President Trump’s attempts earlier this year at implementing a travel ban, the suspected religious animus behind those attempts, as well as the public support for the anti-China rhetoric prevalent during his presidential campaign, has given many in the immigration community cause for concern.
To many, these things seem to indicate that a large segment of the American public believes that China is actually stealing jobs from the United States.
However, what has been lost in all of the rhetoric is the fact that Chinese investors create thousands of U.S. jobs every year through channels like the EB-5 Immigrant Investor Program, which has generated billions of dollars for the U.S. economy since it was established in 1990.
In exchange for investing in a new or existing U.S. business or enterprise that benefits the U.S. economy and infuses it with new capital and new jobs, a foreign investor receives green cards for him or herself and their immediate family to lawfully immigrate to the U.S.
The EB-5 Program at a Glance
The EB-5 program has stimulated growth and created jobs in the U.S. for more than two decades. Every year, 10,000 visas are allocated to the program, which equates to the creation of tens of thousands of U.S. jobs.
To participate in the EB-5 program, a foreign investor must make an “at risk” capital investment of either $500,000 or $1,000,000 into a U.S. business or enterprise that will create at least ten full-time U.S. jobs, and show that the path and source of funders for the investment were done legally.
The foreign investors can choose to invest in one of two ways:
- By directly investing in a new U.S. business or other qualifying U.S. enterprise; or
- By pooling their investment in an EB-5 Regional Center alongside other EB-5 investors
EB-5 Regional Centers are public or private entities that pool EB-5 funds and lend them to qualifying business enterprises or development projects. The regional center acts as a U.S. government-approved/licensed entity that allows a qualifying EB-5 project to count indirect job hires for EB-5 job creation credit.
The minimum investment is $1,000,000 unless the investment is made into a business located in a Targeted Employment Area (TEA).An EB-5 project in a TEA has a reduced required investment of $500,000. TEAs are either rural areas or areas of high unemployment.
Shortly after making the capital investment, each EB-5 investor files an I-526 petition proving that his or her investment funds were lawfully earned and invested into the qualifying project. After the U.S. Citizenship and Immigration Service (USCIS) grants approval of the I-526 petition and then completing the process of obtaining the actual EB-5 visa from the Department of State, the EB-5 investor then has two years to show that his or her investment has created a minimum of 10 qualifying full-time U.S. jobs (per investor). During this period, the investor and his or her immediate family are granted conditional green cards.
During the three-month window before the second anniversary of an EB-5 investor’s conditional residence period, each EB-5 investor files a substantive I-829 petition wherein the enterprise or project into which the funds were invested is again reviewed to ensure all job creation requirements have been satisfied. Only after USCIS approves the I-829 petition are the investor’s conditional green cards exchanged for permanent green cards.
EB-5 Immigration and Chinese Investment
Since its inception, EB-5 immigration has undergone a great deal of change and has evolved tremendously. Once an obscure federal immigration program, the EB-5 program has become an essential tool for creating U.S. jobs and boosting the U.S. economy.
For more than 25 years, EB-5 immigration has been attracting investors and entrepreneurs to the United States from around the world.
Currently, roughly 90% of all EB-5 visas are granted to investors from China. Some of the most notable projects into which Chinese EB-5 investors have participated in include:
- The Four Seasons Hotel at 30 Park Place, New York, which raised $250 million from EB-5 investors.
- A large rental apartment complex in New Jersey raised $50 million, a quarter of its funding, mostly from Chinese EB-5 investors.
- Extell Development is raising up to $340 million from EB-5 investors for Central Park Tower in New York. Once completed, this will be the tallest building in the United States.
Furthermore, Hudson Yards, in New York, the largest private real estate development in U.S. history, raised the most EB-5 money to date. It raised $600 million, which created more than 23,000 U.S. jobs and allowed 1,200 Chinese nationals to become legal U.S. citizens.
So, not only does EB-5 immigration bring much-needed investment capital and jobs to the United States and local economies, it promotes legal immigration to the U.S. as well.
Criticism of the EB-5 Program
EB-5 immigration continues to receive heavy criticism because, amongst other things, states have been accused of gerrymandering the boundaries of targeted employment areas (TEAs) to include affluent areas that are more attractive to potential investors.
Questions have also been raised as to whether or not EB-5 immigration is actually effective at creating jobs. Some argue that the jobs that the program has created thus far would have still been created in its absence.
What cannot be denied, however, is that EB-5 immigration, which annually accounts for only 1% of all new permanent residents in the U.S., has generated more than $13 billion in foreign direct investment for the U.S. economy.
In addition, EB-5 immigration added $9.62 billion to GDP and $2 billion to local, state and federal taxes, all while creating an average of over 29,300 jobs per year—all at no cost to U.S. taxpayers.
If you are interested in learning more about EB-5 immigration, please contact us today so the experienced EB-5 attorneys at David Hirson & Partners, LLP can help you.