The EB-5 visa program, which advocates describe as a jobs initiative that has so far injected $20 billion into the US economy, may have been damaged by its links to the occupants of the White House.
“I know everyone’s heard about Kushner and the latest EB-5 project that’s going on right now and how Trump’s being brought into that conversation,” said Greytone’s Allison Berman during a panel at the Real Estate Weekly Women’s Forum.
Berman was referring to the Kushner family’s One Journal Square pitch to Chinese investors last month. The incident raised conflict of interest issues, with Nicole Kushner Meyer, the sister of President Trump’s son-in-law Jared Kushner, seemingly using family ties to the White House to generate business.
“Unfortunately with the latest EB5 project over in New Jersey people are looking less at the benefits and more at how Trump and his family might benefit. And I think that’s very unfortunate,” Berman said.
Legislators have long derided the program as a vessel for abuse and fraud. Last February, Senator Diane Feinstein and Senator Chuck Grassley introduced legislation to eliminate the program, saying that it “lacks a reliable or verifiable way to measure job creation.”
“Many of the wealthiest areas in America have been inaccurately designated as ‘high-unemployment’ in order to allow investors to obtain a green card,” the pair said in a statement.
Opposition to the program has also gained strength due to accusations of improprieties. In one recent case, a Chinese investor named Shilan Zhao reportedly submitted false paperwork for his EB-5 investment. He also obtained immigration status for Jianjun Qiao, who is accused of embezzling funds from a Chinese state-owned company.
Heidi Learner, Savills Studley’s chief economist, bluntly described the program as “visa for sale.” However, she denies that there is widespread abuse, essentially leveling irregularities on “bad actors.”
Berman, whose firm recently gained regional center approval to expand its EB-5 business to 15 states, outlined the benefits of the program, which she claimed outweighs its negative aspects.
“If you look at EB5, at the end of the day, investors are getting a visa and they are putting money into the country. But also, it’s legal immigrants coming into the country, mostly to put their kids through school. That’s really their main objective. To be perfectly honest with you some of the main investors don’t even come here. They just want their kids to go to school. So they’re putting money in, they’ve put $20 billion into the economy, they’ve definitely created jobs, it’s created affordable housing,” she said.
Nonetheless, Berman expects changes to the program. “We’re definitely going to see some changes, and I think a lot of the changes that we see will be helpful for EB5. We’ll see integrity changes which will make the program much more protective of the investors that get into the program, to make sure they get their money back and they’re able to get their visas,” she said.
However, not all changes are likely to have a positive effect. She expects the minimum investment to be increased, from the current $1 million for a target employment area and $500,000 for a non-target employment area.
“The big question, of course, is how much will they go up if they go up,” she said, adding that raising the minimum investment too high may be damaging.
“I think that will stall EB-5 investment in the United States and I think that will actually be a shame. Because the program has created 175,000 jobs since it’s been started,” she said.
EB-5 is up for renewal in September. There is currently a proposal for revamping the program. The Department of Homeland Security has floated the possibility of raising the minimum investment to $1.35 million.