Immigrant-investor program EB-5, like the wicked witch, is dead, at least for the moment

By David North on June 30, 2021

Washington Times, June 30, 2021

Ding-dong, the wicked witch is dead
Wake up, you sleepy head, rub your eyes, get out of bed
Wake up, the wicked witch is dead!
— Harold Arlen and Yip Harburg from “The Wizard of Oz”

EB-5, the wicked witch of immigration programs (the only one that allows aliens to buy U.S. citizenship) is dead — at least for the moment.

The heart of the EB-5 immigrant-investor program, which puts 10,000 green cards a year up for sale to rich aliens, most of them from Communist China, died at the close of business on June 30. Always a program with temporary congressional authorization, EB-5 failed to get renewed last week, and since the Senate is in recess till July 12, EB-5 is dead, at least for now.

The EB-5 program has two main parts; the smaller piece of the program, that calling for aliens to actually run a business in the U.S., has a permanent authorization but few customers. But the larger segment, which dealt with pooling aliens’ investments through middleman “regional centers,” never had a permanent authorization and had to be periodically renewed by Congress.

Until November 2019, an alien could buy a set of visas by putting $500,000 into a Homeland Security-designated, but not guaranteed investment, usually in big city real estate ventures. This gave the investor, along with his or her spouse and all their under-21 children, a route to green cards, and beyond that to citizenship.

The principal de facto economic role of the program was to supply cheap capital to big city real estate developers, to fatten their profits in already planned projects. It rarely created jobs in depressed rural or small city areas, as it was originally supposed to do. And in a couple of cases in which the program did reach into rural areas — GOP ones in South Dakota and Democratic ones in Vermont — a barrage of scandals ensued, with prison terms looming over some of the U.S. citizen middlemen involved.

In 2019, the Trump administration, following recommendations crafted under former President Obama, made two major changes. First, it upped the minimum ante to $900,000; the $500,000 figure had been set back in the prior century and its increase was long overdue.

The other reform made it more difficult to draw boundary lines in such a way as to gerrymander a high-end development into a “depressed” area. Formerly, a regional center could draw a map of census tracts for a project that included the actual site as well as distant slums. In one such venture, a building on Wall Street was linked on paper, via a body of water and some industrial areas, to a distant housing project in Brooklyn, thus creating the low average unemployment rate needed for Department of Homeland Security approval.

These carefully manipulated zones, called Targeted Employment Areas, can put just about any piece of real estate in a nominally depressed area. A few years ago, it took me only a little over an hour to create a depressed area that included the White House, one of America’s more expensive residences; I took the census block that includes the presidential mansion, and tied it to others till the TEA stretched into the poverty the lies on the other side of the Anacostia River, and voila! I had an area that was depressed by EB-5 standards.

Nor is this merely hypothetical. EB-5 funds were used to build, among many other projects in “depressed” areas, the Waldorf Astoria in Beverly Hills, Hudson Yards on Manhattan’s West Side, and Paramount Miami Worldcenter, a luxury condominium tower with a rooftop landing pad for flying cars. The reforms backed by both the Obama and the Trump administrations would block the economic gerrymandering that made this possible.

It is possible that EB-5 can be brought back, with (using a different movie metaphor) Senate Majority Leader Charles Schumer, New York Democrat, playing the unlikely role of Prince Charming kissing it back into life. Mr. Schumer loved the way that a disproportionately large chunk of the EB-5 investments went into lush projects in Manhattan, and he has often created ways to extend the EB-5 program by tying provisions for it to “must-pass” appropriations bills.

But, at least for a while, nobody will be buying their way into this country.

Ding dong, the wicked witch is dead!