America’s EB-5 investor visa programme backlog is putting Chinese capital at risk
- EB-5 investors fall victim to programme’s popularity as US$17 billion is up to be reinvested without clear guidelines
- Missteps could lead to big capital losses and backlash from investors, disrupting a programme that supporters say has helped create millions of American jobs
A controversial investor visa programme that brought scandal to US President Donald Trump’s in-laws faces an uncertain future as US$17 billion in Chinese investments sits in limbo for longer periods due to a processing backlog in the popular programme.
With a sharp uptick in Chinese applications for the visa programme known as EB-5, waiting times for applicants to obtain US residency have tripled to as long as 15 years. But the programme has no clear guidelines about what happens to the investments during that time, creating more risk.
“It’s a guessing game. Everybody is trying to figure out what to do and it’s a huge problem,” said Stephen Yale-Loehr, a lawyer at Ithaca, New York-based law firm Miller Mayer and an immigration law professor at Cornell Law School.
US developers feel pinch as visa-seeking Chinese pull back on investments
Created in 1990, the EB-5 visa programme allows a foreign national who makes an investment of at least US$500,000 that creates 10 American jobs in a high unemployment or rural area, to become a permanent resident, along with his or her family, usually in five to seven years. The capital, typically in a five-year loan, is returned to the applicant once the residency is granted.
Because real estate projects create jobs, first through construction work and then through service employment, many EB-5 visa investments go to those developments. EB-5 investments are allowed to be pooled together in “regional centres”, often financial services firms that sponsor EB-5 projects and act like bank underwriters to syndicate the loans for the projects.
Redeployment – that is, reinvesting the capital after the real estate projects are completed and the money is no longer in use – is only the latest challenge for EB-5, which has often faced questions about the source of certain funds as well as allegations about questionable projects.
One flap last year concerned Nicole Kushner Meyer, the sister of Jared Kushner – Trump’s son-in-law and senior adviser.