In The News
For Foreign Investors, Profit Isn’t Only Goal
March 16, 2008
The New York Times - By Fred A. Bernstein
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"Under the program, known as EB-5, a foreigner receives a green card for investing $500,000 in a business or high-unemployment area…’It’s win-win-win,’ said Steve Yale-Loehr, an EB-5 expert who teaches immigration law at Cornell University: the business gets capital, residents get jobs and the investor gets a green card…"
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Foreigners Invest Greenbacks in Return for Green Cards
December 08, 2007
The Washington Post - By Cecilia Kang
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"Though the number of applicants each year is still far below the quota, Berez said the amount invested through EB-5 visas was $500 million last year and is projected to rise to $800 million in 2007 and $1 billion in 2008…Investors initially receive two-year residencies while immigration authorities monitor their investments and participation in the program. After a foreign investor passes all checks by the USCIS and the regional center verifies that the investment produced 10 jobs, the applicant is granted permanent residency…"
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U.S. Government’s EB-5 Program Offers Foreign Investors Green Cards for Job Creation
November 02, 2007
The Wall Street Journal - By Miriam Jordan
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An obscure immigration program is pumping millions of dollars from foreign investors into dilapidated inner cities and employment-starved rural areas across the U.S. These investors aren’t focused on financial returns, however: They’re in it to get green cards.
In recent years, a growing list of enterprises — in agriculture, tourism, renewable energy, education and transportation — have benefited from a little-known federal program known as EB-5, or the immigrant-investor visa. It offers a tantalizing trade-off for foreigners who want to establish residency in the U.S.: For a $500,000 investment in a distressed area, a foreigner and his immediate family become eligible for conditional green cards. They become permanent a few years later upon evidence that the investment has created at least 10 jobs for U.S. workers.
The program, administered by U.S. Immigration & Citizenship Services, essentially encourages wealthy foreigners to buy their way into the U.S. Put in place in the early 1990s, it is widely regarded as a response to efforts by Canada and Australia in the late 1980s to attract investors keen to immigrate. But the U.S. program is considered the most stringent because it requires proof that the investment has produced new jobs before permanent residency is granted.
The U.S. program lately has become popular among investors from South Korea, China, Venezuela and Saudi Arabia desperate to bypass the uncertainty and years-long wait to gain residency through traditional means. Helping fuel the new interest are immigration attorneys and others aggressively marketing the program abroad.
"The opportunity is truly beautiful to individuals who want to live and contribute their energy in the United States," says Morrie Berez, chief of the EB-5 program at the immigration agency. "And it creates economic growth and especially jobs for Americans." The job-creation aspect of the program appears to have neutralized criticism from anti-immigration activists.
Under the program, developers sometimes working with local officials apply to the Immigration agency for "regional center" status, typically in a distressed area. Once approved, a regional center markets its program overseas to investors who become equity partners.
The projects promise only modest returns. But that isn’t the main concern for investors such as Sungtae Kim, a Korean software entrepreneur who wanted to come to the U.S. to give his daughters better opportunities. After failing to qualify for a U.S. alien-worker program, he heard about EB-5 from a friend in Los Angeles. Soon, he was in touch with the Seoul branch of a U.S. law firm that specializes in the program.
After attending a seminar in Seoul to learn about the regional centers, Mr. Kim decided to put $500,000 that he had saved over 20 years from a software business into a dairy farm in Veblen, S.D. "I wanted to give my two daughters a better life and good education," he says. Two weeks ago, Mr. Kim and his family moved to a Los Angeles suburb known for its strong public schools. Mr. Kim, who has never visited a dairy farm, hopes to once he is settled.
South Dakota, one of the first states to tap into the program in 2004, credits the immigrant-investor scheme with reviving its dairy industry and starting a new meat-packing sector. The state had been trying to attract foreign investment in its dairy industry before it discovered the EB-5 program. It got regional-center qualification for a swath of 45 contiguous counties in the eastern part of the state. In two years, the program has helped fund new dairy farms worth $90 million and beef-processing plants valued at $52 million, state officials say.
