Cost of some visas set to nearly double

Minimum entry cost jumps to $900,000, up from $500,000

A U.S. visa that awards green cards to foreign investors will require a much larger investment under new rules released this week that are slated to take effect Nov. 21.

Foreign citizens are already contacting immigration lawyers about getting their EB-5 investor visa applications in before the new rules impose higher costs, but once the rules are in place, EB-5 investments will drop and fewer jobs will be created through the program, one immigration lawyer said.

The EB-5 visa, created in 1990 to stimulate the economy through job creation and capital investment, will under the new rules require a minimum investment of $900,000 instead of the current $500,000, U.S. Citizenship and Immigration Services said. That minimum amount will be for investments in businesses in rural areas or regions of high unemployment. For investments in other areas, the minimum will be $1.8 million, compared with the current $1 million.

Homeland Security had originally proposed a new minimum of $1.35 million.

The visa will still require creation of at least 10 full-time jobs but the new rule strips states of the ability to designate areas as rural or high-unemployment “Targeted Employment Areas” to qualify EB-5 applicants for the lower investment threshold. The U.S. Department of Homeland Security will make all such designations, according to the new rules.

Under current rules, developers offering investment opportunities to people seeking EB-5 visas have worked with officials in some states to effectively gerrymander regions to create Targeted Employment Areas that encompass smaller regions without unemployment levels that meet the visa’s requirements, said Mitch Wexler, a Los Angeles-based partner at immigration law firm Fragomen.

The EB-5 program provides a two-year conditional green card upon issuance of the visa, and visa holders who remain eligible can obtain full permanent residency after two years. Up to 10,000 EB-5 visas are issued per year.

An industry has emerged around the EB-5 program, with developers marketing projects to foreign citizens, Wexler said. But because an investor’s main priority is almost always getting a green card, returns on the investments have typically been less

than 3 percent, he said.

“This isn’t really a financial investment,” Wexler said. “Clients view the return on investment as the value of green card.”

Republican Sen. Chuck Grassley of Iowa said in a press release Tuesday that he’d been warning for most of the last decade that the EB-5 was being abused “to

steer investment away from rural America. He added that the new rules would bring opportunities to rural America and “communities in need.”

In the Bay Area, a lawyer and her firm’s office manager were charged earlier this year with criminal fraud, identity theft and obstruction of justice, as well as with civil fraud, over alleged crimes and abuses related to the EB-5 program. The Securities and Exchange Commission

said that between 2008 and 2016, the two made $12.7 million in illegal commissions by referring more than 400 clients to groups that bundle investments from foreigners seeking EB-5 visas.

And two dozen Chinese investors late last month sued a Santa Clara County businesswoman claiming fraud, after they each put up $500,000 investments.