A federal program, known as EB-5, was created by Congress during the recession of 1990 to offer foreigners a way to earn a green card by investing in American construction projects.
The program is so successful that applications have quadrupled in the last two years. The minimum investment in the program was set at $1 million, but if the project is in a rural area or a place where the unemployment rate is fifty percent above the national average, the minimum investment is $500,000. The program is intended to encourage more development and job growth in poor areas, but some evidence suggests that, through selective use of census statistics, state officials are using gerrymandering techniques to designate development zones as having high unemployment in areas that are actually economically flourishing. Consequently, officials and developers are able to allocate more foreign investment toward prospering districts rather than areas in need of more help.
Are state authorities adhering to the spirit of the law? Federal regulators have said states determine whether projects are located in areas of greatest need, but should the federal government be doing more to ensure that states are using these funds properly? Is this system fair for those who want citizenship put don’t have an extra $500,000 to invest? Are there risks associated with having too much foreign money invested in U.S. real estate?
Patrick McGeehan, reporter, New York Times, co-wrote “Rules Stretched as Green Cards Go to Investors”
Brook Taylor, deputy director, California Governor’s Office of Business and Economic Development
Thomas A. Saenz, President and General Counsel, MALDEF, Mexican American Legal Defense and Education Fund