"Suddenly we have extra capital to accelerate development and help South Dakota farmers who want to go large-scale but lack capital," says Joop Bollen, who oversees the state’s program, which has attracted European and Asian investors.
In the financial year that ended Sept. 30, the immigration agency awarded 803 conditional EB-5 green cards to investors and their families, up from 247 in 2004. Mr. Berez hopes by 2011 to be issuing all 10,000 of the green cards available each year under the program — a potential of nearly $2 billion in annual investments, he estimates.
Around the U.S., 17 regional centers under the EB-5 program have attracted about $500 million in foreign funds. Projects include dairy farms in Iowa, nut farms in California, schools and health-care facilities in Alabama, ethanol plants in Texas, and a film and TV production studio in Pennsylvania. Mr. Berez’s team is considering several more areas.
Tom Willis, chief executive of Conestoga Energy Partners LLC in Liberal, Kan., recently guided Korean investors around a new ethanol plant in which they are minority partners. "Their dollars allow us to create jobs, a greater tax base and grow our schools," Mr. Willis says. "You hear about people leaving rural America…This helps us control our destiny."
The program isn’t a slam-dunk for applicants. The U.S. government temporarily suspended it in 1998 to tighten up procedures that enabled some investors to disburse less money than agreed. Mr. Berez, a former official at the Government Accountability Office, was charged with overhauling the program in 2002. Now, investors must put up the entire $500,000 before they can file their green-card petition.
To get his family to the U.S., French law professor Eric Canal-Forgues, a consultant to the World Trade Organization, put his life savings into a Philadelphia regional center that involved partially financing Comcast Corp.’s new international headquarters.
"I have gotten from Europe everything I want," says the 45-year-old Paris native. "The United States is a place where you can do many things." He wants to further his career and raise his two young children as fluent English speakers.
It took Mr. Canal-Forgues almost a year to amass the paperwork required, which included showing the origins of the $500,000 he was committing, his tax returns, pay stubs and employment contracts. In May, he received his conditional approval from Immigration, pending an interview at the U.S. embassy in Paris. He hopes to move to the U.S. with his family by mid-2008.
"The EB-5 program is one of the most complex and heavily scrutinized immigration programs," says Stephen Yale-Loehr, Mr. Canal-Forgues’s attorney and an expert on EB-5 visas. "Investors must show every cent was earned legally."
The Immigration agency also needs to ensure terrorists aren’t buying their way into the U.S. And, given U.S. sanctions, an Iranian EB-5 applicant under consideration must prove that he didn’t make money from doing business with that country’s government.
In Seattle, critics have complained that revitalization of an area south of downtown has raised rents for industrial tenants. But the program hasn’t drawn notable criticism from immigration-restrictionist groups. "If jobs are being created in exchange for visas through a process you can verify, I don’t think we can object to it," says Ira Mehlman, a spokesman for the Federation for American Immigration Reform, which calls for a clampdown on both legal and illegal immigration. But he suggests that the program should "remain small in scope."
Competition for EB-5 dollars is intensifying as more areas win regional-center designations. Venture capitalists William Hungerford and Tim Milbrath have been traveling to the Middle East seeking investors for a fund that will invest in extended-stay hotels, private clinics and other infrastructure in New Orleans and the Gulf Coast. South Dakota’s Mr. Bollen recently put in calls to Argentina and Brazil, hoping to tap into a new pool of foreigners eager to live in the U.S. "We want to continue to pick as much fruit from the EB-5 tree as we can," he says.
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SCLA Development Hinges on Chinese Investors
April 25, 2008
Victorville Daily Press (Victorville, CA) - By Brooke Edwards
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"More than 20,000 local jobs and $1.6 billion in development are contingent on start-up funds from Chinese investors…He calls the EB-5 program a win-win for the city and the investors…’We get to use their money, and they get to be first in line for visas.’"
