By Joshua Pringle, Contributing Editor
In 1990, in an effort to stimulate job creation and foreign capital investment in the United States, Congress created the Immigrant Investor Program, commonly referred to as EB-5. The program provides foreign nationals a way to obtain a temporary green card by investing in U.S. economic development projects.
In 1993, the EB-5 Pilot Program was implemented, supported by the United States Citizenship and Immigration Services. The Pilot Program creates regional centers that act as a liaison between foreign investors and the U.S. government and ensures that the requirements of EB-5 are met.
Taher Kameli is executive director of Chicagoland Foreign Investment Group, a Regional
Center that represents 14 counties in northeastern Illinois and five counties in northwest
Indiana. “A Regional Center has been defined as a public or private entity that has been established to help the economic growth of the region,” explains Kameli. “The U.S. government designates a company as a Regional Center, and then that company has to find projects and bring foreign investors to those projects,” he adds.
Investment money can come entirely from foreign sources, or it can be a mix of foreign and
domestic capital. For an investor to meet the qualifications of EB-5, the minimum investment is $1 million. Or, if the investment targets a high-unemployment or rural area, the minimum qualifying investment is $500,000. Each investment must also create 10 full-time jobs for U.S. workers.
Investors are not required to go through a Regional Center if they are able to put together a comprehensive business plan on their own, demonstrating how the jobs will be created and the requirements met. However, the application process for EB-5 can be a lengthy one, even when the investor does go through a Regional Center.
“In this program,” Kameli says, “the money sits in an escrow account until the application is approved by the U.S. government, which may take six to eight months. And if the individuals are from different countries—certain countries that the U.S. government has sanctions against—those individuals have to get permission from the U.S. government before even sending the money to the escrow account. It adds about six to eight months more to their regular processing. So it may take about a year to one-and-a-half years for the money to be released, and that is something that doesn’t sit well with the real estate community, because it needs the money today.”
The government has been trying to improve the turnaround time on these projects for years. In fact, the program was put on hold from 1998 to 2003 while the application process was streamlined. “After that, it picked up,” Kameli says, “and since 2004 we have seen a surge every year in EB-5 applications.” Currently, “they’re talking about expediting the program and the application process for the individuals if the project is shovel-ready. If we get the application to go through in an expedited way, I think it’s going to be much more attractive to the development community.”
Regional Centers in Seattle and parts of California have successfully pushed through several projects, and other regions are close behind. Chicagoland Foreign Investment Group was not designated until March of 2009, but Kameli is pleased with its progress so far. “In the state of Illinois we have raised enough money to start and finish five assisted-living facilities. That is about $58 million in total committed from the foreigners to set up these facilities.”
Investors from China, South Korea and other parts of East Asia have shown a big interest in the program, as it potentially gives them access to the United States that they would otherwise be unable to obtain. Kameli says, “Many of these investors are getting the green card for, number one, education of their children; number two, to be able to come to the United States much more easily; and number three, to come here and start a new business.”
As of now, the EB-5 Program is scheduled to sunset at the end of September 2012, but the program has been extended several times, and members of the business community are lobbying to make it a permanent program. IIUSA (The Association to Invest in USA) recently held a fundraising event in San Antonio, Texas, advocating for EB-5 permanency. NES Financial, which provides EB-5 escrow administration services, sponsored the fundraiser and spoke out in support of the program’s positive impact on job creation and development.
“I don’t think there’s any reason for the president or Congress to shut this program down,” Kameli says. “It’s a win-win situation. It brings foreign money to the country, and jobs will be created based on the mandate of the U.S. government. I think it is very good for the current state of our economy.”