Despite all the bickering in Washington over immigration, there is a piece of legislation on the books that allows any foreign national to effectively purchase permanent residence status in the United States. All it costs is $500,000.
The EB-5 Visa for immigrant investors is a U.S. visa established by the Immigration Act of 1990. In order to obtain one, the foreign national must invest $1 million (or at least $500,000) in an area that is deemed to have high unemployment or qualifies as a rural area. These “Targeted Employment Areas” can include places like downtown Los Angeles in California where investors can petition the state to designate a particular subdivision of an area as one of high unemployment. The rule of thumb is that the targeted area must have a jobless rate of 150% of the national average.
Not many foreigners took advantage of the rule because the application process was lengthy and complex. It took years before the adjudication process was complete and the applicant’s financial situation had to be scrutinized in order to qualify. As a result, few immigrants applied until 2011 when changes streamlined the process. Today, there are so many applicants that the program might run out of permits for this year.
If the application is approved, the investors and their dependents are granted conditional permanent residence for two years. The investor must then submit evidence, backed by documentation, within 90 days prior to the two year expiration, that the full investments has been made and as a result that at least 10 jobs have been created and maintained.
The program is credited with benefiting projects as diverse as Brooklyn’s Atlantic Yards real estate project to a factory in North Dakota that produces biodegradable food containers. A new hotel, for example, is being constructed right now in L.A. with 95% of the money for construction provided by 320 immigrant investors in 14 countries.
Almost the entire amount was generated through EB-5 visas. As a result, these investors will receive a United Sates Permanent Residence Card (a Green Card) which gives the holder the right to be officially granted immigration benefits, including the right to reside here and work in the United States.
As one might expect, Chinese nationals are mostly responsible for the huge surge in EB-5 visa applications. Wealthy Chinese have applied for nearly 6,900 visas or 80% of total visas compared with only 13% a decade ago. The EB-5 program is limited to only 10,000 visas per year. That number includes visas granted to the investor’s dependents as well. Right now there are a total of 7,000 visas pending for this year. If only half of them are approved and each applicant includes one dependent, the entire quota will have been filled for 2014.
The reasons the Chinese are so hot to flee their own country comes as no surprise. Thanks to their burgeoning economy, there are well over one million millionaires in China. It offers them and their family an opportunity to escape the social strait jacket of Communism at home, while allowing their children to obtain a fabulous education. The quality of life over here is so much greater, with little to no pollution compared to the smoke stacks of China.
Plus it’s cheaper to buy their way into this country then in others, such as Australia. The land down under charges the Chinese nine times as much for the privilege of becoming an Aussie. If the EB-5 experience is any guide, maybe the solution to the immigration problem and the budget imbalance is to charge immigrants for entry. It would insure that all new immigrants immediately become part of the one percent. I am fairly sure our politicians would vote for that. I imagine the pay-offs would be immense for them.
Of course, that would put an end to the myth that this country acts as the last haven for those who seek freedom from persecution of any sort. Color me old fashioned but on this Independence Day, I still kind of hope that we won’t put the right to immigrate on sale to the highest bidder. How about you?