|IIUSA Applauds EB-5 Regional Center Program Extension
Continuing Resolution reauthorizes the EB-5 Program through December 9th
The Continuing Resolution (CR) signed by President Barack Obama today extends authorization of the EB-5 Regional Center Program through December 9. The funding measure, passed both House and Senate earlier this week, takes effect immediately.
“We are pleased that lawmakers extended the EB-5 Regional Center Program in the continuing resolution signed by President Obama today,” said IIUSA Executive Director Peter D. Joseph. “The extension provides EB-5 stakeholders more time to work for important reforms that improve rigorous vetting of both projects and investors, while allowing the program to continue transforming communities and providing quality American jobs.”
A minimum of $11 billion in community investment and over 220,000 American jobs would disappear if the EB-5 Program lapsed, causing immediate negative consequences to U.S. businesses and projects counting on EB-5 investment to create jobs.
The EB-5 Regional Center Program has facilitated billions of dollars in direct foreign investment into a diverse range of projects throughout the United States, generating over $15 billion from 2005-2015 and creating well over 100,000 new US jobs in that time.
EB-5 was created by Congress with broad bipartisan support to attract foreign investment and create American jobs. Investors who commit at least $500,000 or $1,000,000 in approved U.S. businesses are eligible for permanent residency once the U.S. government confirms that their investment created or sustained at least 10 American jobs within a two year period. EB-5 is unique to other immigration programs in that it creates jobs in America and allows the government to collect federal and state taxes from foreign investors worldwide income.
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AT THE CONRAD FORT LAUDERDALE BEACH RESORT, WATCH A NIGHTLY 3D LIGHT SHOW PROJECTED ONTO THE FACADE OF THE NEW CONDO-HOTEL
When night descends upon Fort Lauderdale Beach, tourists and locals can turn their heads to one hotel looking to light up the ocean.
From now until the end of March, a nightly 3D light show will be projected onto the facade of The Ocean Resort Residences Conrad Fort Lauderdale Beach Resort, turning the condo-hotel building into a display of bursting color amid the darkness.
The pop art-style light installation showcases elements of Fort Lauderdale’s nautical lifestyle using more than 70,000 units of brightness. This colossal display, which has been compared to the nightly light show at the InterContinental Hotel in downtown Miami, will run at 7 p.m., 8 p.m. and 9 p.m. every evening.
“We envisioned this lighting display to engage the greater Fort Lauderdale community, demonstrating the vibrant personality we will bring to the city as we prepare for our upcoming grand opening,” hotel developer Andreas Ioannou said.
The luxury condo-hotel property, set to open in 2016, will feature condo units, resort-style residences that will double as hotel rooms, and beachfront villas. The property will offer a Conrad-branded spa, upscale oceanfront dining, a poolside restaurant and lounge, a sixth floor Sky Beach with sand, and more.
Source: The Ocean Fort Lauderdale Website
Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Senate Judiciary Committee Ranking Member Patrick Leahy (D-Vt.) introduced bi-partisan legislation to extend and improve the job-creating immigrant investor visa program, known as EB-5, which is set to expire in September. The American Job Creation and Investment Promotion Reform Act would reauthorize the EB-5 Regional Center program for five years and add measures to improve the program’s integrity.
We now have bi-partisan bills introduced in both the House and Senate. The bill will, among other things:
- Extend the program for five years;
- Provide increased authority to DHS to deny or terminate applications where there is fraud, criminal misuse, or a threat to public safety or national security;
- Establish an “EB-5 Integrity Fund” in which regional centers would pay an annual fee to be used by DHS to conduct audits and site visits to detect and investigate fraud in the United States and abroad;
- Require background checks of regional center and project developer principals;
- Require DHS to vet EB-5 projects earlier in the process, before investors submit applications;
- Require increased disclosures to investors regarding business risks and conflicts of interest;
- Require more oversight of projects and closer monitoring for securities compliance;
- Amend the definition of “Targeted Employment Area” (TEA) to favor more investment in areas with high unemployment and rural areas;
- Raise the investment threshold to $800,000 for TEAs and $1.2 million for non-TEAs; and
- Decrease petition processing times providing for expedited business plan approval and requiring fees be adjusted to the rate necessary to achieve efficient processing.
