441 G St. N.W.
Washington, DC 20548

September 19, 2016
The Honorable Charles E. Grassley
Chairman
The Honorable Patrick J. Leahy
Ranking Member
Committee on the Judiciary
United States Senate
The Honorable Bob Goodlatte
Chairman
The Honorable John Conyers, Jr.
Ranking Member
Committee on the Judiciary
House of Representatives
Immigrant Investor Program: Proposed Project Investments in Targeted Employment
Areas
Congress created the Employment-Based Fifth Preference (EB-5) immigrant visa category as
part of the Immigration Act of 1990 to promote job creation and encourage capital investment in
the United States by foreign investors in exchange for lawful permanent residency (green card)
and a path to citizenship. 1 Upon meeting certain EB-5 Immigrant Investor Program (EB-5
Program) requirements—including investing $1 million (or $500,000) in a new commercial
enterprise that will result in the creation of at least 10 permanent full-time jobs—immigrant
investors and their eligible dependents may receive 2-year conditional green cards to live and
work in the United States. 2 In order to promote EB-5 investment in geographic areas that
struggle to attract development, Congress authorized, and the former U.S. Immigration and

1

Pub. L. No. 101-649, tit. I, subtit. B, pt. 2, § 121, 104 Stat. 4978, 4989-94 (classified, as amended, at 8 U.S.C. §§
1153(b)(5), 1186b). The accompanying report of the Senate Judiciary Committee states that the EB-5 visa category
“is intended to create new employment for U.S. workers and to infuse new capital into the country.” See S. Rep. No.
101-55, at 21 (1989).

2

See 8 U.S.C. §§ 1153(b)(5)(A) (general EB-5 requirements), (C) (amount of capital required), (D) (full-time
employment defined), 1186b(a)(1) (alien entrepreneur receives conditional lawful permanent resident status); 8
C.F.R. § 204.6(e) (definitions), (f) (required amounts of capital), (h) (establishment of a new commercial enterprise),
(j)(4)(ii) (to show that the new commercial enterprise established through a capital investment in a troubled business
meets the statutory employment creation requirement, the petition must be accompanied by evidence that the
number of existing employees is being or will be maintained at no less than the preinvestment level for a period of at
least 2 years). After initial EB-5 Program requirements are met, immigrant investors and their eligible dependents
must be admitted to the United States under EB-5 visas, or if already in the United States, have their statuses
adjusted in order to obtain conditional permanent residency. See 8 U.S.C. §§ 1153(b)(5), 1201, 1255(a). Eligible
dependents (or derivative family members) are the immigrant investor’s spouse and unmarried children under the age
of 21. See 8 U.S.C. §§ 1153(d), (h), 1186b(a), (f).

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GAO-16-749R Immigrant Investor Program

 Naturalization Service 3 set, the lower investment amount of $500,000 if the investment is made
in a targeted employment area (TEA)—defined as either (1) an area that at the time of
investment is either a rural area (rural TEA) or (2) an area that has experienced unemployment
of at least 150 percent of the national average rate (high unemployment TEA). 4
Approximately 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. 5 Under the EB-5 Regional Center Program, which was first enacted as a pilot in 1992
and reauthorized numerous times since, a certain number of the EB-5 visas are set aside
annually for immigrant investors in economic units called regional centers which are established
to promote economic growth. 6 Immigrant investors can choose to invest on their own or with
others directly in a business, or they may pool their investment with those of other immigrant
investors and other foreign and U.S. investors to fund a new commercial enterprise within a
regional center. Most recently, the Regional Center Program was extended until September 30,
2016. 7
Several federal and state agencies are involved to varying degrees in the EB-5 Program. Within
the Department of Homeland Security’s (DHS) U.S. Citizenship and Immigration Services
(USCIS), the Immigrant Investor Program Office (IPO) administers the EB-5 Program—
adjudicating petitions and applications while striving to ensure that program participants,
including foreign investors and principals operating U.S. regional centers, comply with
requirements of the program. Prospective immigrant investors petitioning to participate in the
EB-5 Program submit a Form I-526: Immigrant Petition by Alien Entrepreneur to IPO for
adjudication, along with supporting materials including a business plan, information on source of
funds, and other documentation. 8 Prospective immigrant investors electing to invest in a high
unemployment TEA for a reduced investment threshold of $500,000, may also include a letter
with their Form I-526 certified by the state government’s authorized body, or provide alternative
evidence, that the geographic or political subdivision in which the commercial enterprise or

3

The Homeland Security Act of 2002 (Pub. L. No. 107–296, 116 Stat. 2135) dismantled the former Immigration and
Naturalization Service (INS) and distributed its functions across three components within the newly created
Department of Homeland Security (DHS). On March 1, 2003, DHS’s Bureau of Citizenship and Immigration Services,
now known as U.S. Citizenship and Immigration Services (USCIS) officially assumed responsibility for the
immigration service functions of the federal government.

4

See 8 U.S.C. § 1153(b)(5)(B)(ii), (iii); 8 C.F.R. § 204.6(e), (j)(6).

