People from the Chinese mainland were again the largest recipients of fast-track EB-5 visas last year, which provide wealthy foreigners access to permanent US residency. Chinese mainlanders received 8,308 visas, followed by 162 for South Koreans and 99 for people from Taiwan, according to the National Law Review.
The EB-5 program grants permanent residence in exchange for investments of at least $1 million for an ongoing project or a new business in the US that creates at least 10 or more jobs.
If the visa is granted, the investor and his immediate family, including children under the age of 21, are granted conditional permanent residence. After two years, if the investor can show that his investments have created the required number of jobs, he is granted permanent residence.
The program grants 10,000 foreign residents investor visas every year. Every country is allotted 7 percent of the 10,000, but if a country’s quota is not reached, then the remaining visas are given to applicants from other countries.
People from the Chinese mainland now account for more than 80 percent of EB-5 visas issued, compared to just 13 percent a decade ago, according to the US State Department. Last year, they received 6,895 EB-5 visas. In 2004, only 16 were granted to them.
The program is administered by an agency within the Department of Homeland Security. It is scheduled for an annual renewal by Congress in September, but is now undergoing an audit by the US Government Accountability Office (GAO), an independent watchdog for Congress.
The GAO said last year that the audit had been requested by three Republican senators: Chuck Grassley of Iowa, Bob Corker of Tennessee and Tom Coburn of Oklahoma.
Grassley replaced Democrat Patrick Leahy, a US Senator from Vermont, who was the previous chairman of the Senate Judiciary Committee and a supporter of the EB-5 program.
When the audit was announced in December, Grassley said, “I’ve had too many whistle-blowers come forward expressing concerns with the EB-5 program, to not have some trepidations with it.”
Federal agencies have raised national-security concerns, he said, and efforts have been made at the request of politically influential people to expedite visa requests. “There are a number of flaws in the program itself and in how the program is run,” he said. “The GAO can help Congress sort through the vulnerabilities as we look at reauthorizing the program.”
EB-5 visas have become a critical source of capital for high-profile urban-development projects in several cities. In New York, the development of the Hudson Yards in Manhattan and projects near the entertainment and sports arena Barclays Center in Brooklyn have raised money through the EB-5 program.
“The results of the Government Accountability Office audit will impact the debate on the future viability of the program and its reauthorization,” said Jennifer Magalhaes, associate at Reed Smith law firm.
“As we approach September, any uncertainty surrounding extension of the program, coupled with a strengthening US dollar, may prove to be a disincentive to foreign investors, frustrating EB-5 financing opportunities for real estate developers,” Magalhaes wrote on Lexology, a law intelligence database.
In New York City, the development of the Hudson Yards in Manhattan and projects near entertainment and sports arena Barclays Center in Brooklyn have raised money through the EB-5 program.