This week the separate and heated debates on immigration, jobs and infrastructure crystalized around the question of whether, in some ways, all three can work together. The immigrant investor program known as EB-5 – not a household name outside of real estate development circles — is due to expire at week's end. Congress is racing now to pull off an upgrade to the program in its final hours. Success will be a sign that lawmakers can find their way on these bigger issues despite the rhetoric of the last few months.
EB-5 matters
The EB-5 visa creates a path to a green card for a foreign national (and their spouse and children) who invests $1,000,000 in a United States enterprise that is shown to create 10 U.S. jobs. If the investment is made in a distressed region, the required investment is only $500,000. In either case, the investments are not nothing for those like me whose roots include Brooklyn before it was hip. Typical EB-5 investments could be hotels, travel destinations, and shopping areas.
A Department of Commerce review of EB-5 shows that in calendar years 2012 and 2013 the program generated $5.4 billion in investments and created 174,000 jobs. As unemployment rates improve in monthly increments of 0.1 percent, 174,000 jobs represents just short of a full month of positive job creation. When you consider that the annual gross domestic product in that same period was in the thousands of billions, it's difficult to say that's not some pretty powerful ROI.
Provisions in the recent Grassley-Leahy bill that set aside visas for rural and distressed urban areas are certainly positive, as are provisions promoting the use of investments for infrastructure. And, it is here that the EB-5 program could deliver its most powerful benefit. By directing investments at public or public-private projects like bridges, roads, high-tech incubators, hospitals and countless other similar undertakings, the EB-5 program could promote American prosperity and well-being, and take some of the burden of such critical ventures off of U.S. taxpayers. I would argue to increase the number of visas too, above the current 10,000, but not until legislative refinements to the program have been enacted.
How it works where we live
I have left government, but when I was first nominated to serve as director of U.S. Citizenship and Immigration Services, one area was brand new to me: EB-5. My reaction: what a great idea!
My openness to EB-5 stemmed from my years in local government. From 2007 to 2010 I served as the County Attorney for Montgomery County, Md. Montgomery County knew regulatory schemes promote particularly desirable public objectives. Zoning laws provide that builders who agree to build moderately-priced dwelling units in our prosperous county, as part of a multi-family complex, would be permitted greater market rate square footage for their property. Projects meeting green standards also acquired rights that would not otherwise be available.
Our local government, like many state and local governments around the country, dedicated significant energy to attracting desirable foreign investments, much of it from the same countries that now produce EB-5 immigrant investors.
From this vantage, EB-5 made perfect sense. However, I also learned in several instances regional center operators had been accused of fraud against foreign investors. Some worry that investors themselves could pose national security and fraud concerns. Others feel the program is vulnerable to undue political influence.
None of these concerns were idle and we took them seriously. My boss, then-Secretary of Homeland Security Jeh Johnson, issued strong policies to regulate the manner in which agency leaders would respond to elected officials that make inquiries about the status of cases. Other measures were taken to protect the program from fraud. Even now, USCIS continues to tighten its processes to protect investors and the American public, and ensure the integrity of the program. And frankly, many of the integrity measures being considered in new EB-5 proposals are a good idea, as the program can only thrive if its integrity is insured and can be trusted.
It's a common sense program in the middle of immigration, jobs and infrastructure. Getting it through and right will be promising.
Originally published in the Washington Examiner
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