EB-5 Immigrant Investor Program, more popularly known as the EB-5 investor visa, has become an important tool for US economic growth. This program aims to attract foreign investment and offers a path to US residency to the investors and their families. This blog will explain the economic contribution of EB-5 investors to local US communities. It will show why the EB-5 program is important for the US economy.
The Essence of the EB-5 Investor Visa
The EB-5 investor visa, or EB-5 investment visa (EB stands for employment-based, and 5 refers to the subcategory) was created by Congress in 1990. Congress passed the EB-5 program to stimulate the US economy by drawing in foreign investors who would create jobs and invest capital in US businesses. If applicants want to apply, they must invest at least $1 million in a commercial enterprise (or at least $500,000 if the commercial enterprise is in a designated ‘targeted employment area’ – usually either a rural area or region with high unemployment). The investment must also lead to the creation of at least 10 full-time jobs for US workers.
Job Creation and Economic Stimulation
Most obviously, hundreds of thousands of jobs, 10 or more for each investment, have been created or saved due to the requirements of the EB-5 immigrant investor program. Think of all those houses and buildings built or refurbished, hospital beds filled, children fed and educated, patients sheltered and saved, and much else that depends on employment. A less obvious but lasting form of the program’s economic stimulus involves capital investment in technology industries – an area that the state department specifically earmarks for funds – and thus for job creation.
So while these investments can certainly be used to pay for vanity projects, they have also been used for the urban revitalization or development projects that have boosted the economies of several large urban centers that were otherwise on the decline (local EB-5 investments have been used for similar purposes in rural areas as well). Such projects include the University of Southern California’s $700 million Pan Asian Hotel and a $600 million uptown Charlotte development that will bring a new arts Center, an additional NFL stadium, and a new hotel. EB-5 investments can also support agriculture, renewable energy, development infrastructure and jobs – all critical in rural infrastructure projects that not only improve the local economy but also lift up the entire local community.
Infrastructure and Community Development
From a broad societal perspective, alongside the addition of new jobs, the EB-5 push has been felt in infrastructure and community development across the country. For example, due to EB-5 investments, construction of schools, hospitals and community centers has been funded, raising the general quality benefits through construction job creation, but also produces long term positive effects through the betterment of local amenities and services.
Another example is that when EB-5 funds RFE projects, such as schools or healthcare facilities, these institutions can provide better infrastructure, more programs, higher educational standards, and services. These institutions will also provide more jobs, attract and retain more qualified manpower (staff and personnel), and provide better services to the community.
Regional Centers and Economic Diversification
One distinctive feature of the EB-5 incentive for immigrant investors is that it originally mandated Regional Centers, which might be as broad an area as an entire state or as narrow as a small metropolitan region. These entities (designated by USCIS to promote economic growth within a specific region) allowed the pooling of investments from multiple individuals who were willing to invest the $500,000 in return for a green card. Thus, Regional Centers could support much larger projects and so increase the economic impact.
Without them, communities that have experienced the decline of manufacturing – or any other struggling industry – might never develop the opportunities they need to economically diversify. Regional Centers help places modernize their approach to economic development, by focusing on projects in technology, renewable energy, and other innovative sectors. Seen from this perspective, EB-5 is a useful tool for encouraging resilient local economies; a way of preparing places for the industries that will drive their futures, no matter what circumstances arise.
Meeting EB-5 Visa Requirements
If the goals are met – ie, if the EB-5 visa standards are exceptional – the purpose is to ensure that the investments will be real and substantial. Any money that doesn’t meet these standards will not count. Those investing have to prove that their money is sourced legally and at risk for the life of the investment. And, finally, by requiring that some jobs be created or preserved, the result of the investment is both real and measurable.
The steps in the EB-5 visa process include an I-526 petition, conditional permanent residence, and application to remove conditions to gain permanent residency. While this is a lengthy process, it keeps the program and its investors serious: this is for people looking to really invest in the US economy.
Challenges and Criticisms
Although it is very advantageous, the EB-5 program has many critics. They argue that it discriminates the riches class because the number of rich immigrants accepted every year is higher than other types of immigrants. Also, they think that some projects do not go to the most needy areas. Some cases of frauds and other mistakes have been reported, calling for more control over this program.
Indeed, in response, the US government has made reforms so that the EB-5 program remains true to its intent of advancing US economic development and the creation of US jobs. Since 2005, the program has become more transparent and accountable.
Conclusion
There is little doubt that EB-5 has been a positive intervention for local communities in the US, bringing jobs, economic stimulus, and funding to essential infrastructure projects. There have been grumbles about how the money works in practice but, given the growing success of the program, the USCIS has committed to regular reforms to strengthen the programmer’s integrity and add safeguards. Ongoing oversight by the SEC and government committees will provide constant obstacles for anyone with nefarious goals. For those intending to invest, EB-5 offers the opportunity to contribute to the US economy and their own family through residency and citizenship.
When EB-5 investors create jobs and their families reap the benefits of greener pastures, they’re a reminder of the public-private gains that well-designed immigration policies can unlock. The future of the program remains a work in progress, but as long as US economic development agencies have a seat at the table, the EB-5 Investor Program promises to provide a useful source of capital for economic growth both here and abroad.