5
See 8 U.S.C. §§ 1151(d) (worldwide level for employment-based immigrants), 1153(b)(5)(A) (no more than 7.1
percent of employment-based visas are to be made available to qualified immigrants seeking to enter the United
States for the purpose of engaging in a new commercial enterprise).
6

See Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993,
Pub. L. No. 102-395, tit. VI, § 610, 106 Stat. 1828, 1874 (1992) (classified, as amended, at 8 U.S.C. § 1153 note).
Under 8 C.F.R. § 204.6(e), a regional center is defined as any economic unit, public or private, which is involved with
the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and
increased domestic capital investment. See also 8 C.F.R. § 204.6(m)(3), (6).

7

See Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, div. F, tit. V, § 575, 129 Stat. 2242, 2526 (2015).

8

Other petitions and applications adjudicated by USCIS include the Form I-829: Petition by Entrepreneur to Remove
Conditions, submitted by immigrant investors to remove the conditional status of green cards for themselves and
family members upon completing EB-5 Program requirements; and the Form I-924: Application for Regional Center,
submitted by sponsors of prospective regional centers requesting participation in the EB-5 Program.

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GAO-16-749R Immigrant Investor Program

 associated job creating entity is or will be principally doing business, meets a minimum
threshold for having an average unemployment rate at least 150 percent of the national rate. 9
USCIS regulations authorize a state government to delegate authority to certify TEAs in a
particular state to an agency, board, or other appropriate governmental body of the state.
However, such delegation must be reported to USCIS by a state official before the relevant
state agency, board, or other appropriate governmental body may designate a TEA and issue
TEA certification letters. The state authorized certifying bodies may provide TEA certification
based on the unemployment rate for any geographical or political subdivision, such as a single
census tract or county where the project is located or, as allowed under the program, the
average unemployment rate for a combination of census tracts or block groups 10 that are
connected to the project location in a continuous pattern to achieve an average unemployment
rate at or above the minimum threshold.
We have previously reported on USCIS’s management and oversight of the EB-5 Program. 11
Specifically, in February 2016 and August 2015 we found, among other things, that USCIS’s
methodology for reporting program outcomes and overall economic benefits was not valid and
reliable. We recommended that USCIS track and report data that investors report and that the
agency verifies on its program forms for total investments and jobs created through the EB-5
Program. DHS concurred with the recommendation and in August 2016, USCIS anticipated
developing a case management system that will enable USCIS to track and report data that
immigrant investors report in fiscal year 2017.
You asked us to provide information on projects that prospective immigrant investors
(petitioners) included with their Form I-526 petition for participation in the EB-5 Program. This
report provides information we gathered and reviewed from unadjudicated Form I-526 petitions
as well as associated documents submitted during the fourth quarter of fiscal year 2015 that
describe the (1) proportion of petitioners that did or did not elect to invest in a TEA; (2)
proportion of petitioners basing a high unemployment TEA on various types of geographic
9

See 8 C.F.R. § 204.6(i), (j)(6)(ii)(B). Instead of a state certification letter, the petitioner may provide his or her own
evidence that the metropolitan statistical area, the specific county within such area, or the county in which a city or
town with a population of 20,000 or more is located, in which the new commercial enterprise or an associated job
creating entity is principally doing business, has experienced an average unemployment rate of 150 percent of the
national average rate. See id. § 204.6(j)(6)(ii)(A); USCIS’s May 30, 2013 Policy Memorandum states that for the
purpose of the EB-5 Program, a new commercial enterprise is “principally doing business” in the location where it
regularly, systematically, and continuously provides goods or services that support job creation. Department of
Homeland Security, United States Citizenship and Immigration Services, EB-5 Adjudications Policy, PM-602-0083
(May 30, 2013).
10
According to the United States Census Bureau, census blocks are statistical areas bounded by visible features,
such as streets, roads, streams, and by nonvisible boundaries, such as selected property lines and city, township,
school district, and county limits and are the basis for all tabulated data. Census blocks are numbered uniquely with a
four-digit census block number from 0000 to 9999 within census tract, which nest within state and county. The first
digit of the census block number identifies the block group. According to USCIS officials, historically, the use of
census block groups has been rare, compared to the more common use of census tracts for TEA designations.
Census tracts are small, relatively permanent statistical subdivisions of a county or equivalent entity that are updated
by local participants prior to each decennial census. The primary purpose of census tracts is to provide a stable set of
geographic units for the presentation of statistical data.
11

GAO, Immigrant Investor Program: Additional Actions Needed to Better Assess Fraud Risks and Report Economic
Benefits, GAO-16-431T (Washington, D.C.: Feb. 11, 2016) and Immigrant Investor Program: Additional Actions
Needed to Better Assess Fraud Risks and Report Economic Benefits, GAO-15-696 (Washington, D.C.: Aug. 12,
2015).

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GAO-16-749R Immigrant Investor Program

