EB-5 Foreign Investor Program: The Immigrant-Investor Visa
As the US unemployment rate soars to a 14-year
high and economists predict an economic downturn that will rival the worst
recession since the end of world war two – there must be some hope to our
country’s fiscal malaise. One particular federal program shines as a bright
star over a sea of economic distress. In recent years the EB-5 Foreign
Investor program has successfully married foreign investors with
disadvantaged communities throughout America. A diverse range of businesses
including dairy farms, ski resorts, renewable energy, real estate, and
entertainment have been the beneficiary of this federal program known as the
EB-5, or the immigrant-investor visa
The EB-5 program, administered by the United States
Citizenship and Immigration Services (“USCIS”) was initially created in 1991 to
encourage foreign investment in the United States. Unlike many of the other
immigrant visa categories that involve excruciatingly long wait times, the
EB-5 program provides a conditional green card to a successful
applicant and his/her family immediately upon approval by the USCIS. The
investor can arrive in the United States knowing that he and his family have
Permanent Resident status and can apply for U.S. citizenship after 5 years.
Section 203(B)(5) of the Immigration and Nationality Act allocates
approximately 10,000 immigrant visas each fiscal year for
those qualified applicants who invest in a new commercial enterprise that
employs at least ten full-time workers. The standard EB-5 program
requires that an investor contribute $1,000,000.00 to a commercial enterprise
that creates ten direct jobs in the United States. Of the 10,000 allocated
visas, 3,000 are set aside for those who invest at least $500,000 in a
"Targeted Employment Area" (TEA). If the investor meets the investment and job
creation requirements, he and his immediate family are rewarded with a "green
card," lawful permanent residency, in the United States.
In 1992, the USCIS offered an alternative to direct investment under the EB-5
category known as the "Regional Center Pilot Program." A Regional Center is a
public or private business engaged in the promotion of economic growth,
improved regional productivity, job creation, and increased domestic capital
investment. The Regional Center Program is suitable for an investor who wants
to engage in a more passive role in the management of their investment. Unlike
the original program, the pilot program does not require that the immigrant
investor to directly employ ten workers, as long as the investor can reasonably
demonstrate that the regional center has indirectly created or induced ten or
more jobs and improved regional productivity per investor. The Regional Center
Pilot Program was suspended due to under-funding and mismanagement. However, in
2003 its shortcomings were addressed and the EB-5 program has been invigorated
with new life. Today more than 75% of all approved cases in the EB-5 category
are through Regional Centers.
There are two principal requirements for the Immigrant Pilot Program: (1) a
passive investment of $500,000 into a designated Regional Center in a Targeted
Employment Area (TEA); and (2) the investment must directly or indirectly
create ten United States jobs per investor. An important advantage to obtaining
the immigration visa through a Regional Center Program is the requirement of
creating and sustaining at least ten new full time jobs is satisfied by showing
that, as a result of the investment and the activities of the new enterprise,
at least ten jobs are created indirectly though an employment creation
multiplier effect.
The procedural path to the greed card is broken down into three stages.
First, the Immigrant Petition by Alien Entrepreneur (Form I-526) must be
approved. Second, the alien must either adjustment his/her status or apply for
an immigrant visa abroad. Last, a Petition by an Alien Entrepreneur to Remove
Conditions (Form I-829) must be filed with USCIS within 90 days before the
second year of the adjustment of status or the alien investor’s admission to
the United States. All conditions of the I-829 must be met. These conditions
include: (1) proof that the requite amount of money has been fully invested;
and (2) that the full time jobs have been created or, in the case of a Regional
Center Program investment, have been indirectly created. Once Form I-829 is
submitted, it takes an average of 12 months for the USCIS California Service
Center, which adjudicates the EB-5 petitions, to make a decision.
Evaluating and preparing EB-5 applications is a complex and
difficult process. Hurdles one may face include tax planning issues, tracing
the source of the investment funds, selecting the appropriate investment or
Regional Center, interpreting applicable laws and regulations which at times
lack clear guidance, and overcoming restrictive Board of Immigration Appeals
(BIA) decisions. When deciding which program best fits a person’s needs, it is
important to weigh the advantages and the disadvantages of each investment
program.
A traditional EB-5 visa is the best option for investors who
wish to invest in a new or existing business, have a desire to maintain an
active role in the management of their own operation, have one million dollars
to invest, or $500,000.00 to invest in a designated TEA directly, and can
shoulder the burden of creating ten new full times jobs.
Conversely, for those who prefer only to invest $500,000.000, maintain a more
passive role in the management of their investment, and do not wish to be
directly involved in the creation of ten jobs, then the Regional Center Program
is the best option. From a financial standpoint the Regional Center Program is
a favorable alternative to the traditional EB-5 visa. A lower
capital investment means less risk. Additionally, there is no responsibility to
maintain the high cost of ten direct employees for over two years.
The EB-5 program has proven to have a positive impact on the
United States economy and job creation. In 2006 alone the EB-5
Immigrant Investor and Regional Center program resulted in the
aggregate total of over $250 million in immigrant investor capital inflow to
the United States economy and the creation and/or preservation of 5,000 jobs in
areas of high unemployment. Projections for 2007 are estimated to be an
aggregate total of $500 million dollars, and 10,000 jobs principally in areas
of high unemployment Whatever program is selected, it is important to note that
prior to acquiring residency the investor should consult with a tax advisor
regarding tax consequences.
The EB-5 visa creates a win-win situation by connecting
foreign investors’ international fortunes to depressed economies and high
unemployment areas around our country. In exchange for their investments, the
investors receive a reasonable rate of return and green cards for themselves
and their family. When fully utilized it is estimated that the program will
contribute between $1.5 – 3 billion in foreign capital to the United States
economy each year. Such investments could have a significant impact on our
economy. Of equal importance this program will also provide and /or preserve
more than 30,000 jobs for United States workers each year.
For additional information on pursuing residency under the EB-5 category
or obtaining a Regional Center Designation, please contact
Roger Bernstein at (305) 895-0300 or by email at rbernstein@visaattorneys.com.
By Roger A. Bernstein
BERNSTEIN OSBERG-BRAUN, LLC
1200 Byscane Blvd, Suite 106
Miami, FL 33181
305-895-0300
RBernstein@VisaAttorneys.com
Bernstein Osberg-Braun & de Moraes