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Asian Funds Sought for Redevelopment
March 27, 2008
Milwaukee Journal Sentinel - By John Schmid
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"The program offers U.S. residency rights to qualified foreign investors who invest at least $500,000 and create at least 10 jobs in rural or distressed areas within a designated ‘EB-5 Immigrant Investment Zone’…Qualified investors from almost any part of the world can apply for residency under an EB-5 Immigrant Investment Zone, so named because it hinges on a class of visa called the EB-5…The Association to Invest in USA, a trade association of EB-5 zones, estimates that the 17 zones could bring in a total of $1 billion in foreign investment this year…"
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South Dakota becomes land of opportunity
October 22, 2007
American News (Aberdeen, SD) - By Emily Arthur-Richardt
Rodney Elliott first heard about the opportunities South Dakota could offer him and his family at an informational meeting in Northern Ireland.
"South Dakota was promoted right across the world for what they could do for dairy farmers," said Elliott, 43, who now lives in a house on Lake Poinsett with his wife, Dorothy, and three teenage children. "We went to information night in February 2004, and following the first information night, I decided to take a little trip."
That first trip brought Elliott to South Dakota, where he visited the state and toured some of the dairy farms around the area. Two years and at least five trips to South Dakota after that first meeting, Elliott was moving his family across the world and opening a dairy farm. The new beginning was partly because of Elliott’s persistence that there was something better out there and partly because of a program known as EB-5.
EB-5 is an employment-based visa category that gives foreign investors their green cards if they invest $500,000 or $1 million – depending on the location – in a U.S. business.
"I’ve been in dairy all my life, but the opportunities back in Northern Ireland aren’t what they are here," said Elliott, who is considered a permanent resident in the United States, while his wife, who was born in Connecticut, is a U.S. citizen. "It was getting very difficult. Land prices are extremely high; land acquisition is very tough. It was just getting hard to make a living there."
While Elliott and his family had planned to move to the United States to live and work anyway, EB-5 gave them a way to do it.
Four Korean investors were brought on board to help with the financing, and Elliott became a general partner in a dairy operation in Hamlin County.
Drumgoon Dairy near Lake Norden milks about 1,500 head of cattle a day, Elliott said. A far cry from the approximately 150 head he had in Maguiresbridge, County Fermanagh, Northern Ireland. The South Dakota dairy farm, which is about five miles from their home, also employs about 20 people, he said.
"South Dakota offered a lot of opportunity to build a business of a size I really wanted to do," Elliott said. "It also offered an opportunity to work in an area we really liked."
Since coming to South Dakota, Elliott said his family has made a conscious effort to make South Dakota their home. The Elliott children go to school in Estelline, Elliott said the dairy farm tries to buy as many supplies in Hamlin County as possible, and the family often participates in community and social functions.
"We like it very well here," Elliott said.
And while they would have maybe ended up in America anyway, it might not have worked out the way it did, he said. The Elliotts might not be in South Dakota and the dairy operation definitely wouldn’t be the size it is, Elliott said.
He gives EB-5 much of the credit.
"It’s enabled us to have what we’ve always wanted," said Elliott, who hopes to buy off the investors after five years and have sole ownership. "We’re just in our first year here, but it’s given us a better life…. It was influential in our decision to come to South Dakota."
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China trade outpost may join Pabst site
July 12, 2007
Milwaukee Journal Sentinel - By Tom Daykin
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"The Milwaukee facility could take advantage of the recent designation of a federal economic development zone in southeastern Wisconsin that seeks to attract foreign investment. The Immigrant Investor Pilot Program offers visas to foreigners who invest at least $500,000 and create at least 10 jobs within the seven-county region. The Milwaukee area is among only about 15 Immigrant Investor Pilot Program zones. The Department of Homeland Security in May approved the zone for southeastern Wisconsin…"
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U.S. OKs regional development zone
May 02, 2007
Milwaukee Journal Sentinel - By John Schmid
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"On Tuesday, the Department of Homeland Security approved the creation of an economic-development zone in southeastern Wisconsin that’s meant to attract foreign investment by offering United States residency rights to qualified investors…To lure entrepreneurs from around the world, the program offers visas to foreigners who invest at least $1 million - or $500,000 in areas that have high unemployment or are rural - and create at least 10 jobs within the seven-county metro region…"
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EB-5 Visa Program Seeks to Pump Investment Dollars into New Orleans
March 15, 2007
The Washington Diplomat - By Larry Luxner
Click here to see the article published online.