 areas; and (3) EB-5 investment as a proportion of the total investment in petitioners’ TEA
projects.
As USCIS does not track information on projects that petitioners included with their Form I-526,
we selected and reviewed a simple random sample of 200 of the 6,652 Form I-526 petitions
submitted by petitioners to participate in the EB-5 Program in the fourth quarter of fiscal year
2015, from an electronic list USCIS provided of all fiscal year 2015 petitions. 12 We focused our
review on petitions filed in that timeframe because of the comparatively larger volume of
petitions submitted in the fourth quarter (47 percent) and because those petitions had not yet
been adjudicated by USCIS at the time of our review, making them still available for our
review. 13 Unless otherwise noted, our sample of 200 petitions allowed us to generalize the
results of our review 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. 14 For estimates of means and medians, the 95 percent
confidence interval is within +/- 13 percentage points or less.
To determine the reliability of the list of Form I-526 files USCIS provided for selecting our
sample, we compared the date the petitions were filed, the enterprise name, as well as other
information such as the file receipt number of each petition in the list to the actual hard copy
files in our sample and determined that the list was sufficiently reliable for selecting the sample.
The scope of our work did not include assessing the accuracy or reliability of the information
provided in our sample of I-526 petitioner files or USCIS’s adjudication process.
To estimate the proportion of petitioners in the fourth quarter of fiscal year 2015 that did or did
not elect to invest in a TEA, we first reviewed each Form I-526 in our sample of 200 petitioners,
which identified whether a petition was based on the full investment amount of $1 million or a
reduced investment amount of $500,000 in a commercial enterprise or associated job creating
entity in a TEA. If the latter, we then determined if the basis of the proposed TEA qualification
was for principally doing business in a rural area or high unemployment area by reviewing the
file for a TEA letter issued by the state, city, or other designated entity in the state where the
proposed project is or will be located. The presence of a TEA letter in the file indicated that the
TEA qualification was based on a high unemployment location. 15 For TEA petition files that did
not include a TEA letter, we reviewed the project business plan and other supporting materials
to confirm that the petitioner either submitted alternative evidence for a high unemployment TEA
or elected to invest in a rural TEA.

12

A simple random sample is a sampling design in which distinct units are selected from the population such that
every possible sample of a given size is equally likely.

13
For example, petitions filed in the fourth quarter were more likely to be available at USCIS office premises for our
review than petitions filed earlier in the fiscal year which were likely to have already been adjudicated and shipped to
the Department of State for visa processing, or to an offsite facility for storage. None of the fourth quarter Form I-526
petitions in our sample had been adjudicated as of May 16, 2016, the date we commenced review of the files.
14

Our sample of Form I-526 files from the fourth quarter may not be representative of Form I-526 files submitted in
other quarters. The margin of error exceeds 7.5 percent when examining some subpopulations.

15

Under EB-5 Program regulations, TEA state certification letters are not explicitly provided for in relation to TEA
qualification based on investment in a rural area. A rural area is defined as any area not within either a metropolitan
statistical area (as defined by the Office of Management and Budget) or the outer boundary of any city or town having
a population of 20,000 or more (based on the most recent decennial census of the United States). See 8 U.S.C. §
1153(b)(5)(B)(ii), (iii); 8 C.F.R. § 204.6(e), (j)(6).

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GAO-16-749R Immigrant Investor Program

 To estimate the proportion of petitioners in the fourth quarter of fiscal year 2015 that based a
high unemployment TEA on various types of geographic areas, we reviewed the Form I-526 and
the TEA letter, as well as associated appendices for each high unemployment TEA petition
included in our sample. We determined the proportion of petitioners that based a TEA on the
unemployment rate for a single census area (tract, block group, or county) or on the average
unemployment rate for a combination of census areas; and for TEAs based on a combination of
census areas, determined the number of census areas comprising the TEA. For all petitioners
who elected to invest in high unemployment TEAs, we calculated the unemployment rate for the
census tract or tracts in which every petitioner project was physically located (or primarily doing
business) 16 using the census-share methodology outlined by the Bureau of Labor Statistics
(BLS), data from the Census Bureau’s American Community Survey (ACS) 5-year Estimates, as
well as data from BLS Local Area Unemployment Statistics (LAUS) that was available on the
date of petitioners’ investments 17 Percentage estimates for this analysis are generalizable to the
population of EB-5 Program petitioners from the fourth quarter of fiscal year 2015 electing to
invest in a high unemployment TEA and have a margin of error of +/- 8.2 percentage points or
less at the 95 percent confidence level.
To estimate EB-5 investment as a proportion of the total investment for projects located in TEAs
that were included in fourth quarter fiscal year 2015 Form I-526 petitions, we reviewed the
business plans included in our sample of Form I-526 petition files. To estimate the percentage
of petitioners that elected to invest in different types of TEA projects, we reviewed the Form I526 and business plan for information on the type of business (e.g., mixed use real estate
development). 18 We categorized the business type for projects in our sample using seventeen
business type categories developed based on a pilot review of EB-5 petition files as well as on
previous related GAO work. 19 However, insufficient information was available to generalize
other attributes to this population, including EB-5 investment locations, the number of EB-5
investors by project, and total estimated project costs. While we could not estimate the results
for these attributes to the population of fourth quarter fiscal year 2015 petitioners, we were able
to present results for all or some of the 114 unique projects included in 198 of our sample 200
petitions that were based in a TEA. Additional details on our scope and methodology are
contained in enclosure I.

16

We determined the physical location of the projects based on census tract information petitioners provided in their
TEA letters, or by looking up the census information using the project address in petitioners’ files.

17

For more information on the census-share methodology, see Department of Labor (DOL), Memorandum for: State
Workforce Agency Administrators and BLS Regional Commissioners, DOL Local Area Unemployment Statistics
(LAUS) Technical Memorandum No. S-10-20. (July 21, 2010). Department of Homeland Security, United States
Citizenship and Immigration Services, EB-5 Adjudications Policy, PM-602-0083 (May 30, 2013). For projects that
were physically located in more than one census tract and for which we had location information, we averaged the
unemployment rate of up to four tracts. As the timeframe of petitioners’ investments ranged from fiscal year 2013 to
fiscal year 2015, to calculate the census tract unemployment rate we used the ACS and LAUS employment data that
were available on the date of a petitioner’s investment. Depending on the date of a petitioner’s investment, we used
ACS 5-year employment estimates for calendar years 2008-2012 or 2009-2013 as well as calendar years 2012,
2013, or 2014 annual employment averages from BLS LAUS.
18

For our purposes we defined mixed use development as a type of development that blends residential and
commercial uses.

