If you have access to $500,000, it is possible to buy your way into America. No need to stand in line; no need to wait years. Hand over the money and take your papers.
In 1990, Congress created the EB-5 visa program to promote economic vibrancy through job creation. It became possible for rich immigrants to obtain a green card by investing $1 million in a business with the condition that at least 10 jobs would be created through the investment; or $500,000 in a business project in a rural area — one that has had a severe shortfall in jobs, with an unemployment rate of at least 150 percent of the national average; or $500,000 as part of a regional center — a firm that sponsors projects for EB-5 investments.
There are 838 approved regional centers in America, and 203 of those are in California. In San Francisco, Golden Gate Global is an EB-5 Regional Center. GGG is behind the Hunters Point Shipyard project, which has floated seven EB-5 funds for infrastructure installations and home construction. This 775-acre project is pitched as being San Francisco’s “largest-ever development” on the waterfront with a projected 12,000 housing units and expansive commercial, retail and recreational spaces.
Despite opposition, Congress approved the EB-5 program on Dec. 15, 2015. The program will continue as before until Sept. 30, 2016.
Sen. Dianne Feinstein and Sen. Charles Grassley (R-Iowa) are outspoken critics of the program. Grassley called it a program with “serious problems and serious vulnerabilities.”
The vulnerabilities he lists include no background checks on anyone associated with a regional center; investment levels not adjusted in 25 years; regional centers not required to comply with securities laws; and regional center operators possibly fleecing foreign nationals above and beyond the investment requirements with little oversight.
There have been several cases of investors defrauded. The SEC filed a $68 million federal fraud complaint last year against Luca International and its CEO in U.S. District Court in San Francisco for “running a Ponzi-like scheme” and drawing Chinese immigrants into EB-5 investments.
And then there’s the curious case of China supplying 83.5 percent of EB-5 investors in 2015. That looks like a red flag. Why is there not a more equitable distribution of countries providing investors?
Sen. Feinstein has wanted to terminate the program. In an op-ed in Roll Call on Nov. 4, 2015, she wrote, “Simply put, EB-5 sends a terrible message to the millions of immigrants patiently waiting their turn to enter the United States legally to be reunited with their families or for legitimate employment. It says that American citizenship is for sale, and that’s not what our country stands for.”
It is true, as Feinstein pointed out, that the backlog for employment visas goes all the way back to 2004, and the backlog for family-related visa applications despairingly dates back to 1992.
So you might have the situation of a foreign immigrant investor landing in San Francisco airport, along with a couple of family members, carrying $500,000 ready cash to invest in building a high rise in The City. That investor and his or her family will quickly get a green card and commence work on the project by employing immigrants to excavate and lay the foundation and put up dry wall. And these immigrants might be desperately waiting to become permanent residents and to get their families over. The social scale seems grossly imbalanced.
Even so, despite the inequity of the situation and all the vulnerabilities, the direct and indirect economic advantages are far too important to dismiss. Ten taxable paychecks mean 10 grocery bills and clothing bills and rents and gas bills — and newspaper bills. The induced effect of the one $500,000 investment spreads into the coffers of small and large businesses infusing currency into everyday transactions.
There is more to the immigrant investor visa beyond Sen. Feinstein’s rhetoric. Hunters Point Shipyard had been lying unused for years. With the planned development, no doubt the area will see a resurgence — more jobs, more residents in the area, more businesses catering to the new residents and more social, cultural and economic diversity.
Looking at the data from Invest in the USA, there is no question of the economic impact of the program. From 2010 to 2013, 117,430 jobs were created and supported and $9.6 billion was contributed to the GDP.
The problem with EB-5 is not that the rich are able to walk into America to become part of our social and economic fabric. They are certainly paying a real price for it, and there’s nothing wrong with that.
The problem with the program is that there is a dire need for better oversight and enforcement. At the very least, there needs to a vigorous examination of investors and regional center administrators and operators.
If administered with integrity, the EB-5 visa program is likely to greatly benefit our economy, our lifestyles and livelihoods. Taking an implacable stance against a working program can only limit possibilities. After all, this particular visa was signed into existence to stimulate our economy.
And, for the most part, the EB-5 visa has done exactly that.
Jaya Padmanabhan is the editor of India Currents, www.indiacurrents.com. She can be reached at email@example.com. In Brown Type covers immigrant issues in San Francisco.