O pinion
Is an increase of the EB-5
$500,000
minimum inevitable?
by Mona Shah
The EB-5 Program is due to be renewed this
September. The issue on the table appears to
be, not whether it will be renewed, but what
changes Congress will make to the program.
Politicians from both major parties support
the renewal of the program, but for some, only
with changes. Presidential hopeful Jeb Bush, for
example, has publically voiced his opinion that
Targeted Employment Area designation should
be eliminated entirely, leaving the EB-5 investment amount at $1 million.
Today the EB-5 investment program has evolved into a fullfledged industry that revolves around the $500,000 figure, and
yet still brings billions of dollars in foreign investment into the
United States. Whether the TEA’s $500,000 minimum investment amount will be raised or eliminated entirely are concerns
for all within this industry.
Is there a need to increase the
minimum amount of $500,000?
The TEA investment amount of $500,000 was set more
than two decades ago. When adjusted based on the Consumer
Price Index, 1990’s $500,000 has the purchasing power of only
$275,235 in today’s dollars.
In comparison to other immigrant investor programs, the
United States’ EB-5 investment program requires the least
amount of investor capital. I have converted foreign currency
to the current value in USD to help illustrate the comparison.
Australia requires USD $4 million, the UK requires USD $3
million, New Zealand requires USD $1.2 million, and the
Maltese investment program requires USD $2 million. Portugal
is the second most popular immigrant investor program in
China, and it’s a 500k investment into real estate.
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The significant difference between these other investment
programs and the EB-5 visa is the fact that the money is
invested into “safe” (non-risky investments) like government
bonds. The basic requirements of EB-5 program – creating
jobs and stimulating the economy -- distinguish it from the
other investment programs. In addition, while some argue that
investing $500,000 in an entrepreneurial stand-alone project is
unlikely to sustain a viable business creating 10 permanent jobs,
the same amount pooled, either in a direct pooled or a regional
center project certainly has proven success.
Does the current state of affairs
contradict congressional intent?
When the Regional Center Program as we know it today
emerged, regional centers looked to the success of our Canadian
neighbors, who had been attracting considerable wealth from
the Asian Pacific with an investment amount of only $400,000.
The United States needed a competitive investment amount to
keep up with its Northern Neighbors.
Today, around 90 percent of all EB-5 projects are in TEA’s
and are thus at the $500,000 level. Congress created TEAs to
benefit rural areas or areas with high unemployment. This was
done to encourage immigrants to invest in new commercial
enterprises that are principally doing business and creating jobs
in areas of greatest need. Clearly Congress’ intent was not to
maximize investment, but to direct foreign investment into undeveloped areas. However, today, many of the large scale EB-5
regional center projects are found in affluent urban areas like
Manhattan, Los Angeles, and Miami, as census tracts are often
manipulated to allow for a TEA designation. Is this a flagrant
flouting of congressional intent?
While manipulating the census tracts may be considered,
arguendo, inappropriate scheming or gerrymandering by some,
the ultimate goal and purpose of the EB-5 program is to create
jobs and, in turn, stimulate the economy.
EB5 INVESTORS MAGAZINE