There is yet a lot of work to be done in both the Senate and the House to reach the right balance in this reform legislation.
By Laura Foote Reiff on
EB-5 Innovation Summit addresses industry trends for 2015
This past Tuesday, NES Financial wrapped up its 2015 EB-5 Innovation Summit seminar series with resounding success in Los Angeles, California. Between the New York, Miami, and Los Angeles events, more than 300 people attended. Each city’s panel hosted an impressive array of EB-5 industry experts, who offered valuable insight and expertise into the rapidly changing EB-5 industry. Attendees left well prepared to face the challenges and opportunities the EB-5 sector is likely to encounter in the coming year.
To determine the topics for the Summit series, NES Financial surveyed leading players in the EB-5 industry on what they expected to be the major challenges and opportunities for EB-5 in 2015. Compliance/legislation and the EB-5 program’s capacity, including the possibility of Chinese retrogression, topped the list. This was followed closely by increased investor demands for transparency, the globalization of EB-5 markets, and the new challenges expected to arise as more and more EB-5 projects reach the end of the immigration process.
The EB-5 Innovation Summit addressed all of these topics, providing valuable insight into what lies ahead for the EB-5 industry. As Reid Thomas noted in his State of the Market Address, the EB-5 industry has grown explosively in the last two years. EB-5 has become a mainstream source of funding for projects of all sizes, spanning many industry sectors. As a result, new demands have emerged within the industry; a growing number of projects have found a need for streamlined escrow, fund administration, and immigration workflow solutions. NES Financial has seen record adoption of our products across all three categories, and announced that it has been engaged in over 300 EB-5 representing over $12Billion in EB-5 capital.
In the next several weeks, the NES Financial blog will offer an in-depth exploration of the primary conversations from the 2015 EB-5 Innovation Summit, including:
- The impact of Chinese retrogression on EB-5 markets in the coming year
- New regulatory, legislative, and investor demands for EB-5 projects
- Globalization of EB-5 markets
- USCIS processing times and managing the end of the EB-5 life cycle, including return of investor funds
Once again, we’d like to thank our many excellent speakers and everyone who attended the events for helping to make each seminar such a success.
What is EB-5? Find out more by downloading our EB-5 Solution Kit.
Allow us to address your business needs by contacting us, or commenting on the post below. We look forward to hearing from you!
USCIS updated its processing times for the Immigrant Investor Program Office on Feb. 11, 2015. Unfortunately, the news is not welcome. Processing times ticked up slightly to 14 months for I-526 Petitions, 11.4 months for I-829 Petitions and 11.1 months for I-924 Applications. The I-924 Application processing time has risen a full seven months from a low of four months in June 2014. However, I-526 Petition processing time has held relatively steady in the past six months, only oscillating from a low of 13.3 months in July 2014 to a high of 14.7 months in October 2014.
Source: Greenberg Traurig, LLP
A new government crackdown is targeting lawyers abusing an investment visa program.
To qualify, the foreign investor needs to invest a minimum of $500,000 in a “targeted employment area” and the venture must “create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years” or “a reasonable time after the two-year period,” according to the U.S. Citizenship and Immigration Services.
The program has been the source of criticism in the past, many pointing out that targeted employment areas are often in high-demand areas such as New York City or downtown Miami, and that the enterprises fail to offer the stimulative effect that the EB-5 program originally entailed. Additionally, some critics argue the scheme is unfair, effectively increasing an inflow of wealthy foreigners who may have gained their wealth from corrupt means, and encouraging them to launder and park their funds in the United States.
Additional criticism is coming from the SEC, who now says lawyers and corrupt business owners in the United States, who are charging large fees for fraudulent investment scams that promise foreign investors an EB-5 as well as a strong return on their funds, are targeting many foreigners.
