Is it the result of turbulent economic times, tighter bank financing, or the globalization of the private finance and investment world? We cannot say for sure what is fueling the interest, but an increasing number of our clients are asking about, exploring or already gaining the benefits of the EB-5 Immigrant Investor Visa Program.
What Is the EB-5 Program? Created as part of the Immigration Act of 1990, the EB-5 Immigrant Investor Visa program grants lawful permanent residence to foreign nationals who invest $1 million (or $500,000 in special certified circumstances) in qualifying U.S. businesses that in turn create or preserve at least 10 jobs in the United States. The EB-5 Immigrant Investor Program is administered under the U.S. Citizenship and Immigration Service ("USCIS"), a division of the Department of Homeland Security ("DHS").
When Congress created the EB-5 visa category, its goal was to attract immigrant entrepreneurs who are interested in investing in the U.S. economy, thereby creating alternative sources of finance and spurring job creation. The EB-5 program was based on similar visa programs used in Australia and Canada. Supporters of the EB-5 program have emphasized the program's potential as an economic recovery tool, an aspect of the program that has also caught the attention of various federal government agencies and several members of Congress.
Historically, real estate development projects have dominated the field of qualifying projects. While real estate developers continue to avail themselves of this alternative financing tool in droves, the latest uptick in interest in the program has yielded a more diversified field including energy, cleantech and other project finance projects as well as venture capital and private equity like funds financed through foreign nationals.
How Does it Work? Foreign nationals wishing to legally immigrate to the United States can invest (i) directly in businesses that qualify as a "new commercial enterprise" or as a "troubled business" or (ii) indirectly in qualifying projects sponsored by USCIS-approved "regional centers." In exchange, immigrant investors (and their spouses and unmarried children) obtain a temporary green card. If, after two years, 10 permanent full-time American jobs have been created as a result of the investment, the immigrant investor (and the investor's spouse and unmarried children) can apply for permanent green cards. The investment threshold amount is $1 million unless the investment is located in a designated targeted employment area in which case the USCIS may approve a lower investment threshold amount of $500,000. A "targeted employment area" or TEA is a government-designated "rural" area or an area that has experienced high unemployment of at least 150% of the national average.
What Is a Regional Center? A regional center is defined as any economic unit, public or private, which is involved in the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment. A regional center needs to be certified by the USCIS through the I-924 Application of Regional Center process. Anyone interested in applying should understand up front that the process is very involved and takes many months. But, once approved, unlike direct EB-5 investment projects, regional center-sponsored projects can count indirect and induced jobs as well as direct jobs toward a foreign investors' job-creation requirement. This has great appeal to foreign nationals exploring the program benefits.
Who Invests? Immigrant investors are predominantly from Asia, specifically non-treaty countries. This trend may indicate that the EB-5 investor visa program is becoming an especially attractive option for wealthy foreign nationals who might otherwise face long backlogs in family- or employment-based visa categories.
Several aspects of the program make it particularly inviting to foreign-born investors. Unlike other visa categories, the EB-5 program allows applicants to self-petition for visas; they do not need a family member or employer to serve as an immigration "sponsor." Another attractive feature is that approved EB-5 immigrants can enter the United States immediately, as currently there is no backlog in the EB-5 visa category.
Recent Legislative Efforts
1. DHS Announces Phase-in of Proposed Rules Streamlining EB-5 Applications
On August 2, 2011, the DHS issued a press release outlining a series of policy, operational and outreach efforts made by Secretary of Homeland Security Janet Napolitano and USCIS Director Alejandro Mayorkas to stimulate foreign investment in the nation's economy. The press release announced major changes to the intake and review process of the EB-5 Immigrant Investor Program, including a phased-in implementation of the May 2011 proposed EB-5 streamlining process, which will likely begin in September 2011. The EB-5 streamlining process includes (1) extending the availability of premium processing for certain "shovel-ready" EB-5 applications and petitions, (2) implementing direct lines of communication between EB-5 applicants and USCIS, and (3) providing EB-5 applicants with the opportunity to resolve any outstanding issues with their application during either a telephone or in-person interview with a USCIS panel of experts.
Read the full press release here.
Read the full proposed changes here.
2. U.S. House of Representatives to Consider Permanent or Temporary Extension of EB-5
On September 14, 2011, the House of Representatives Subcommittee on Immigration Policy and Enforcement of the Judiciary Committee, chaired by Rep. Lamar Smith (R-TX), held a legislative hearing to consider whether to recommend a permanent or temporary extension of the EB-5 regional center program (currently a pilot program), as well as other investor options, including a new EB-6 investor program. See our October 5, 2011 update for more information on the subcommittee's hearing.
3. USCIS Announces "Conversations with the Director" Series
On September 14, 2011, USCIS Director Alejandro Mayorkas held the first of a series of small group sessions titled "Conversations with the Director" to discuss policy issues regarding the EB-5 Immigrant Investor Program. The first session focused on economic development in the context of the EB-5 program and complemented the EB-5 quarterly meeting that took place on September 15, 2011.
Read the full press release here.
If you are interested in learning more about the EB-5 Immigrant Investor Program, you can check out www.USCIS.gov for more information. If you want assistance with understanding or creating a regional center or other qualifying EB-5 investment or are a foreign national seeking EB-5 visa status, attorneys with experience in this area can be found on our website under EB-5 Immigration Investments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