19

GAO, Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors,
GAO-05-256 (Washington, D.C.: Apr. 1, 2005).

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GAO-16-749R Immigrant Investor Program

 We conducted our work from March 2016 to September 2016 in accordance with all sections of
GAO’s Quality Assurance Framework that are relevant to our objectives. The framework
requires that we plan and perform the engagement to obtain sufficient and appropriate evidence
to meet our stated objectives and to discuss any limitations in our work. We believe that the
information and data obtained, and the analysis conducted, provide a reasonable basis for any
findings and conclusions in this product.
In summary, most EB-5 petitioners from the fourth quarter of fiscal year 2015 elected to invest in
a TEA, and of these petitioners, most used the average unemployment rate for a combination of
census areas to qualify for a high unemployment TEA, as allowed under the program. EB-5
investment in projects located in TEAs was generally less than non-EB-5 investment by other
foreign or U.S. investors to the total estimated project cost, with most petitioners investing or
planning to invest in various types of real estate projects.
Most EB-5 Petitioners from the Fourth Quarter of Fiscal Year 2015 Elected to Invest in a
TEA
We estimate from our review of Form I-526 petition files from the fourth quarter of fiscal year
2015, that almost all (99 percent) of the 6,652 EB-5 petitioners who filed a Form I-526 petition in
the fourth quarter of fiscal year 2015 elected to invest in a project located in a TEA to qualify for
the reduced investment threshold of $500,000. The remaining 1 percent of petitioners elected to
invest at least $1 million in a project that was not located in a TEA (See fig. 1).
Figure 1: Estimated Percentage of EB-5 Petitioners from the Fourth Quarter of Fiscal
Year 2015 Electing to Invest in a Targeted Employment Area (TEA)

Note: Percentage estimates are generalizable to the population of 6,652 petitioners requesting to participate in the EB-5 Program in
the fourth quarter of fiscal year 2015, and have a margin of error of +/- 7.5 percentage points or less at the 95 percent confidence
level. Percentages do not sum to 100 due to rounding. An estimated 96.5 percent of EB-5 petitioners in the fourth quarter of fiscal
year 2015 elected to invest in a high unemployment TEA, 2.5 percent elected to invest in a rural TEA, and 1 percent elected not to
invest in a TEA.

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GAO-16-749R Immigrant Investor Program

 Most EB-5 Petitioners from the Fourth Quarter of Fiscal Year 2015 Based a High
Unemployment TEA on a Combination of Census Areas
We also estimate from our review of Form I-526 files from the fourth quarter of fiscal year 2015
that nearly all (90 percent) petitioners electing to invest in a high unemployment TEA, based the
TEA on the average unemployment rate for a combination of census areas as allowed under the
program (see fig. 2). The remaining petitioners (10 percent) based the TEA on the
unemployment rate of a single census tract, census block group, or county.
Figure 2: Extent EB-5 Petitioners from the Fourth Quarter of Fiscal Year 2015 Based a
High Unemployment Targeted Employment Area (TEA) on a Single Census Area or a
Combination of Census Areas

Note: Percentage estimates are generalizable to the population of EB-5 Program petitioners from the fourth quarter fiscal year 2015
electing to invest in a high unemployment TEA and have a margin of error of +/- 7.5 percentage points or less at the 95 percent
confidence level.

We further estimate that 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, most combined 2 to 10 census areas (tracts or block groups), as
shown in figure 3. Specifically, we estimated that 63 percent of petitioners combined 2 to 10
census areas, 26 percent combined 11 to 100 census areas, and the remaining 12 percent
combined more than 100 census areas, as allowed under the program (percentages do not sum
to 100 due to rounding). 20

20
Eighteen petitioners in our sample invested in projects that were physically located in more than one census area
and used those census areas and others to create a combined TEA. For example, a railway project based a TEA on
more than 100 census tracts and was physically located in many of those tracts.

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GAO-16-749R Immigrant Investor Program

 Figure 3: Estimated Percentage of EB-5 Petitioners from the Fourth Quarter of Fiscal
Year 2015 That Elected to Invest in High Unemployment Targeted Employment Areas
(TEA) Using Combined Census Areas by Number of Census Areas

Note: Percentage estimates are generalizable to the population of EB-5 Program petitioners from the fourth quarter of fiscal year
2015 electing to invest in a high unemployment TEA using combined census areas and have a margin of error of +/- 7.5 percentage
points or less at the 95 percent confidence level. Percentages do not sum to 100 due to rounding. Of EB-5 petitioners who elected
to invest in a high unemployment TEA using combined census areas, 63.2 percent used 2 to 10 census areas, 20.7 percent used
11 to 25 census areas, 4 percent used 26 to 50 census areas, .6 percent used 51 to100 census areas, and 11.5 percent used more
than 100 census areas.