The SEC highlights one such case in which accuses an American based couple of falsely promising a 5% return and EB-5 visas to investors who would fund a project. Defendant accusations include misusing the funds for their own personal use, and failing to obtain conditional visas for their clients.
In a separate case involving $156 million, the SEC claims several investors were defrauded with a scam that promised to build a hotel and convention center in Chicago. The fraudsters offered a money-back guarantee for investors, but they had already spent most of the investors’ money.
The EB-5 visa program began in 1990, during a recession in which the program promised to attract foreign investment in the country. Since then, it has gotten easier to get a visa from the program, although economists note the benefit to the U.S. economy has been minimal and difficult to measure.
Over 10,000 EB-5 visas were issued to foreigners in 2014, after over 8,000 were issued in the prior year. Chinese investors accounted for over 85% of the total EB-5 visa winners in 2014.
Source: Economy Watch
ABC News recently published a Nightline investigation into the EB-5 immigrant investor visa program. The article that accompanied the television segment, “Whistleblowers: US Gave Visas to Suspected Forgers, Fraudsters, Criminals,” sensationally details potential security risks in the program and alleges that it is specifically prone to fraud.
Most pointedly, the article misunderstands how the EB-5 program works. The article alleges that immigrant investors “can jump to the front of the line and obtain legal status to live in the U.S. for two years.” This implies that immigrant investors take visas and a place in “line” from other immigrants who do not have the financial means to utilize the EB-5 program. This is simply inaccurate. Each visa category is distinct and separate from other categories, so the assertion that EB-5 applicants “leap ahead of legitimate applicants who lack the means,” is simply not true. EB-5 visas are set aside for economic stimulation and do not take visas away from anyone attempting to enter the country via other immigration programs. There are 10,000 visas set aside for EB-5 investors each year, which accounted for less than 2 percent of the immigrant visas issued at foreign service posts in 2014, as reported by the U.S. Department of State Bureau of Consular Affairs.
The article also claims that “the program has become a magnet for those seeking to sidestep the scrutiny of the traditional immigration process.” Again, this is an unfounded portrayal of the program. Applicants are not simply given a free pass to enter the U.S. upon making their investments; EB-5 investors go through the same Department of Homeland Security checks and protocols that all other green card applicants are subjected to.
The reality is that EB-5 immigrant investors go through a gauntlet of scrutiny. The process of verifying the investor’s capital source is broken down into (1) evidence of how the investor obtained the funds, and (2) a clearly documented path of funds from the originating source to its destination in the U.S. In its review, the DHS routinely requests notarized employment letters, banking records, personal and corporate tax returns, purchase and sales agreements for the disposition of personal property, receipts for the purchase of household goods, and invoices for the purchase of office equipment.
Immigration attorney David Hirson explains that, “from there, the documents are reviewed for authenticity and accuracy, all while the DHS runs the EB-5 investor’s personal information through State Department, IRS, Interpol, Office of Foreign Asset Control, and its own databases. It should be noted that this process routinely takes in excess of 18 months, and immigrant investors are granted no legal right to enter the U.S. until official approval. The documentation process is so detailed and arduous that prospective immigrant investors from countries with non-western banking practices often turn away from the program altogether.”
The scrutiny that the investors are put through is far more intense than an IRS audit and certainly more stringent than the regulations imposed on banks by OFAC under the “know your customer regulations,” Hirson said.
“Because of the high level of scrutiny, there is very little possibility that suspected ‘forgers, fraudsters, or criminals’ would use the EB-5 program to gain access to the U.S.,” Hirson added about the thorough investigation EB-5 applicants go through. “These individuals would seek alternate routes into the country.”
Furthermore, the Obama Administration has budgeted $60.9 billion for Department of Homeland Security in fiscal year 2015. The reality is that no one is legally entering the United States without a significant background check, regardless of which visa category they fall under.
