The EB-5 is a visa program that allows immigrants to obtain instant green cards for permanent residency if they agree to invest $1 million in a business in the U.S. If they locate their business in a TEA they get a green card even if they invest 50% less.
To qualify you must: Invest or be in the process of investing at least $1,000,000. If your investment is in a designated targeted employment area then the minimum investment requirement is $500,000.Another way to put this is that the U.S. government will give an instant green card to all aliens that are willing pony up $1 million in cash. They get a 50% discount if they agree to invest the cash in a TEA.
There is one tiny catch to qualify for an EB-5 visa: the regulations say that the loot must be invested in a business that employs 10 people. Local governments believe that rich foreign investors will immigrate to their area to start businesses, and employ lots of Americans.
There is a mad rush for TEA status all across the nation. New York put up a website devoted to attracting EB-5 investors. The home page has a video you can watch with several different selections of language subtitles, and it is loaded with diversity talk. Interviews are made by hosts and mock guests who are represented by a large variety of racial groups. New York is making an offer that can't be refused. Here are just some of the perks they offer:
The Pabst Brewing Co. complex, perhaps the most conspicuous symbol of Milwaukee's urban decay, is reaching out for redevelopment funding from an unexpected source: the Chinese. ...Recently the Phoenix Business Journal wrote about a small city on the outskirts of Phoenix, Arizona called Surprise. Like many sand cities, this one is suffering from the real estate bust. City officials are hoping that once they get TEA status there will be hoards of money laden foreign investors that come to Arizona to start solar power projects and high-tech companies, which will in turn create lots of high paying jobs for Arizonans.
The redevelopment of the 21-acre site is one of three projects in southeast Wisconsin soliciting international investments under an obscure federal program that was approved for the region less than a year ago. Asian funds sought for redevelopment, by John Schmid of the Journal Sentinel, March 28, 2008
Economic Development Director Jeanine Jerkovic said Surprise has applied to become a regional center in the federal EB-5 visa program, which allows foreign nationals and their immediate families to get permanent U.S. green cards if they invest $500,000 to $1 million in the U.S. economy. She expects the foreign investment zone designation to help attract cash infusions for solar, biomedical and high-tech startups in Surprise, including the AZ TechCelerator, a business incubator housed in the old Surprise City Hall. She also said there is one health care company that could receive foreign investment if the city gets the EB-5 designation. .....So, Arizona is a state with more sunshine than any other state in the union but it cannot manage to develop its own solar power industry without the help of foreign investors. How pathetic is that?
There are 89 regional centers nationwide under the EB-5 program, according to the Bureau of Citizenship and Immigration Services. Some of them are in Los Angeles, Napa Valley and Riverside, Calif.; Las Vegas; Seattle; and Miami. Surprise looking to attract more foreign investors, by Mike Sunnucks, February 26, 2010
Arizona leaders aren't showing much confidence that Obamaâ€™s vaunted green initiatives funded by stimulus money are going to save the economy by producing "green jobs".
Surprise officials are deluding themselves if they think $500,000 investments by immigrants is the way to spawn lucrative business ventures. Disregarding the fact that foreigners with EB-5 visas rarely invest their money in businesses that employ many more than their immediate family members (who come with them); these officials seem to be clueless about what it takes to start high-tech businesses. One half of a million dollars isn't even enough to start a McDonaldâ€™s Hamburger franchise. According to the â€?About McDonaldâ€™sâ€? web site an initial fee of $45,000 must be paid to buy a franchise and the restaurant will cost from $950,900 to $1,797,700 to build.
In contrast, according to the EE Times, a company called NexPower Technology Corp. was established in 2005 to produce thin film solar cells. It cost $24 million just to start the business, and another $60 million to build a production facility. Oh, and one minor detail to consider: the plant was built in Taiwan, not Arizona. Jerkovic is downright silly to think that rich foreigners are going to build research centers and factories in Arizona when they can build it in other countries. Arizona has lots of sunshine but so does the Gobi desert, and labor is way cheaper there!
Jerkovic said Surpriseâ€™s proposed EB-5 zone covers the entire city and is focused on new technologies including solar, biotechnology and information technology. She hopes it will help bring business investments into the West Valley from markets such as Spain, Canada and China. ... There are 89 regional centers nationwide under the EB-5 program, according to the Bureau of Citizenship and Immigration Services. Some of them are in Los Angeles, Napa Valley and Riverside, Calif.; Las Vegas; Seattle; and Miami.There are other problems with the EB-5 visa program â€“ like for instance itâ€™s rife with fraud and corruption. EB-5 fraud is a subject for another blog that I will do hopefully soon. There are other ominous signs to be discussed, like for instance a new Congressional push to expand the EB-5 program.
Sunnucks did an excellent job of describing my misgivings with the EB-5 visa program:
But Rob Sanchez, author of the Job Destruction newsletter in Chandler, said foreign investors sometimes get their green cards without coming through with promised investments. He also questions the idea of the U.S. government essentially selling green cards to rich investors.That last statement might not make it clear what I meant (Oops! I'm not used to being accurately quoted!) but I can't blame Sunnucks. What I should have said is that EB-5 investors are under no requirement to hire Americans for their new businesses so way too often they opt to hire family members or H-1Bs instead, or even worse they defrauded the system by never investing the money in a business.
â€?Foreigners come into the U.S. flashing big billfolds, but they rarely invest the half- to $1 million they were supposed to,â€? Sanchez said. â€?They usually end up investing a fraction of the money, perhaps $10,000 in dubious enterprises, and they have no intent to hire Americans.â€?