Our review of unemployment rates for the physical census tract locations of petitioner projects
included in high unemployment TEAs showed that petitioners from the fourth quarter of fiscal
year 2015 most commonly (an estimated 41 percent) invested in projects physically located in
census tracts having an unemployment rate in the range of greater than 4 percent to 6 percent
at the time of investment. 21 We estimate that about 36 percent of the petitioners from the fourth
quarter of fiscal year 2015 invested in projects located in census tracts with an unemployment
rate below this range, and 24 percent of petitioners invested in projects located in census tracts
with an unemployment rate above this range. 22 (See table 1 showing estimated unemployment
rates for EB-5 petitioner project locations included in our sample.)

21

Petitioners electing to invest in a high unemployment TEA are not limited to using the unemployment rate for the
project location to qualify for the reduced investment threshold, and generally use the unemployment rate for the
overall TEA as allowed under the EB-5 program. We included this analysis on the unemployment rate for project
locations in high unemployment TEAs at the time petitioners submitted their respective Form I-526s for context and
perspective.

22

These estimates for the percentages of petitioners investing in projects located in census tracts with unemployment
rates in ranges above and below greater than 4 percent to 6 percent have a margin of error within +/- 8.5 percentage
points at the 95 percent confidence level.

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GAO-16-749R Immigrant Investor Program

 Table 1: Estimated Percentage of EB-5 Petitioners from the Fourth Quarter of
Fiscal Year 2015 That Elected to Invest in a High Unemployment Targeted
Employment Area (TEA), by Unemployment Rate of Census Tract(s) Where
Project Is Physically Located

Unemployment Rate (Percent)
0 to 2
>2 to 4
>4 to 6
>6 to 8
>8 to 10
>10 to 12
>12

Petitioners
(Percent)
7
29
41
12
3
3
6

Source: GAO analysis of Employment-Based Fifth Preference Immigrant Investor Program (EB-5 Program) petition files. I GAO-16-749R

Note: For projects physically located in more than one census tract and for which we had project location information, we averaged
the unemployment rate of up to four tracts. Percentage estimates are generalizable to the population of EB-5 Program petitioners
from the fourth quarter of fiscal year 2015 electing to invest in a high unemployment TEA and have a margin of error of +/- 8.2
percentage points or less at the 95 percent confidence level.

Proportion of EB-5 Investment in Projects Submitted by Petitioners for TEAs in the
Fourth Quarter of Fiscal Year 2015 Was Smaller Than Proportion of Non-EB-5 Investment
Our review of information from EB-5 petitioner business plans from the fourth quarter of fiscal
year 2015 showed that EB-5 investment by one or more immigrant investors who have invested
or plan to invest in projects located in a TEA was generally less than non-EB-5 investment by
other foreign or U.S. investors to the total estimated project cost. Specifically, we estimate that
the median percentage of total potential EB-5 investment in petitioner projects from the fourth
quarter of fiscal year 2015 is 29 percent of the total estimated project cost, and the estimated
mean percentage is 40 percent. 23 (See fig. 4 for the estimated percentage of petitioners by
reported percentage of EB-5 investment in total project cost.) For projects in our sample,
examples of sources of non-EB-5 capital included developer equity, bank loans, land
contributions, tax credits, cash from operations, and government loans and grants. (See enc. II
for the number of EB-5 projects and petitioners by location, estimated number of EB-5 investors,
and the total estimated planned project costs for all or some projects in our sample located in a
TEA.) 24

23

These estimates of means and medians have a relative margin of error within +/- 13 percentage points at the 95
percent confidence level.

24

Potential investment amount reflects estimates in the business plan for the amount of funding for the project that will
potentially be provided by EB-5 investors if the developer is able to attract the number of EB-5 investors required to
raise that amount.

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GAO-16-749R Immigrant Investor Program

 Figure 4: Estimated Percentage of EB-5 Petitioners from the Fourth Quarter of Fiscal
Year 2015 Electing to Invest in Targeted Employment Areas (TEA) by Reported
Percentage of EB-5 Investment in Total Project Cost

Note: Percentage estimates are generalizable to the population of EB-5 Program petitioners from the fourth quarter of fiscal year
2015 electing to invest in a high unemployment or rural TEA and have a margin of error of +/- 7.5 percentage points or less at the 95
percent confidence level.

We also estimate, based on our sample file review that nearly three-fourths 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. Specifically, an estimated 74 percent of petitioners
from the fourth quarter of fiscal year 2015 invested or planned to invest in projects including
mixed use, hotels and resorts, commercial, and residential developments; while the remaining
28 percent invested or planned to invest in infrastructure projects, such as railways and
highways, or transportation, restaurants, medical, and education facilities as shown in figure 5
(percentages do not sum to 100 due to rounding).

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GAO-16-749R Immigrant Investor Program

 Figure 5: Estimated Percentage of EB-5 Petitioners from the Fourth Quarter of Fiscal
Year 2015 That Elected to Invest in Targeted Employment Areas (TEA) by Type of
Investment Project

Note: None of the petitioners in our sample invested in projects in 5 of our 17 categories: “Technology,” “Farms,” “Manufacturing,”
“Domestic Sales,” or “Import Export”; however, it is still possible that these types of projects exist among the population of petitions.
Percentages do not sum to 100 due to rounding. Percentage estimates are generalizable to the population of EB-5 Program
petitioners from the fourth quarter of fiscal year 2015 electing to invest in a high unemployment TEA and have a margin of error of
+/- 7.5 percentage points or less at the 95 percent confidence level.

