The controversial EB-5 Immigrant Investor Program enjoys bipartisan support in the U.S. Congress, and potentially offers solutions for the country’s aging infrastructure. When used to fund public private partnerships these foreign investments offer a pool of low interest, long-term funding that doesn’t have to clear bank hurdles.
But, foreign investment from the EB-5 Immigrant Investor Program has to create jobs in America, and one aspect of this program almost guarantees that construction jobs will count.
In the Beginning
Basically, the EB-5 Immigrant Investor Program allows people to buy permanent U.S. resident status in return for investment in the country. The price? One million dollars put into a commercial enterprise, or $500,000 put into a business serving a rural area or an area with high unemployment. Each investment has to create 10 jobs.
Video Presentation with Details about the EB-5 Immigrant Investor Program
The EB-5 Immigrant Investor Program was started in 1990, and in 1992 Congress added the Regional Center Pilot Program which allowed indirect jobs to count toward the 10 required jobs. This pilot program was slated to expire in December 2016
at the end of September 2015, but Congress extended it to April 28, 2017 using its now favorite budget tactic, the Continuing Resolution. Unlike most other things these days, both parties in Congress seem to like the EB-5 Regional Center Program, and have regularly renewed it in three-year cycles.
The “Buying Citizenship” Rub
The regional centers can be public or private, and have to meet certain criteria in terms of their purpose and the geographies they cover. There are now
745 865 Regional Centers and they’ve been growing at a good clip since 2008. In 2012 there were only 207. And, it’s the Regional Centers that issue most of the “conditional visas,” giving out 97% of the total in 2014.
About 74 percent of petitioners from the fourth quarter of fiscal year 2015 who invested through a Regional Center did so for various types of real estate projects including mixed use, hotels and resorts, commercial, and residential developments. The remaining petitioners invested, or planned to invest in projects such as infrastructure projects, or transportation, restaurants, medical, and education facility projects, according to the Government Accounting Office.
Needless to say, in this era of immigrant animosity, many people don’t like the idea that foreigners can just buy citizenship. And, over the years, the EB-5 program has had its share of controversy and allegations. But, Congress has always renewed it, and with new efforts afoot to make changes that will improve the program’s transparency and accountability, it’s possible this time around the EB-5 might get its customary three-year renewal.
looks like that will happen again in December.
Construction Labor Counts
For construction, and especially infrastructure and civic development projects, the EB-5 program is busy. At least two states have their own state-run regional centers, and cities like Dallas, Miami, and Philadelphia also have their own regional center entities developing public works projects.
Project duration is important for making indirect jobs count. For example, for construction jobs, the construction project must last at least two years, and the indirect jobs claimed must be full-time equivalent for the full two years. Currently the calculations related to job formation must come from an economist working with a regional center.
The secret to making construction jobs count as direct jobs under the regional center program lies in the project duration. If the project lasts at least two years, and the calculation is done by an economist, and there is third party verification, then the construction jobs can count as direct jobs. Otherwise, construction jobs are considered indirect. And, because indirect jobs also count under the Regional Center Program, construction projects of shorter duration are also eligible for funding this way.
If it all sounds confusing look at it this way: The EB-5 program is custom made for construction projects when they are developed through a Regional Center because
regardless of project duration,construction jobs can count toward the job creation requirement.
The Other Attractions of EB-5 Money
The other aspect of the EB-5 program that appears attractive for civic and infrastructure is the flexibility this type of financing can provide. According to Mary Scott Nabers, president and CEO of Strategic Partnerships Inc., a business development company, these foreign investors are most interested in securing a visa, so they will often accept below market, to minimal returns, if the investment will allow them to safely recoup their capital over time.
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