"The prized green cards come courtesy of the little known EB-5 visa program, whereby non-Americans are granted U.S. residency if they invest at least $1 million in a commercial enterprise and create a minimum of 10 direct U.S. jobs in the process. But if the investment is made in a specially designated "targeted employment area" (TEA) suffering from high unemployment or economic crisis, then the immigrant investor is required to invest only $500,000 and create 10 direct or indirect jobs…the U.S. government believes total investment through the EB-5 program into these regional centers has been running about $300 million to $400 million annually, but that by the end of 2008, it could jump to $1 billion a year. A maximum of 10,000 green cards may be issued annually under the EB-5 program, of which 3,000 are set aside for these designated regional centers…"
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Investment plan could create jobs
January 24, 2005
The Bellingham Herald (Bellingham, WA) - By John Stark
A wrinkle in U.S. immigration law, coupled with Whatcom County’s location on the Canadian border, could tap into a new source of investment dollars to finance private job creation here. The federal government must approve the plan.
The Bellingham Whatcom Economic Development Council is applying to the U.S. Department of Homeland Security to get the county designated as a regional center under the Immigrant Investor Pilot Program. If the designation is granted, federal law would allow a foreign investor to earn permanent resident status in the United States by investing as little as $500,000 in a Whatcom County business if the investment created at least 10 new jobs, directly or indirectly.
The investor would get a temporary visa once a qualifying investment was made, and a permanent resident visa if the jobs were still here after two years. Rob Pochert, executive director of the development council, said the designation would be "another arrow in the quiver to attract investment dollars to Whatcom County."
If the designation is approved, the opportunity would be marketed to foreign investors in a number of ways.
The development council and the Bellingham Whatcom Chamber of Commerce would market local investment opportunities to foreign investors who make inquiries. Such investors would be recruited in Canada by the nonprofit Pacific Corridor Enterprise Council, and on a worldwide scale by IMS Immigration Services Ltd., a company that specializes in helping would-be immigrants get legal status in the United States and other countries.
The company has offices in Canada, Korea, New Zealand and Australia.
Pochert said he hopes federal officials will respond to the application within four months.
If the feds approve the deal, immigration attorney Greg Boos said he doesn’t think it will trigger a major rush of foreign capital into the county. But it will give the county equal status with other communities such as Philadelphia, New Orleans and the state of Hawaii that already have acquired the regional center designation. Boos said the federal immigrant investor program has been around for years, but until recently it was cumbersome to use, and only about 1,000 investors per year took advantage of it. Now the program has been overhauled and should be more attractive to the people it was meant to attract, he said.
The county’s border location should make it a more attractive location for such investments than many other areas of the country, he added.
Jim Pettinger, president of International Market Access Inc., said he doesn’t expect a big financial windfall for local companies, but the immigrant investor incentives could still have significant direct impact.
Pettinger’s company provides services to companies trading across the U.S.-Canada border, and he operates a foreign trade zone in the Port of Bellingham’s International Trade Building at 3873 Airport Way.
He compared the immigrant investor designation to the foreign trade zone. As he described it, the zone doesn’t provide a lot of direct economic benefits under the current state of trade law between the U.S. and Canada. But the existence of the zone helps attract business inquiries that sometimes lead to business relationships, even if the zone itself winds up not being a part of that relationship, Pettinger said.
Reach John Stark at john.stark@bellinghamherald.com.
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