"EB-5 Visas and the Ramifications
for Regional Development"
Economic Consulting Group, LLC
May 9, 2012
The ECG Team
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Riley Moore
Lorrie Brown
Lizbeth Martin-Mahar
Hart Hodges
Dave Wallace
Kari Qvigstad
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Employment-Based Immigration - Fifth Preference (EB-5)
• EB-5 Visa
– Started in 1990
– Invest $1 million or $500,000 in a targeted employment area (T.E.A.)
– Need to directly create jobs for at least 10 U.S. workers
• EB-5 Regional Pilot Program (Regional Center)
A Regional Center (RC) is defined as "any economic unit, public or private,
which is involved with the promotion of economic growth, including
increased export sales, improved regional productivity, job creation, or
increased domestic capital investment.
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Pilot program started in 1992 (extended until September 30, 2012)
Invest $1 million or $500,000 in a targeted employment area (T.E.A.)
Need to either directly or indirectly create jobs for at least 10 U.S. workers
Investor can be limited partner
3,000 EB-5 green cards each year are held for people who invest in
designated "regional centers.“
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USCIS RC EB-5 Homepage
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“It should surprise no one that citizens of other countries are
eager to invest in the U.S. economy. And along with the positive
message a healthy and productive program like this sends to
investors around the world, the core purposes of the EB-5
Regional Center Program are to generate capital investment
and create jobs in communities around the United States. I
want to underscore that both of these benefits are
accomplished at no cost to taxpayers, and are not reliant on
what is currently a very restrictive credit market. Under the
program, in order to become a non-conditional lawful
permanent resident, a foreign investor must prove the creation
of 10 new jobs. The job creation requirement is central to the
program, and ensures that foreign investments translate into
tangible benefits for Americans. We can all acknowledge that
the issue of immigration is a difficult one. But I view the
Regional Center program as less about immigration than about
job creation and capital investment in American communities”.
Senator Patrick Leahy (D-Vt.), Hearing On "Promoting Job
Creation And Foreign Investment In The United States: An
Assessment Of The EB-5 Regional Center Program" July 22,
2009
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United States not Unique
Immigration through investment is not unique
to the United States.
Other countries with similar programs:
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Canada
Australia
New Zealand
United Kingdom
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EB-5 RC Options
• New commercial enterprise and create new
full-time jobs
• Existing and troubled enterprise and save
full-time jobs
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Complicated
and
detailed
process
Source: http://www.whicheb5.com/flow-chart-eb5-visa-application.php
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Program of Contradictions &
Limited Transparency
• EB-5 is an economic development program that is
administered by a federal agency that is mainly
focused on “immigration enforcement”
• Continues to evolve and limited transparency
• Regional center pilot program still not permanent
and continues to be repeatedly extended for
three year periods (extended again until Sept.
2012)
• Up until recently, review of RC’s economic impact
reports were conducted by non-economists
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More
Recent
Local
Coverage
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Total EB5 Visas Issued, by Category, FY06-FY10
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
FY06
FY07
FY08
FY09
FY10
EB-5 - $1M
EB-5 (TEA) - $.5M
Regional Center - $1M
Regional Center (TEA) - $.5M
Source: U.S. Department of State: Report of the Visa Office
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Total EB-5 Visas Issued
*
4,218
4,500
4,000
3,463
3,500
3,000
2,405
2,500
1,885
2,000
1,360
1,500
1,000
500
744
806
FY06
FY07
158
0
FY05
FY08
FY09
FY10
FY11
FY12**
* Estimate of visas issued to the investor and dependents
** As of March 2012, Source: U.S. State Department
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Top 5 EB-5 Countries
Percentage of Total Visas Issued
Rank
1
2
3
4
5
FY2006
Country
S. Korea
China
Taiwan
Canada*
U.K.
%
47%
12%
8%
6%
5%
FY2008
Country
S. Korea
China
U.K.
Taiwan
Canada
%
48%
25%
8%
3%
2%
FY2009
Country
China
S. Korea
U.K.
