Keeping the EB-5 Program Competitive in the Global Marketplace
Recent years have seen an unprecedented wealth distribution paradigm shift worldwide. Individuals benefitting from energy, tech or real estate continue to watch earnings grow, while manufacturing, unskilled, and other jobs made redundant by technology and modernity are on the way out. By way of example, as reported by Andrew Keen in “The Internet is Not the Answer”, Airbnb, a 700-person startup was valued in 2014 at $10 billion, which makes it worth about half as much as the $22 billion Hilton corporation, a worldwide chain with almost 4,000 hotels and 152,000 employees. A related trend reported in a 2013 the Credit Suisse World Wealth Report, found that the top 1% own 46% percent of all global wealth, and the richest 10% own 86 percent of the wealth.
Nowadays, countries are in competition to attract High Net Worth foreign investors, offering immigration/residency and visa programs with requirements ranging from a simple cash influx threshold, starting a job creating business, and/or real estate investment. Turning our attention to cash investment-based residency; Dominica offers citizenship for the equivalent of $100,000, the amount in Austria is $10 million, and the threshold for Malta is €650,000.
Immigrant Investors, such as those pursuing the EB-5 program in the U.S., desire permanent residency for various reasons. Clients from the Middle East, Russia, and China tell me they want a safe, free environment for their children to grow up, and where they can conduct business in a stable environment. Others simply want to get the Green Card to add to a portfolio of passports and visas abroad so that they have guaranteed passage to more corners of the world (although individuals obtaining U.S. residency must actually ‘reside’ in the U.S., or risk abandonment).
Each year, 10,000 EB-5 U.S. Residency Visas (“Green Cards”) are made available to foreign investors seeking residency in the U.S. Implemented in 1990, the program contributes over $2.6 billion to GDP and generated over $346 million in federal tax revenue and supported over 30,000 U.S. jobs between 2010 and 2011.
Potential EB-5 investors can qualify by making a $500,000 cash investment in a U.S. government pre-approved investment project (“Regional Center”). Individuals wanting to purchase or start a business can do so if the business will create ten jobs for U.S. workers and is capitalized by at least $1 million ($500,000 if the entity is located in a Targeted Employment Area–an area with an unemployment rate greater than 150% of the national average). A simple investment in real estate (without the job creation) will not meet EB-5 requirements.
Qualifying for the EB-5 program has been criticized by some as too cumbersome. The petitioner packages that our firm submits to USCIS are typically about one foot thick, and the government processing time for the EB-5 petition (Form I-526) is currently between 13-15 months. Investors must place their $1 million or $500,000 at risk without a guarantee of any return on the principal invested. Further, individuals who need flexibility to travel in and out of the U.S. during the 13-15 month period in which the I-526 is pending may be denied a visitor visa based on Section 214(b) immigrant intent. Individuals who travel while their I-526 immigration petition is pending on “ESTA” (the Visa Waiver Program) or a visitor visa also face the risk of additional scrutiny or denial of admission at the Port of Entry based on immigrant intent. Individuals consulting with us about their eligibility for EB-5 immigration are often surprised at the hurdles that they face for wanting to bring an influx of cash and federal tax revenue into the U.S. economy.
Human history is the history of migration, it has always been that way and it remains that way today. Those who are able, will seek to migrate to places that are safer, more stable and provide the highest quality of life. If our immigration policy makers and agencies deem it beneficial to the national welfare to attract high net worth individuals, it is hoped that more reasonable policies are enacted to increase and improve the current system. For one, implementation of a “Premium Process” for Form I-526 Immigrant Investor Petition, as is in effect for many employment-based immigrant and non-immigrant petitions, would be a good start. Under Premium Processing, the USCIS will generally issue a decision in case within 15 calendar days of filing. Allowing priority processing for immigrant investors would allow them the flexibility of being able to migrate/travel freely, as is the norm in today’s global marketplace.
The EB-5 system currently attracts investment amounting to approximately $1.8 billion into the U.S. economy annually. Further immigration reform attracting immigrant investors, entrepreneurs and highly-skilled foreign workers should be a top priority to enhance the U.S., otherwise these individuals will seek to invest their time and money in Australia, France, Malta, New Zealand, or any one of a number of other countries offering investment-based residency programs.