Report: Investor visa program mainly funds wealthy areas

A controversial investor visa program meant to boost economic development in poor and rural areas sends most of its money to well-off urban neighborhoods, according to a government watchdog report released this week.

The nonpartisan Government Accountability Office report, which reviewed 200 projects from 2015, appears to support claims that developers take advantage of lax requirements under the EB-5 visa program to gerrymander projects in poorer areas into wealthy areas.

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Only 1 percent of EB-5 investors funded projects outside “targeted employment areas (TEAs)" in the fourth quarter of fiscal year 2015, and just 3 percent of EB-5 projects were in rural areas, according to the report.

Seventy-seven percent of TEA projects in the timeframe were based in areas with an unemployment rate of 6 percent or lower. Forty-one percent of those projects were located in areas with 4-6 percent unemployment, and 36 percent were located in areas with 4 percent unemployment or lower. 

Just 12 percent of the reviewed TEA projects were based in areas with unemployment rates of 8 percent or higher.

The national unemployment rate at the time of those investments hovered around 5.1 percent. The Federal Reserve considers 5-5.2 percent the baseline for full employment, while guidelines set by legislation pin it closer to 3 percent.

Investors funding projects in TEAs are only required to give $500,000, while other projects have a $1 million minimum investment.

The EB-5 visa program, which woos foreign investment in American infrastructure with the promise of legal status and eventual citizenship, has brought billions of dollars in investment into the U.S. but has seen criticism after government and media investigations discovered fraud.

Lawmakers from rural and poor urban areas have also claimed the program lacks the proper safeguards to make sure investment is directed to the neediest areas.

The program’s critics, including Senate Judiciary Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyOvernight Defense: Pompeo blames Iran for oil tanker attacks | House panel approves 3B defense bill | Trump shares designs for red, white and blue Air Force One On The Money: Pelosi says no debt ceiling hike until deal on spending caps | McConnell pressures White House to strike budget deal | Warren bill would wipe out billions in student debt | Senate passes IRS reform bill On The Money: Pelosi says no debt ceiling hike until deal on spending caps | McConnell pressures White House to strike budget deal | Warren bill would wipe out billions in student debt | Senate passes IRS reform bill MORE (R-Iowa) and ranking member Sen. Patrick LeahyPatrick Joseph LeahyGOP nervous that border wall fight could prompt year-end shutdown GOP nervous that border wall fight could prompt year-end shutdown On The Money: Pelosi says no debt ceiling hike until deal on spending caps | McConnell pressures White House to strike budget deal | Warren bill would wipe out billions in student debt | Senate passes IRS reform bill MORE (D-Vt.), say developers use poor areas close to wealthy urban neighborhoods to gerrymander their projects into TEAs.

More than 80 percent of TEA projects used combined census tracts to qualify for the lower investment threshold, according to the report.

But EB-5 defenders, such as Sen. Charles SchumerCharles (Chuck) Ellis SchumerElection security bills face GOP buzzsaw Election security bills face GOP buzzsaw US women's soccer team reignites equal pay push MORE (D-N.Y.), John CornynJohn CornynTrump puts GOP in tough spot with remarks on foreign 'dirt' Trump puts GOP in tough spot with remarks on foreign 'dirt' Overnight Health Care: Pelosi to change drug-pricing plan after complaints | 2020 Democrats to attend Planned Parenthood abortion forum | House holds first major 'Medicare for All' hearing MORE (R-Texas) and Jeff FlakeJeffrey (Jeff) Lane FlakeDemocrats needle GOP on standing up to Trump Democrats needle GOP on standing up to Trump Amash gets standing ovation at first town hall after calling for Trump's impeachment MORE (R-Ariz.), counter that employees of those projects commute from those nearby poor areas.

The EB-5 program is set to expire on Dec. 9, the end of government funding through a spending bill passed in September.

Lawmakers have squabbled for a year over how to reform the program after House and Senate leaders scrapped a measure pushed by Grassley, Leahy, House Judiciary Committee Chairman Bob GoodlatteRobert (Bob) William GoodlatteTop Republican releases full transcript of Bruce Ohr interview It’s time for Congress to pass an anti-cruelty statute DOJ opinion will help protect kids from dangers of online gambling MORE (R-Va.) and ranking member John Conyers (D-Mich.) from last year’s government funding bill.