Taiwan
Canada
%
47%
21%
8%
4%
2%
Source: U.S. Department of State, Visa Office
* Tied with Netherlands at 6%
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Top 10 Countries Issued EB-5 Visas
1) People’s Republic of China
2) Republic of South Korea
3) Great Britain/Northern Ireland
4) Taiwan
5) India
6) Iran
7) Mexico
8) Canada
9) Russia
10) South Africa
#
772
295
135
94
62
55
50
45
41
34
%
41
16
7
5
3
3
3
2
2
2
Source: U.S. Department of State: Report of the Visa Office
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EB-5 Visas Issued, By Region, FY06-FY10
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
FY06
FY07
FY08
FY09
FY10
Africa
14
12
6
70
58
Asia
610
649
1,188
3,340
1,358
Europe
124
105
192
571
289
North Am.
45
16
40
142
111
Oceania
0
1
2
16
24
South Am.
9
10
15
79
45
Source: U.S. Department of State: Report of the Visa Office
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Economic Impact Analysis Steps
1) Identify the targeted area of the proposed
regional center
2) Identify the new expenditures that are being
introduced
3) Identify sectors affected
4) Incorporate transaction value dollars adjusted
for year of the model
5) Run the input/output model and evaluate the
change in employment, output, value added
and labor income by industry sectors
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Some Drivers for Direct Jobs
• Business plan
• Square footage (and expected use)
• Projected business revenue
• Average employment per industry
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Components in the Economic Report
• Defining the region: characteristics
• How the regional center investments will affect the
regional center’s economy
– Direct, indirect and induced employment, output & valueadded impacts
• Assumptions behind the economic impact results for
the proposed project
• Demonstrate that the proposed project activity
results in new jobs
• Competition with existing businesses
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Latest USCIS Issue:
Tenant-Occupancy Methodology
• USCIS has clamped down on allowing the
counting of future tenants jobs towards the
regional center’s direct job count
• USCIS is only counting those jobs resulting
indirectly from construction activity and
applicable building management
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Explosion in Supply of Regional Centers
250
218
Number of Regional Centers
200
150
125
100
77
50
45
11
20
0
2007
2008
2009
2010
2011
2012*
* As of March 2012, Source: USCIS
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States with 5 or more RCs*
State
California
Florida
Texas
Washington
New York
Georgia
Michigan
Nevada
Arizona
Hawaii
Illinois
#
58
20
14
13
10
6
6
6
5
5
5
%
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9
6
6
5
3
3
3
2
2
2
* As of March 2012, Source: USCIS
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States currently with no RCs*
Alaska
Arkansas
Connecticut
Delaware
Minnesota
Nebraska
New Mexico
Rhode Island
West Virginia
* As of March 2012, Source: USCIS
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13 Regional Centers in Washington
Aero Space Port International Group (ASPI Group) Regional Center
American Life Ventures Everett, Washington
American Life, Inc. - Lakewood Regional Center
American Life Seattle RC | Gold Rainbow | Freedom Fund
American Life Ventures, Tacoma, Washington
Eastern Washington Regional Center
Farm for America Regional Center
Path America Sonoco, LLC
Seattle Regional Center
Twin Development LLC Regional Center
Washington Regional Center
Western Washington Regional Center LLC
Whatcom Opportunities RC
Source: U.S. Citizenship and Immigration Services
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Regional Centers: Public vs. Private
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Top Regional Center
Firms/Agents
American Life, Inc.
Henry Liebman
Can Am Enterprises, LLC
Tom Rosenfeld
Invest in the USA
Stephen-Yale Loehr
Source: U.S. Citizenship and Immigration Services
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New Kid on the Block with New Paradigm?
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Introducing 520 Bridge Project in Shanghai
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Other Issues & Patterns
• Priced too low……as RMB strengthens the cost
of entry becomes more affordable…..cost of
apartment in Shanghai ~$600K…..get green
card for whole family for $500K
• Trend towards investment following students
studying abroad (based on discussions with
agents in China)….universities can be drivers
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Conclusions
• Supply vs. Demand: Big increase in RCs in
recent years but RCs need to assess demand
• USCIS moving towards more transparency and
permanency
• Transition from private to public projects if
current policies stay in place
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THANK YOU
QUESTIONS?
Reminder
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Conference
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www.pnrec.org