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GAO-16-749R Immigrant Investor Program

 Agency Comments
----We provided a draft of this report for review and comment to the Secretary of Homeland
Security. DHS provided technical comments, which we incorporated as appropriate.
As agreed with your offices, unless you publicly announce the contents of this report earlier, we
plan no further distribution until 30 days from the report date. At that time, we will send copies to
the Secretary of Homeland Security, and other interested parties. In addition, the report will be
available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have questions concerning this report, please contact me at 202-512-8777 or
gamblerr@gao.gov. Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Major contributors to this report were Cindy
Ayers (Assistant Director); David Alexander; John Mingus; Krista Mantsch; Jon Najmi; Anna
Maria Ortiz; and Edith Sohna (Analyst-in-Charge).

Rebecca Gambler
Director, Homeland Security and Justice
Enclosure(s) – 2

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GAO-16-749R Immigrant Investor Program

 Enclosure I: Objectives, Scope, and Methodology
This report provides information on projects that prospective immigrant investors (petitioners)
included with their Form I-526 petition for participation in the Employment-Based Fifth
Preference Immigrant Investor Program (EB-5 Program). Specifically, this report provides
information we gathered and reviewed from petitioners’ Form I-526 as well as associated
documents submitted during the fourth quarter of fiscal year 2015 that describe the (1)
proportion of petitioners that did or did not elect to invest in a Targeted Employment Area (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.
To address all three objectives we selected and reviewed a simple random sample of 200 of the
6,652 Form I-526 petitions submitted by petitioners of the EB-5 Program in the fourth quarter of
fiscal year 2015 from an electronic list the U.S. Citizenship and Immigration Services (USCIS)
provided of all fiscal year 2015 petitions. We focused our review on petitions filed in that
timeframe because of the comparatively larger volume of petitions submitted in the fourth
quarter—about 47 percent of the total filed in fiscal year 2015--and because those petitions had
not yet been adjudicated by USCIS at the time of our review, making them still available for our
review. 1 Unless otherwise noted, our sample of 200 petitions allowed us to generalize the
results of our review 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. 2 For estimates of means and medians, the 95 percent
confidence interval is within +/- 13 percentage points or less.
To determine the reliability of the list of Form I-526 files that USCIS provided to us for selecting
our sample, we compared the date the petitions were filed, the enterprise name, as well as
other information such as the file receipt number of each petition in the list to the actual hard
copy files in our sample and determined that the list was sufficiently reliable for selecting the
sample. The scope of our work did not include assessing the accuracy or reliability of the
information provided in our sample of I-526 petitioner files or USCIS’s adjudication process. For
example, we did not contact states to ensure that the TEA certification letters included in the
files were valid, or assess whether the unemployment rates provided in the files matched the
unemployment rates in the Census Bureau’s American Community Survey (ACS) or Bureau of
Labor Statistics Local Area Unemployment Statistics (BLS LAUS) data sets at the time of filing. 3
We used a two-stage process to review the sample of 200 Form I-526 petitions. First, an analyst
reviewed and completed a standardized and pretested data collection instrument (DCI) for each
petition. Next, a second analyst reviewed the completed DCI and the associated petition for
accuracy of each coded item, and made any necessary corrections. All DCI data were double
1

For example, petitions filed in the fourth quarter were more likely to be available at USCIS office premises for our
review than petitions filed earlier in the fiscal year which were likely to have already been adjudicated and shipped to
the Department of State for visa processing, or to an offsite facility for storage. None of the fourth quarter Form I-526
petitions in our sample had been adjudicated as of May 16, 2016, the date we commenced review of the files.

2

Our sample of Form I-526 files from the fourth quarter may not be representative of Form I-526 files submitted in
other quarters. The margin of error exceeds 7.5 percent when examining some subpopulations.

3

Administered by the U.S. Census Bureau, the American Community Survey (ACS) is an ongoing survey that
provides annual information, such as on employment, housing, and educational attainment that helps determine how
federal and state funds are distributed each year. The Local Area Unemployment Statistics (LAUS) program
produces monthly and annual employment, unemployment, and labor force data for census regions and divisions,
states, counties, metropolitan areas, and many cities, by place of residence.

