Bolstering the Post-COVID Economic Recovery Through EB-5 Visa Funding

Revitalizing the EB-5 Program

During the Great Recession, countless distressed real estate projects were able to move forward with the help of EB-5 investment capital. Now, with the U.S. economy still reeling from the effects of COVID-19, the EB-5 program could once again play a crucial role in economic recovery.

EB-5 filings were at relatively low numbers in the 2022 fiscal year. However, this is only due to processing backlogs for nations with the highest demand for EB-5 visas: China and India. With the United States still recovering from the COVID-era economic depression, now seems the right time to breathe new life into this valuable job-creating engine.

Increasing the EB-5 visa supply would alleviate these backlogs and help restore EB-5 activity from these backlogged nations. In turn, more EB-5 investments would also boost the program’s impact on the U.S. economy.

EB-5 capital is often available to real estate developers at below-market rates, making it an attractive and accessible source of funding.

In this piece, we cover possible proposed solutions to increase the supply of EB-5 visas. Any one or a combination of these solutions could bolster the EB-5 program and stimulate the U.S. economy.

Remove Annual Visa Caps

One possible strategy is to exempt certain investment visas from the annual limits if there is a “compelling U.S. government interest”.

For example, Congress has exempted applicants for adjustment of status from before June 1, 1978 from both the annual worldwide limit and the per-country limit. Similarly, 75% of the family-sponsored 2-A category for spouses and children of lawful permanent residents is exempt from per-country limitations.

The Immigration and Nationality Act (INA) — which sets overall worldwide limits on immigration — also exempts workers who serve the U.S. “national interest” from otherwise applicable labor-certification requirements, provided there is no U.S. worker displacement.

Finally, U.S. Citizenship and Immigration Services (USCIS) policy allows expedited adjudication of immigration benefits for cases of “compelling U.S. government interests”.

As such, a solid argument exists that omitting certain EB-5 visas—such as China and India—from annual limits would be in the government’s best interest.

Investments in infrastructure, healthcare, urban revitalization initiatives, STEM research, public-private partnerships, and distressed businesses would be ideal cases for this method of visa exemption.

Omitting Family Member Dependents From EB-5 Limits

In 2017, Senator John Cornyn (R-TX) drafted a comprehensive EB-5 reform proposal that would not count dependents in the annual visa limits. This would increase the number of available EB-5 visas.

Additionally, exempting dependents is backed by legislative history underlying the current law.

Congressional records show that legislators creating the EB-5 program originally intended for 10,000 investors to immigrate to the U.S. each year and create 100,000 jobs. In reality, much of the EB-5 visa supply goes to dependent family members, i.e. spouses and children.

Reallocate Diversity Visas

Reallocating most or all of the Diversity Visa category would align with current economic needs, especially if designated for recovery needs involving infrastructure, revitalization initiatives, distressed projects, and public-private partnerships.

For example, evenly distributing the 55,000 diversity visas amongst the five employment-based preference classes would add 11,000 more EB-5 visas.

Alternatively, reallocating the current statutory proportion of 7.1% of the employment-based worldwide limit would add 3,905 more visas to the current EB-5 supply

Recapture Leftover Visas

By some estimates, there are roughly 180,000 employment-based visas that have never been used. These visas could be “recaptured” for use in the EB-5 category, a process that has been utilized by Congress in the past.

For instance, the American Competitiveness in the Twenty-First Century Act recaptured 130,107 employment-based visas that were available but went unused in Fiscal Years 1999 and 2000. In a similar fashion, the REAL ID Act of 2005 recaptured 50,000 employment visas for Schedule A (healthcare) workers.

These laws recaptured unused visas after the year 2000. However, a significant number of leftover employment-based visas from before the year 2000 “fell across” to family-sponsored categories but were never used. While these could be recaptured for EB-5 purposes, the issue largely hinges on political palatability.

Softening the Visa Wait

Not all proposed solutions to the visa supply problem involve adding more visas. For example, EB-5 investors and their dependents awaiting visas could be afforded the chance to live in the United States while their petitions are being adjudicated. They could also receive travel permits and employment authorization, similar to the benefits available through concurrent filing.

Whereas concurrent filing is only available to applicants already residing in the U.S., this proposed solution would soften the visa wait for those living overseas and incentivize EB-5 demand.

An EB-5 bill from 2019, S. 2778, not only proposed these benefits but demonstrated bipartisan support for the concept as well. This bill also contains age-out protections for dependent children, crucial for keeping families together and preserving immigration benefits for an investor’s children.

A similar solution to the one discussed above is creating a nonimmigrant visa category specifically for EB-5 immigrants to allow work and travel.

Legislative Versus Executive Solutions

There are many options Congress can consider for increasing EB-5 supply and bolstering post-COVID-19 economic recovery. While this article is not an exhaustive list, it contains both legislative and executive strategies for the EB-5 visa limit issue.

Legislative solutions include those found in the EB-5 Reform and Integrity Act of 2022, which introduced some of the most extensive changes seen in the program’s history. In the hierarchy of legal authority, an act of Congress is second only to the opinions of the Supreme Court. As such, a legislative fix would be extremely robust and effective in amending EB-5 stipulations.

An executive fix would be one from an administration ordering agencies under its authority.

While the U.S. economy could benefit from more funding from EB-5 investors, thousands of real estate projects have already benefitted from EB-5 capital. For more information on the EB-5 program, schedule a free consultation with EB5AN.