The green card through investment or “EB-5” green card program is an incredibly popular albeit controversial way for foreign nationals to obtain permanent residency in the US through investment.
A common misconception is that this program is a “green card for cash” program – some backroom loop-hole for the global elite to skirt our Nation’s established immigration procedures and skip ahead of everybody else in line. This could not be further from the truth.
By some estimates, to date, the EB-5 green card program has brought in over $15 billion in alternative capital to projects throughout the country, which might otherwise have a difficult time getting off the ground. Another fact rarely discussed in the media, is that more than 25 countries have similar programs aiming to attract foreign investments.
This blog series will seek to clarify the EB-5 process, answer some common questions, all with the aim of promoting a more rational and fact-based dialogue on the use of EB-5.
The EB-5 “Green Card through investment” program is a job-creation measure established by Congress in 1990. The goal was (and still is) to inject new capital into our nation’s economy and promote our interests by using foreign capital to create jobs.
According to the US government, there are three main elements to the EB-5 green card program:
- the immigrant’s investment of capital,
- in a new commercial enterprise
- that creates jobs.
By investing a certain amount of “capital” “at risk” in a “new commercial enterprise,” an intending immigrant can obtain permanent residency and ultimately citizenship for themselves as well as their spouse and dependent children under 21. The capital must be traceable to a legal source, and must be linked to the creation of 10 full-time, US citizen (or legal permanent resident) jobs.
There are generally three “New Commercial Enterprise” options:
- start a new business;
- expand/restructure/invest in an existing or troubled business; or
- invest in a Regional Center project.
The Regional Center was developed in 1992, but began to take off as an alternative to traditional financing in real estate development projects in the mid-to-late 2000s.
Factors such as the oversaturation of less-than-savory real estate development projects which tried to use EB-5 to finance projects after failing to obtain other means of financing, along with highly publicized cases of fraud and SEC crackdowns, have caused the EB-5 project pendulum to swing back towards more ‘traditional’ projects, arguably more consistent with the program’s original congressional intent.
Combined with a massive Regional Center shake-up slated for this fall, there are many who think the EB-5 program has peaked and is past its prime.
While some argue that the proposed legislative shake-up will irreparably harm the program, we believe the best is yet to come. The early abuse and lack of oversight to the nascent EB-5 system is analogous to instability in any emerging market.
Abuse of the system in a ‘wild west’ culture has helped pave the way for future stability, increased oversight and investor protection, all aimed at insuring the program’s long-term integrity.
Regional Center real estate development projects are still tremendously popular but stability will breed innovation in areas that will undoubtedly benefit from alternative financing, such as infrastructure and transportation. This author in particular would be happy to see changes implemented that facilitate innovation in green infrastructure and reward projects in rural and economically disadvantaged areas.
Our EB-5 blog series will work its way through the technical aspects and numerous issues that face the program.
We will start by providing a high-level overview of the program’s requirements, use, and procedure. We will also talk about what the immigration attorney’s role is in this dynamic and complex option for permanent residency, and we will discuss the proposed changes to the program and what they mean for the future of EB-5.