Did you know that foreign investors can qualify for a green card by investing $500,000 in an EB-5 Regional Center?
With the weak dollar, the EB-5 Regional Center program is is becoming an increasingly attractive option for foreign visitors who would like to immigrate to Sarasota–particularly visitors from the U.K. and other European countries. But, this option will expire at the end of September unless Congress takes action soon.
In 1990, Congress changed U.S. immigration law to authorize up to 10,000 green cards (permanent residence) each year for “alien entrepreneurs.” Normally, a foreign person must invest $1 million in a new commercial enterprise and create 10 full time jobs to qualify for this green card.
In agricultural or targeted employment areas, the investment can be $500,000 instead of $1 million. This green card is called the “EB-5” green card, which stands for employment based fifth preference category.
After a few years, Congress noticed that few foreign investors were seeking EB-5 green cards. The category was much underutilized.
To encourage more use of the EB-5, Congress created the Immigrant Investor Pilot Program within the EB-5 category. This program allows public and private entities to operate Regional Centers. Regional Centers take years to be approved. But, once they are approved, the Regional Centers can pool the money of foreign investors and use the money collectively to create jobs for U.S. workers.
The significant benefit of the pilot program was that, unlike regular EB-5 cases, the Regional Center could show that it created the requisite 10 jobs per investor directly or indirectly. In contrast, an investor in a standard EB-5 case would have to show that his or her business directly employs 10 full time workers.
Another big difference between a Regional Center EB-5 and a regular EB-5 is that the investment is much more passive. The foreign investor invests his or her money for five years and has little control over the operation of the investment entity (usually the entities are set up as limited partnerships). The foreign investor can invest the money a Regional Center located anywhere in the U.S. and, once the green card is approved, can live wherever he or she likes.
There are no Regional Centers approved in Florida. There are about 20 active Regional Centers at the moment around the U.S. Jaensch Immigration La Firm can provide information about a lot of them. Most are based in agricultural or targeted employment areas. As a result, an investment of $500,000 is sufficient to qualify.
Congress allocated 3,000 of the 10,000 EB-5 green cards to investors in Regional Centers. While the pilot program has helped increase the popularity of EB-5 green cards, the government still is not issuing anywhere near 10,000 per year. However, with the dollar trading at historic lows and the difficulty we are seeing in other immigration categories, our firm has seen a tremendous interest among clients in EB-5 Regional Center investments.
What foreign investors like is that they can invest $500,000 in a Regional Center for five years and relatively quickly qualify for a green card that would allow them to live in Sarasota. The investment requires little effort on their part in terms of managing a business or workers.
Incidentally, what they do not like is that the investment principal is not guaranteed (by law, the investment must involve risk) and many Regional Center programs offer very low returns for the five year investment period and some do not have a clear exit strategy.
Unfortunately, the Immigrant Investor Pilot Program is set to expire on September 30, 2008. All the parties involved hope and expect Congress to renew the program, but no one knows for sure if and when this will take place. There are all kinds of theories as to what the government will do if Congress does not act in time.
Many foreign investors who would be interested in an EB-5 Regional Center investment are understandably concerned about investing now, because they do not know what will happen if the green card is not approved before the September 30 sunset date. Others have decided to act quickly and invest while the opportunity still exists.
This issue affects Sarasota because so many people are expecting foreign investors to come and help our local economy by purchasing homes. From what I have seen, there are many foreigners who would love to buy homes in Sarasota and retire here. The problem is that current immigration law only permits these individuals to stay here for around six months per year.
The Immigrant Investor Pilot Program is one of only a few ways where a high net worth foreign investor–the kind that would purchase a multimillion dollar home in Sarasota–can qualify for a green card to live here full time. But if this program goes away, there will be one less reason for them to buy here.