Grassley-Goodlatte: DHS Should Finalize EB-5 Regs to Restore Program Integrity
Restoring integrity to the immigration
system
By House Judiciary Committee Chairman
Bob Goodlatte of Virginia
& Senate Judiciary Committee
Chairman Chuck Grassley of Iowa
In 1990, Congress created the
investor visa green card program to bring entrepreneurial talent to the United
States, create new jobs and infuse new capital into our economy, especially in
hard-hit rural and depressed areas. Unfortunately, over the years this program
— known as the EB-5 program — has strayed further and further from
congressional intent and has been repeatedly tarnished by scandal and political
favoritism.
For the past three years, we have worked in
good faith to reform the EB-5 program and set it on a solid foundation.
Unfortunately, a breakthrough compromise was scuttled by moneyed New York City
interests despite having the support of most of the EB-5 industry. As a result,
reforms were not included in the recent omnibus and the program continues to
operate in its current dysfunctional form.
At the end of the last administration and
with our urging, the Department of Homeland Security issued proposed
regulations delivering long-overdue EB-5 reform. We congratulated DHS for a job
well done. These proposed regulations are a valuable first step that would curtail
abuse in the program and bolster job creation and economic growth in rural and
distressed areas.
As two steadfast conservative Republicans,
we strongly believe that Homeland Security Secretary Kirstjen Nielsen should
quickly finalize these reforms. Here’s why.
Under the current EB-5 program, a foreign
national can apply for a green card — which allows permanent residence leading
to eventual citizenship — if they invest at least $1 million in an American
business and create 10 jobs. However, foreign nationals need only invest
$500,000 if projects are located in rural or high-unemployment areas. Congress
intended this lower investment tier to provide a strong incentive for
investment in rural and depressed areas that struggle to attract capital.
The minimum investment amounts have not
been increased in the nearly three decades since the program’s inception,
reducing the real value of each investment by roughly half. Nearly all EB-5
visas now go to foreign nationals, mostly from China, investing at the $500,000
level meant for rural and poor areas even though the projects are almost always
in affluent urban hubs.
Regional centers, some effectively run by
the Chinese communist government, have learned that they can get away with
“gerrymandering” their project maps. They build luxury condos in midtown
Manhattan and other affluent areas and still get credit for revitalizing
high-unemployment areas. They do this by stitching together ritzy high-rent
districts with depressed zones miles away. They can then market their projects
to foreign nationals for $500,000.
In this way, the EB-5 program has morphed
into a boondoggle for wealthy, well-connected, big-city developers. They
essentially sell citizenship to foreign nationals not for public benefit, but
to give themselves a cheap source of capital and a higher profit margin for
projects that would have been built anyway. All the while, rural and struggling
areas are once again left in the dust.
For example, Hudson Yards, a Manhattan
mega-development, marketed investor visas at the lower tier. At its first
condominium project, condos were reportedly going for $1.9 million to $32
million. Hudson Yards purchased a four-page spread in Vogue to advertise its condos,
boasting that it would include “some of the tallest and grandest towers in the
city” with a “unique combination of luxury retailers,” “independent boutiques”
and an “innovative luxury spa.” It’s laughable to consider some of the nation’s
richest ZIP codes as distressed areas and it’s a travesty that this capital was
not injected into the rural and urban distressed communities that needed it the
most.
DHS’ proposed regulations would address
many of the problems plaguing the EB-5 program. They would raise the minimum
investment amount to $1.8 million for standard projects and $1.35 million for
rural and high unemployment areas. These increases simply make up for inflation
over the past quarter century.
The regulations would bring to an end the
regional center gerrymandering. To be considered a high-unemployment investment
area, a project would have to be actually located in a census tract that has a
high-unemployment rate or touches such a tract.
While we have been outspoken about
unconstitutional executive overreach by the Obama administration, these
regulations are the poster child for how an administration should regulate. It
was Congress itself that gave the Executive Branch explicit authority
to raise the minimum investment amounts, determine which areas qualify as
depressed and make the other reforms contained in the draft regulations.
We urge Secretary Nielsen to finalize these
regulations. President Trump rightly campaigned on restoring integrity to our
immigration system and creating jobs for American workers. Finalizing the
regulations will help deliver on these campaign promises, and it will ensure
that the EB-5 program works as intended to boost our economy and create jobs
here at home.
Bob Goodlatte, a Republican U.S.
representative from Virginia, is chairman of the House Judiciary Committee.
Chuck Grassley, a Republican U.S. senator from Iowa, is chairman of the Senate
Judiciary Committee.
-30-