13

GAO-16-749R Immigrant Investor Program

 key-entered into an electronic file in batches (that is, the entries were 100 percent verified), and
all data in the electronic file were verified again for completeness and accuracy.
To estimate the proportion of petitioners in the fourth quarter of fiscal year 2015 that did or did
not elect to invest in a TEA, we first reviewed each Form I-526 in our sample of 200 petitioners,
which identified whether a petition was based on the full investment amount of $1 million or a
reduced investment amount of $500,000 in a commercial enterprise or associated job creating
entity in a TEA. If the latter, we then determined if the basis of the proposed TEA qualification
was for principally doing business in a rural area or high unemployment area by reviewing the
file for a TEA letter issued by the state, city, or other designated entity in the state where the
proposed project is or will be located. The presence of a TEA letter in the file indicated that the
TEA qualification was based on a high unemployment location. 4 For TEA petition files that did
not include a TEA letter, we reviewed the project business plan and other supporting materials
to confirm that the petitioner either submitted alternative evidence for a high unemployment TEA
or elected to invest in a rural TEA.
To estimate the proportion of petitioners in the fourth quarter of fiscal year 2015 that based a
high unemployment TEA on various types of geographic areas, we reviewed the Form I-526 and
the TEA letter, as well as associated appendices (for example, letters from the designated entity
responsible for determining the employment rates for the jurisdiction where the project is
located) for each high unemployment TEA petition included in our sample. We determined the
proportion of petitioners that based a TEA on the unemployment rate for a single census area
(tract, block group, or county) or on the average unemployment rate for a combination of census
areas; and for TEAs based on combined census areas, determined the number of census areas
comprising the TEA. For all petitioners who elected to invest in high unemployment TEAs, we
calculated the unemployment rate for the census tract or tracts in which every petitioner project
was physically located (or primarily doing business) 5 using the census-share methodology
outlined by the Bureau of Labor Statistics (BLS) and data from the Census Bureau’s American
Community Survey (ACS) 5-year Estimates as well as data from BLS Local Area
Unemployment Statistics (LAUS) that was available on the date of petitioners’ investments. 6
Percentage estimates for this analysis are generalizable to the population of EB-5 Program
petitioners from the fourth quarter of fiscal year 2015 electing to invest in a high unemployment
4

Under EB-5 Program regulations, TEA state certification letters are not explicitly provided for in relation to TEA
qualification based on investment in a rural area. A rural area is defined as any area not within either a metropolitan
statistical area (as defined by the Office of Management and Budget) or the outer boundary of any city or town having
a population of 20,000 or more (based on the most recent decennial census of the United States). See 8 U.S.C. §
1153(b)(5)(B)(ii), (iii); 8 C.F.R. § 204.6(e), (j)(6).

5

We determined the physical location of the projects based on census tract information petitioners provided in their
TEA letters, or by looking up the census information using the project address in petitioners’ files.
6

For more information on the census-share methodology, see Department of Labor (DOL), Memorandum for: State
Workforce Agency Administrators and BLS Regional Commissioners, DOL Local Area Unemployment Statistics
(LAUS) Technical Memorandum No. S-10-20. (July 21, 2010). Department of Homeland Security, United States
Citizenship and Immigration Services, EB-5 Adjudications Policy, PM-602-0083 (May 30, 2013). For projects that
were physically located in more than one census tract and for which we had location information, we averaged the
unemployment rate of up to four tracts. As the timeframe of petitioners’ investments ranged from fiscal year 2013 to
fiscal year 2015, to calculate the census tract unemployment rate we used the ACS and LAUS employment data that
were available on the date of a petitioner’s investment. Depending on the date of a petitioner’s investment, we used
ACS 5-year employment estimates for calendar years 2008-2012 or 2009-2013 as well as calendar years 2012,
2013, or 2014 annual employment averages from BLS LAUS.

14

GAO-16-749R Immigrant Investor Program

 TEA and have a margin of error of +/- 8.2 percentage points or less at the 95 percent
confidence level. While petitioners electing to invest in high unemployment TEAs are not limited
to using the unemployment rate of the project location to qualify for the reduced investment
threshold, we included this analysis to provide context and perspective. We used this
methodology and these data sources because they are cited in EB-5 policy as the acceptable
data sources for calculating unemployment. To assess the reliability of the ACS and BLS
datasets, we reviewed the agencies’ online documentation of the methodology used to
determine unemployment rates for census areas and reliability assessments conducted for
these datasets. We determined based on the steps taken that the data were sufficiently reliable
for deriving the unemployment rate of each census area.
To estimate EB-5 investment as a proportion of the total investment for projects located in TEAs
that were included in fourth quarter fiscal year 2015 Form I-526 petitions, we reviewed the
business plans included in the Form I-526 petition files. Sufficient information was available in
our sample files to estimate the EB-5 investment as a proportion of the total investment for all
petitioner projects in the fourth quarter of fiscal year 2015.
To estimate the percentage of petitioners that elected to invest in different types of TEA
projects, we reviewed the Form I-526 and business plan for information on the type of business
(e.g., mixed use real estate development). 7 We categorized the business type for projects in our
sample using seventeen business type categories developed based on a pilot review of EB-5
petition files as well as on previous related GAO work. 8 However, insufficient information was
available to generalize other attributes to this population, including EB-5 investment locations,
the number of EB-5 investors by project, and total estimated project costs. While we could not
estimate the results for these attributes to the population of fourth quarter fiscal year 2015
petitioners, we were able to present results for all or some of the 114 unique projects included in
198 of our sample 200 petitions that were based in a rural TEA or high unemployment TEA.
We conducted our work from March 2016 to September 2016 in accordance with all sections of
GAO’s Quality Assurance Framework that are relevant to our objectives. The framework
requires that we plan and perform the engagement to obtain sufficient and appropriate evidence
to meet our stated objectives and to discuss any limitations in our work. We believe that the
information and data obtained, and the analysis conducted, provide a reasonable basis for any
findings and conclusions in this product.

7

For our purposes we define mixed use development as a type of development that blends residential and
commercial uses.

8

GAO, Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors,
GAO-05-256 (Washington, D.C.: Apr. 1, 2005).

