Immigrant Investor Program: Proposed Project Investments in Targeted Employment Areas

What GAO Found

Congress created the Employment-Based Fifth Preference (EB-5) immigrant visa category to promote job creation and encourage capital investment in the United States by foreign investors.  EB-5 Immigrant Investor Program (EB-5 Program) requirements include investing
$1 million in a new business that will result in the creation of at least 10 permanent full-time jobs or a reduced amount of $500,000 if the investment is made in a targeted employment area (TEA)—defined as an area that is rural or has an unemployment rate at least 150 percent of the national average. GAO estimates from its review of a generalizable simple random sample of unadjudicated EB-5 Program petitions (Form I-526) that about 99 percent of the 6,652 EB-5 petitioners who filed a petition in the fourth quarter of fiscal year 2015 elected to invest in a project located in a TEA. The remaining one percent of petitioners elected to invest in a project that was not located in a TEA.

GAO also estimates from its review of Form I-526 files that about 90 percent of petitioners from the fourth quarter of fiscal year 2015 electing to invest in a high unemployment TEA, based the TEA on the average unemployment rate for a combination of census areas (e.g. tracts), as allowed under the program. The remaining petitioners (10 percent) based the TEA on the unemployment rate of a single census tract, census block group, or county. Of the 90 percent of petitioners from the fourth quarter of fiscal year 2015 who based a high unemployment TEA on the average unemployment rate of a combination of census areas, an estimated 63 percent used 2 to 10 census areas, 26 percent combined 11 to 100 census areas, and the remaining 12 percent combined more than 100 census areas (percentages do not sum to 100 due to rounding).  

GAO’s review of EB-5 petitioner business plans included in the Form I-526 files from the fourth quarter of fiscal year 2015 showed substantial differences in the number of potential project investors and costs, and that EB-5 investment in projects located in a TEA was generally less than non-EB-5 investment by other foreign or U.S. investors. Under the program, petitioners can combine their business investment with other foreign and U.S. investors. GAO estimates that the median percentage of total potential EB-5 investment is 29 percent of the total estimated project cost, and the estimated mean percentage is 40 percent. About 74 percent of petitioners from the fourth quarter of fiscal year 2015 who elected to invest in a TEA invested or planned to invest in various types of real estate projects including mixed use, hotels and resorts, commercial, and residential developments; while the remaining 28 percent of petitioners invested or planned to invest in projects such as infrastructure projects or transportation, restaurants, medical, and education facility projects (percentages do not sum to 100 due to rounding).

Why GAO Did This Study

About 10,000 EB-5 visas per fiscal year are made available to qualified immigrant investors and their families seeking to immigrate to the United States through the EB-5 Program. EB-5 Program petitioners submit a Form I-526 to the Department of Homeland Security’s U.S. Citizenship and Immigration Services for adjudication, along with supporting materials, including a business plan. GAO was asked to provide information on projects that petitioners included with their Form I-526 petition. This report provides information from unadjudicated petitions submitted during the fourth quarter of fiscal year 2015 on the (1) proportion of petitioners who did or did not elect to invest in a TEA; (2) proportion of petitioners basing a high unemployment TEA on various types of geographic areas; and (3) EB-5 investment as a proportion of the total investment in petitioners’ TEA projects.

GAO selected and reviewed a simple random sample of 200 of the 6,652 Form I-526 petitions submitted in the fourth quarter of fiscal year 2015 based on volume and availability. The sample of 200 petitions allowed GAO to generalize the results to the universe of 6,652 petitions filed in the fourth quarter of fiscal year 2015 with a confidence interval of +/- 7.5 percentage points or less for percentage estimates at the 95 percent confidence level. For estimates of means and medians, the 95 percent confidence interval is within +/- 13 percentage points or less.  GAO’s sample of Form I-526 files from the fourth quarter may not be representative of Form I-526 files submitted in other quarters.