The EB-5 program was launched in 1990 to encourage investment in economically disadvantaged areas. Foreigners did not begin until 2008, when the turbulence on the American capital markets led real estate developers to look for other ways to raise money. Currently, more than $ 5 billion is being generated each year for nearly 10,000 green cards ̵
As the EB-5 program works, states can choose which areas and projects are eligible. As a result, most of the EB-5 investment flowed into fast-growing urban centers. However, some legislators wanted to focus the program more on poor rural areas. Another criticism is that states have challenged high-end projects for EB-5 investment by including poor neighborhoods in EB-5 districts – as is customary in electoral politics. A common example is Hudson Yards, the massive refurbishment project in New York City. (WarnerMedia, the parent company of CNN, has offices in Hudson Yards.)
In addition to raising minimum investment, the new scheme essentially excludes states from the process, meaning that only the state security can pull out districts that are eligible for EB-5 holdings. Theoretically, this should provide more capital for less populated areas.
It is not clear how the changes will affect the total amount of EB-5 investment. Property developers value the program because it allows them to offer lower returns than usual as investors receive green cards that are valuable in themselves.
In its final rule, the DHS stated that there are currently far more applications than there are Visa slots, so if enough aspiring US citizens are prepared to pay more for a green card, that could mean that Program more and not less investment generated.
The new ruling was first proposed by the outgoing Obama administration in January 2017.
Many of the complaints about the EB-5 program are similar to those raised in the opportunity zone tax incentive created by the tax cuts and Jobs Act in late 2017. It is predicted that far more investment will be made each year than EB -5-Visa. However, the benefits for the communities are dubious, as there are very few restrictions on how the money can be used so that investors earn high revenues cutting their capital gains taxes.