It is no surprise that the most recent effort to "reform" the EB-5 program, put out by the Chamber of Commerce and its allies, is an effort to keep the program pretty much as it is (with much window dressing). But it is odd that their sleek, super-well-paid publicists would produce such a sloppy document.
As background, the EB-5, or immigrant investor program, rewards alien investors with a family-sized set of green cards for – in most cases – a $500,000 investment that has been approved by, but is never guaranteed by, the Department of Homeland Security. These $500,000 investments are in places called "Targeted Employment Areas", where unemployment is supposed to be 50 percent above the national average. The EB-5 middlemen draw these TEAs, often creating odd shaped entities, such as one that links wealthy parts of Manhattan's West Side (such as Hudson Yards), through Central Park to distant areas of Harlem.
This is economic gerrymandering. Money designated by Congress for poor areas goes to rich ones, and thus the shape of, and the impact of, these TEAs is a central part of the EB-5 controversy. So it is odd that they are treated in the following clumsy way by Chamber of Commerce publicists:
In a covering note Lauren Edmonds of GPG (we'll get back to these initials later) says the "reform package" will have this, as well as other elements:
Addressing concerns about 'TEA gerrymandering," by limiting these TEAs to a single-census tract that is designated by the Treasury as a "Qualified Opportunity Zone" under the Tax Cuts and Jobs Act.
This certainly could be understood to mean all TEAs, 100 percent of them.
Then we have this in a longer letter from the Chamber being sent to the chairs and the ranking members of the two Judiciary Committees:
The balanced principles we propose would provide market advantages to Targeted Employment Area (TEA) projects in rural communities and distressed urban census tracts designated by the U.S. Treasury Department as "Opportunity Zones." Notably, we recommend a 30% set aside of the annual visa allotment each year for investors in TEA projects, which would be split equally between Rural and Urban Distressed communities.
Now, in the letter to Congress it is made clear that 70 percent of the grants will be handled in something like the current manner, and there will be a 30 percent set-aside for a different approach. This would not be much of a change from current practices – a bit, but not much.
Next, Congress was sent a more detailed "Consensus Recommendation for EB-5 Regional Center Reform" (included in the source cited above), which calls for
- 5% of visas for Rural
- 15% of visas for Urban Distressed
So the "reform" deals with not 100 percent, not 30 percent, but 20 percent of the total group of TEAs.
Over and above the bewildering presentation, the rest of the documents calls for a one-year long quadrupling of the 10,000 a year limit set by Congress; the CoC says that there is a backlog of about 30,000 EB-5 visas, and instead of simply temporarily not issuing any more visas until the backlog goes away, it proposes that alien families willing to make a nearly nominal $50,000 payment could eliminate their waiting period.
It is bad enough that the administration wants to keep legal immigration at its current high levels, but here is a proposal to add 30,000 more people to the flood of arriving immigrants. The "pay extra money to get to get to the head of the queue" notion fits perfectly with the idea that the rich should get everything they want as soon as they want it.
The consensus document then deals with what to do with the $1.5 billion to be raised in this way:
The revenues raised by the EB-5 backlog fee should be maintained separately for use by Congress for programs deemed to be in the national interest.
Duh. One might observe that, typically, that is how Congress acts anyway.
The coalition writing this document with the CoC includes, fittingly, the Real Estate Board of New York, where the largest chunk of EB-5 money is currently spent. In order not to rock any boats, the coalition calls for a mild increase in the current $500,000 amount, set a quarter of a century ago, to $800,000, and a decrease in the (seldom-used) EB-5 category of alien-managed investments from $1,000,000 to $900,000. You might think that the 30,000 backlog at $500,000 means that the required level of investment was set so low that a much larger increase could be demanded and still the 10,000 a year slots would all be filled, but the CoC apparently disagrees with that market-driven observation.
This last decision, to go to $800,000 for most EB-5 visa sets, is not an error in presentation; it is an obtuse judgement call from the industry itself.
Speaking of presentation, the cover note from Ms. Edmonds is on e-stationery that bears the initials GPG and a D.C. phone number and nothing more. It, arrogantly, I think, assumes that the recipient will know that GPG stands for Glover Park Group, a D.C. publicity firm. (I had to use Google to figure that out.) Glover Park might be described as a middle-class neighborhood that is either adjacent to, or part of, wealthy Georgetown, which, in turn, is an area within Washington, D.C.