ME Considers State-Run EB-5 Program, GAO Report Looks at Economic Impact of EB-5 Programs

Due to a lack of activity by the state’s three privately-run regional EB-5 centers that serve the state of Maine, the Maine Department of Economic and Community Development (MECD) is considering launching its own EB-5 visa program to attract more direct foreign investment to the state, according to the Bangor Daily News. Under the proposed state-run EB-5 program, the state hopes to create economic prosperity and job creation by stimulating foreign direct investment into economic development projects across the state – in return the foreign investors gain a fast-track path to citizenship. To be eligible for the EB-5 program, foreign investors must invest $500,000 to $1 million in a project that helps create or retain at least 10 jobs in the United States. The recent announcement comes almost four years after the state legislature directed MECD to set up a state-run regional center. However, the state has not allocated funding for the program yet, according to the Sun Journal. If Maine proceeds with the proposal, it would be one of only a handful of states that has a state-run EB-5 program. In addition to targeting investment in traditional economic development projects, several states have successfully used the EB-5 program to attract foreign investments in tech startups, advanced manufacturing companies and other projects that help grow their state’s innovation economy.

A recent report, however, from the U.S. Government Accountability Office (GAO) has found problems in the economic impact reporting of the EB-5 program and the potential for fraud. Administered by the Department of Homeland Security’s (DHS) U.S. Citizenship and Immigration Services (USCIS), the EB-5 Program has created a minimum of 73,730 jobs and attracted more than $11.2 billion in foreign investments since its inception in 1990 through 2014. GAO contends that USCIS’s methodology for reporting program outcomes and overall economic benefits is not valid and reliable because it may understate or overstate program benefits in certain instances as it is based on the minimum program requirements of 10 jobs and a $500,000 investment per investor instead of the number of jobs and investment amounts collected by USCIS on individual EB-5 Program forms. In the report, GAO recommends several strategies to increase the accuracy of economic impact data reported by USCIS on EB-5 funded projects. It also calls for an economic valuation of the program to understand both the societal costs and economic benefits of the program. GAO concludes the report with several recommendations to reduce the potential for fraud in the EB-5 program. Read the report…