Vt., to reform the program.

That legislation was blocked last year and the funding for the EB-5 program expired and has since been dormant. But in a rare bipartisan instance of successful immigration reform, the visa program will be resurrected with a slew of significant reforms from the Grassley-Leahy legislation -- after real-estate groups agreed to the reforms after watching the program lie dormant for a year.

The omnibus includes a range of measures to reform the "regional center" part of the program, which allows multiple investors to pool capital to fund large investments in the country. While intended to promote growth in poor or rural areas, the drawing of regional maps around specific impoverished pockets was used to pump money into luxury projects in places like New York City and San Francisco.

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The reforms see a range of measures to tackle fraud, and also includes audits, background checks and site visits for EB-5 projects, as well as tighter definitions of terms like "capital" to prevent abuse. It also increases the level of funding needed for high poverty areas to $800,000. Of the 10,000 EB-5s made available each year, 2,000 will be earmarked for rural or high poverty areas.

Provisions also include increased DHS powers to vet foreign capital to make sure it is lawfully sourced, and require foreign agents and third-party promoters of the program to register with DHS. 

The language now included in the omnibus also establishes an EB-5 "integrity fund," in which centers and investors would pay fees to be used by DHS to conduct additional scrutiny. The omnibus also includes a number of regulations that were struck down under the Trump administration by a federal judge.

While investor groups welcomed the move, immigration hawks were less sure. RJ Hauman, head of government relations at the Federation for American Immigration Reform, said that the program was "riddled with fraud and national security vulnerabilities" and "frequently exploited by rich urban developers who siphoned investment money away from rural and economically distressed areas to fund ritzy projects in some of the nation’s wealthiest neighborhoods." 

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"While the reforms are well-intended, the program was dead, and it should have stayed that way," he said.

Hauman also expressed concern about the program being used by Russian oligarchs:

"Also, if the world successfully chokes off enterprise in Russia, and we see it happening already, all those rich oligarchs will be all the more motivated to invest their money in safer havens," he said. "EB-5 not only satisfies that but gives them a green card so they can flee a crumbling country."