In 1990 Congress implemented an immigrant investment program designed to create jobs in the U.S. by capitalizing on foreign investments made by immigrants seeking U.S. citizenship for themselves and their respective families. The program, referred to as the “EB-5 Program,” has been in existence for 20 years with middling success. However, due to a combination of several factors, including a global financial crisis, record unemployment, increased immigration in the U.S., and the “flattening” of the global investment community (to borrow a term from author Thomas Friedman), the EB-5 Program has experienced a dramatic resurgence as a viable opportunity to match investment in the U.S. economy and job growth with U.S. citizenship.
The EB-5 Program is administered by the U.S. Citizenship and Immigration Services (“USCIS”). Generally speaking, EB-5 requires that the immigrant make a capital investment in a new commercial enterprise located within the U.S., which capital investment must be a minimum of $1 million (or $500,000 if the investment is made in a high unemployment area or rural region) and must create or preserve 10 full-time jobs for workers in the U.S.
When an immigrant first makes the capital investment, the immigrant (and the immigrant’s spouse and unmarried children under the age of 21) receives a “conditional” U.S. permanent residence card from USCIS that is good for two years. At the end of the two year period, if the immigrant establishes to the USCIS that the capital investment has been maintained and has created or preserved at least 10 full-time jobs, the conditional status will be removed and permanent U.S. residence status will be granted. Up to 10,000 visas may be authorized by the USCIS each fiscal year under the EB-5 program.
A subset of EB-5 is the Immigrant Investor Pilot Program, which is commonly referred to as the “Regional Center.” Under this program, 3,000 of the 10,000 visas are set aside each year for immigrants who make their capital investment in a new commercial enterprise located within a designated Regional Center. A Regional Center is defined as any economic unit, public or private, engaged in the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment. The benefit of this program is that an immigrant investing within a Regional Center is only required to show that 10 full-time jobs were created indirectly by the immigrant’s capital investment; a direct showing of job creation is not required.
There are high unemployment areas or rural regions throughout Idaho. Companies with operations in these areas would be viable options for an immigrant looking to invest $500,000 that would directly create or preserve 10 full-time jobs. There also are currently 2 Regional Centers in Idaho, with two additional applications pending. Companies with operations in these areas could receive a $500,000 investment from an immigrant and that immigrant would qualify for U.S. citizenship upon a showing that the investment indirectly created or preserve 10 full-time jobs.
Businesses in Idaho can utilize the EB-5 Program to access much-needed financing and create much-needed jobs. The state has recently networked with potential foreign investors from China, Mexico, and other countries. The EB-5 Program presents an attractive financing opportunity for Idaho businesses. Hawley Troxell can provide the legal services needed to facilitate an EB-Program transaction. We have worked with companies looking to access EB-5 Program investments and with groups looking to organize Regional Centers.
If you would like more information about this topic, or other legal issues, please contact a member of our Business Group or call 208.344.6000.