It will also revise the standards for what is considered a blighted or high-unemployment neighborhood, to prevent developers from “gerrymandering” their own boundaries to attract investments for projects located in affluent communities.
The standard investment threshold for projects in non-needy areas will increase from $1 million to $1.8 million. The amount will automatically adjust for inflation every five years.
The rule, effective Nov. 21, marks the first significant revision to the program since 1993, according to U.S. Citizenship and Immigration Services.
“This rule not only brings more integrity to our immigration system, it also brings new jobs to America,” Sen. Charles E. Grassley (R-Iowa) said in a statement Tuesday.
Grassley, along with his Democratic colleagues, has been advocating for change for years, proposing at one point to eliminate the program because of widespread abuses. Each time, their efforts were defeated by what he called “big-money interests.”
Congress created the EB-5 citizenship pathway in 1990 as a way to provide jobs during a recession. The visa program required an investment of at least $1 million in a new business that would create at least 10 full-time jobs — or $500,000 in projects located in high-unemployment areas. In exchange, the investor and immediate family members receive two-year conditional green cards.
Critics derided the program as “green cards for cash” and “golden visas.” Sen. Dianne Feinstein (D-Calif.) called it “U.S. citizenship for sale." The program, they argued, created a two-tier immigration system favoring the rich over those fleeing wars, persecution and poverty.
The visa program enabled foreign investors to park their cash in high-end real estate in Beverly Hills and Manhattan. That’s how Trump Bay Street, a 50-story luxury apartment complex built by Kushner Companies in Jersey City, was financed, according to a 2016 Bloomberg News report. A quarter of the project’s funding — $50 million — came from EB-5 investors.
The program came under more scrutiny in 2017 when Kushner was a White House adviser to Trump and his family real estate firm made a sales pitch to Chinese investors. One speaker advised those in attendance to invest early — under the “old rules” requiring $500,000 — in case regulations change under Trump.
One week before Trump was sworn into office, the Department of Homeland Security under President Barack Obama had proposed new rules for the visa program, enabling DHS, not states, to decide which areas qualify as economically distressed.
Trump, upon assuming the presidency, imposed a freeze on all pending regulations.
The new rule to be published Wednesday, like the Obama-era proposal, eliminates a state’s ability to designate certain geographic and political subdivisions as “high-unemployment.” Instead, Homeland Security would make such designations.
“This was never intended to be government-sanctioned welfare to the high-profile real estate industry in the major cities of America, but it evolved into that after the meltdown of 2008,” said William Cook, former general counsel of the U.S. Immigration and Naturalization Service under George H.W. Bush when the EB-5 program was created. “This is money developers were able to raise that didn’t come by the normal process.”