As with any governing body, fraud typically stems from individuals, not the system, and the EB-5 program is no more systematically prone to exploitation than any other visa program. The program is not perfect, but the overwhelming evidence shows that right now, it is working. That being said, there are several pieces of legislation in the pipeline that would drastically improve it. The most notable bill is the American Entrepreneurship and Investment Act of 2015, co-authored by Congressmen Jared Polis (D-CO 2nd District) and Mark Amodei (R-NV 2nd District). The bi-partisan bill would make the regional center program permanent, and also set more rigorous standards for regional center operators and administrators. Legislation like Congressmen Polis’ and Amodei’s bill makes the program more secure and efficient, and would drive more money into the American economy and create more jobs for American workers.
Source: Huff Post Business
According to the South Bend Tribune, the state of Michigan intends to utilize the EB-5 Visa program to increase available capital and decrease unemployment. Green cards for jobs on table Gov. Snyder wants to offer visas to investors. By COURTNEY CULEY November 21, 2011 LANSING — Foreign investors willing to put up a large lump […]
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Michigan District Hoping For Approval of an EB-5 Regional Center
New EB-5 visa Regional Center (EB-5 MRC) is approved for Central Michigan
Source: EB5 News
The Economist reports on how it has become even easier to obtain an investor visa in the USA, given the current economic climate.
Dec 3rd 2011 | SEATTLE | from the print edition
“GIVE me your tired, your poor, your huddled masses,” reads Emma Lazarus’s ode to immigration inscribed on a plaque beneath the Statue of Liberty. More than a century later, however, it is the jet-lagged and rich who are receiving the warmest welcome at America’s borders.
Two senators, Charles Schumer, a Democrat, and Mike Lee, a Republican, recently introduced legislation to fast-track visas for foreigners spending $500,000 on residential property. Their Visit USA Act would allow purchasers and their families to live in America for as long as they owned their houses, though not to work there or receive any federal benefits.
Although the act is unlikely to become law anytime soon, would-be immigrants with half a million dollars in hand need not despair: America has a visas-for-cash scheme up and running. The Immigrant Investor Programme, also known as EB-5, was set up in 1990 to lure in foreigners by giving them the right to live and work there permanently if they created jobs.
Initially EB-5 came laden with stringent conditions: immigrants had to invest $1m either in a new enterprise that would create at least ten full-time jobs, or in a failing one to preserve the same number. They were required to manage the business themselves, and even to dedicate some of the jobs to exports. If a company failed in its first two years, investors would lose both their money and their green cards.
With the exception of the two-year rule, these restrictions have now melted away. Investors today can choose to buy into all sorts of packaged projects, created by regional centres that oversee their day-to-day management. Many projects qualify for a minimum investment of only $500,000, designed to push investment to rural regions and areas of high unemployment. Crucially, the required ten jobs no longer need to be in direct employment. This permits investment in limited partnerships whose purpose is to lend money to companies that do employ workers, reducing investors’ risk.
The logical conclusion is that immigrants could qualify for permanent residency simply by buying local government bonds—and that is exactly what did happen in October. A group of 95 investors, mostly Chinese, bought $48m of Washington state bonds to help finance a replacement for the longest floating bridge in the world, near Seattle.
The evolution of the EB-5 scheme has angered some of those offering traditional investments to immigrants. Henry Liebman is chief executive of American Life, a Seattle-based real estate company that manages around 15% of all EB-5 projects nationwide. “If an investor has the chance to buy a bond backed by the full faith and credit of the state, why would he give a developer $500,000?” he wonders.
America’s struggling construction sector certainly needs the money. While $48m accounted for less than 10% of the bridge bonds issue (and just a tiny fraction of the project’s multi-billion dollar total bill), EB-5 finance has become a much-needed source of funds for private property deals.
The rules, however, are unlikely to be tightened again. Over the summer, the Citizenship and Immigration Services streamlined the EB-5 process further. Last year, 2,480 immigrants got their green cards via EB-5. The Obama administration would like to see that number increase to 10,000 a year, which should bring in billions of dollars for building shops, offices and infrastructure. It should also mean tens of thousands of jobs for the poor, huddled masses of America’s unemployed.