15

GAO-16-749R Immigrant Investor Program

 441 G St. N.W.
Washington, DC 20548

Enclosure II: Characteristics of Sample Projects
This enclosure describes various characteristics of all or some of the 114 unique projects from
198 of the 200 Form I-526 petition files in our sample where immigrant investors elected to use
high unemployment (109 projects) or rural (5 projects) Targeted Employment Areas (TEAs) to
request participation in the Employment-Based Fifth Preference Immigrant Investor Program
(EB-5 Program) in the fourth quarter of fiscal year 2015. 1 These characteristics for TEA projects
include the number of EB-5 projects and petitioners by location, estimated number of EB-5
investors, and the total estimated planned project costs. We did not have the information
necessary to select a random sample of projects that would allow us to generalize results to all
projects in which petitioners in the fourth quarter of fiscal year 2015 invested. 2 Therefore, our
results are limited to describing characteristics of all or some of these 114 unique projects.
Sample EB-5 Projects and Petitioners by Location
The 114 unique TEA projects we reviewed were located in 20 states, the District of Columbia,
and the Northern Mariana Islands with most petitioners investing in projects located in three
states: New York, California and Florida (see table 1). Petitioner files for 108 of the 109 unique
projects in high unemployment TEAs included information on city location, with petitioners
investing in projects located in a total of 65 cities, including a high of 20 projects in New York
City, 3 between three and six projects in Dallas, TX; Houston, TX; Los Angeles, CA; San
Francisco, CA; Miami, FL; and Seattle, WA; and two or fewer projects in each of 58 other cities
and towns such as Akron, OH; Sicklerville, NJ; and Kernersville, NC. 4 Petitioners for the five
projects in a rural TEA invested or planned to invest in projects located in North Dakota,
Mississippi, Utah, Wisconsin, and the Northern Mariana Islands.

1

Of the 198 petitioners electing to invest in a high unemployment or rural TEA from our sample of 200 EB-5 I-526
files, 111 petitioners invested in the same project as one or more other petitioners in our sample.

2

Because USCIS does not maintain an electronic list of projects contained in the I-526 petitions, we based our
random sample on the available list of petitions.
3

New York City includes projects in the boroughs of Manhattan, Staten Island, and Brooklyn.

4

Petitioners did not include information on city location for 1 of the 109 projects in high unemployment TEAs. This
project was an infrastructure project that spanned more than one city.

Page 16

GAO-16-749R Immigrant Investor Program

 Table 1: Number of EB-5 Projects and Petitioners in Targeted Employment
Areas (TEAs) by Project Location for GAO Sample Selected from the Fourth
Quarter of Fiscal Year 2015
State
New York
California
Florida
Texas
Washington
Pennsylvania
New Jersey
Ohio
Georgia
North Carolina
Illinois
Massachusetts
Minnesota
Mississippi
Nevada
North Dakota
Northern Mariana
Islands
South Carolina
Utah
Vermont
Washington, D.C.
Wisconsin
Total

Projects
29
23
17
10
9
4
3
3
2
2
1
1
1
1
1
1
1

Petitioners
43
54
25
14
16
8
4
3
2
6
1
6
1
1
2
1
1

1
1
1
1
1
114

1
1
1
6
1
198

Source: GAO analysis of Employment-Based Fifth Preference Immigrant Investor Program (EB-5 Program) petition files.   GAO-16-749R

Sample Project Investors and Project Costs
We found substantial variation in the reported count of potential EB-5 investors across projects
in our sample for the 198 petitioners who elected to invest in TEAs. 5 Petitioners for five projects
in our sample reported 500 or more potential EB-5 investors on the project, including a
commercial real estate project in New York (1,300 potential EB-5 investors), two mixed use real
estate development projects in California (900 and 600 potential investors, respectively), a
railway project in Florida (600 potential investors), and a hotel project in New York (500 potential
investors). Nine petitioners in our sample reported that the project they invested or planned to
invest in would have fewer than ten potential EB-5 investors. For example, one petitioner in our
sample invested in a chain restaurant in Ohio that reported four potential EB-5 investors.

5

We did not calculate estimates for the population of petitions because information on the number of EB-5 investors
per project was not always consistent across petitions for the same project. Examples in this paragraph include only
projects for which reported information on the count of potential EB-5 investors was consistent across the petitions
that fell into our sample.

17

GAO-16-749R Immigrant Investor Program

 The total reported project costs in the business plans included in the petition files we reviewed
for the 198 petitioners who elected to invest in a TEA ranged from $500,000 to $12 billion. 6
Among the projects with the largest reported costs in business plans in our sample were an
energy sector project in North Dakota with a total reported cost of $12 billion (4 percent EB-5
funded), a commercial real estate development project in New York with a total reported cost of
$5.9 billion (11 percent EB-5 funded) and a hotel renovation and expansion project in California
with a total reported cost of $1.8 billion (25 percent EB-5 funded). The three projects with the
lowest costs reported in business plans in our sample were a pizzeria in Texas with a total
reported cost of $500,000 (100 percent EB-5 funded), an urgent care medical facility in
California with a total reported cost of $1.1 million (91 percent EB-5 funded), and a restaurant in
South Carolina with a total reported cost of $1.2 million (83 percent EB-5 funded).

(100689)

6

Information on the potential cost of projects was not always consistent across petitions in our sample when multiple
petitioners were investing in the same project, and may change as the nature of the project evolves over time.
Examples in this paragraph include only projects for which reported information on the total project cost was
consistent across the multiple petitions for a project that fell into our sample.

18

GAO-16-749R Immigrant Investor Program

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