An old program has been getting a lot of new attention these days. The EB-5 visa program hands out 10,000 unconditional visas per year to immigrants willing to invest $500,000 – $1,000,000 to create U.S. jobs. Since it’s inception in 1990, the program has attracted over $1.5 billion in investments and created over 31,000 jobs. The bulk of that activity has occurred since the economic downturn, as businesses and developers are looking for new sources of financing.
The program stipulates that investments be $1,000,000 and create or preserve 10 full-time jobs. If the business is located in a high unemployment or rural area, investors need only dish out $500,000. Of course the investor could create his or her own new business, or invest in others. 3,000 of the visas are set aside for designated Regional Centers, which match investors with qualified projects. The number of Regional Centers has grown rapidly, from just 11 in 2007 to 191 today.
Each Regional Center is unique. The types of industries they invest in cover everything from shellfish farming to manufacturing to biotech R&D to real estate to arts & entertainment. Some Centers focus on just one industry, while others focus on many. Some Centers focus on just one county, while others focus on multiple states. Most Centers are either privately run or public-private partnerships, charging fees from $30,000 – $50,000.
Like everyone else, the community development world has been struggling to find new and innovative revenue sources. The EB-5 program requires that investments be made in new for-profit commercial enterprises, which obviously leaves out many community development organizations. However, because investing through a Regional Center extends the definition of job creation to include indirect jobs, a for-profit commercial enterprise could pool investments and make loans to non-profits, who would then create the jobs. Furthermore, community development organizations involved in real estate development could use EB-5 funds to finance for-profit projects. Because residential development alone rarely creates jobs (construction jobs don’t generally count), EB-5 is most successful when used for mixed-use or senior housing developments.
Because many Centers are private, and because so much of the EB-5 activity is new, it’s been difficult to find examples of how EB-5 is being or could be used for community development. However, there seems to be a lot of potential and room for creativity in this program. Though changes are being implemented to streamline the process, creating a new Regional Center and getting projects approved can be a cumbersome process. And of course someone needs to attract the investors. However, check this list to see if there’s an existing Center near you – you might be surprised! And if you have experience working with this program, please share your thoughts below.