With the clock ticking down on the end of the fiscal year, Congress is working feverishly to avoid a government shutdown. One important economic development program that should not be shutdown is the EB-5 Investor Visa Program, and the related EB-5 Regional Center Program, which will sunset on September 30 absent reauthorization
Created by Congress in 1990, the EB-5 program has enjoyed strong bipartisan support for good reason. EB-5 provides an important mechanism to attract foreign investment in economic development projects that create jobs -- at no cost to taxpayers. Under the program, foreign nationals who invest at least $500,000 in a U.S. business or economic development project that creates or saves 10 jobs become eligible for a green card.
The value of EB-5 to our economy increased exponentially during and after the great recession. When the bottom fell out of the financial markets, commercial lending dried up and economic development ground to a halt. EB-helped fill the financing gap, providing much-needed capital to get projects moving and put Americans back to work.
Since 2008, EB-5 has generated $11.92 billion in foreign direct investment. And, from 2010-2013 alone, the program contributed $9.62 billion to gross domestic product while supporting an average of 29,300 jobs per year. Over 95 percent of all EB-5 investments flow through EB-5 Regional Centers.
While the recession may be technically behind us, access to capital remains a critical need across the country. Traditional lenders require more diversified financing on the front-end to mitigate risk, particularly for infrastructure and large-scale economic development projects. EB-5 remains a vital financing tool in this new normal.
In fact, the program is benefiting more communities than ever before. Last year marked the first time that EB-5 operated at full capacity with the maximum allowable number of visas issued under the program. Nearly $3.25 billion in investment funds have been raised in the first three quarters of FY2015 for projects in communities as diverse as Cleveland, Ohio and Stutman County, North Dakota. There is an additional $6.5 billion in the pipeline pending government approval.
Failure to reauthorize EB-5 would shut down this critical flow of investment to American communities. National economic output is built on thousands of local economies – towns, counties and cities with their own needs and plans for economic growth. The impact of EB5 on local, struggling economies is tremendous.
The program’s benefits are evident in communities devastated by the closure of military bases that are now home to thriving business centers. Or in the jobs created – and families supported -- by new senior living facilities. It’s new businesses that help make us energy independent while putting people to work. It’s new hospitals that bring healthcare jobs and lifesaving care to underserved communities and the renovation of older buildings into hotels that anchor vibrant redevelopment districts.
The list of EB-5 successes is long and getting longer every day. Each project represents the creation of real jobs directly on-site and all along the supply chain. And, each project represents the opportunity for more people to share in the American dream – workers employed and supported by EB-5-funded businesses and successful immigrants who put their resources at risk to start a new life in our country.
That’s why the U.S. Conference of Mayors, the National Association of Counties, the Council of Development Finance Agencies, the International Economic Development Council and hundreds of other stakeholders support reauthorization of the EB-5 program. They’ve seen the benefits first hand.
Critics often cite the program’s complexity as a cause of concern – how can we be sure that investments are worthwhile? that the jobs are real? that there isn’t fraud or abuse of the program?
This complexity is part of what makes our system unique. More than twenty other countries offer investor visa programs – all competing in the global capital market. The EB-5 program is by far the most stringent, requiring significant risk of capital, immigration status tied to demonstrated job creation and rigorous law enforcement and national security screenings.
In the last few years, the federal government has stepped up oversight and enforcement, adding expertise and enhancing interagency cooperation to evaluate project and investor applications, define consistent adjudication policies, and weed out bad actors. This is a welcome development, and the EB-5 industry supports additional common-sense reforms to strengthen oversight and protect the integrity of the program.
EB-5 has proven itself to be a valuable tool for job creation and economic growth. To continue and build on that track record of success, Congress needs to reauthorize EB-5 before September 30.
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