Not All EB-5 Investment Options and Regional Centers Are Created Equal
Congress created the EB-5 category in 1990 to attract foreign entrepreneurs to invest in U.S. businesses in exchange for immigrant visas. By investing $1,000,000 or $500,000 in new or troubled businesses and by creating 10 jobs for US workers, an alien investor has the opportunity to obtain a green card for himself and his immediate family. The annual 10,000 immigrant visas allocated to the EB-5 category have been highly underutilized in the past. However, the category is growing in popularity, with a recent surge of 7,400 visas obtained in 2012, compared to just 4,218 visas in 2009 and 1,443 visas in 2008.
There are two ways for an alien investor to obtain lawful permanent resident status under the EB-5 category: through the Basic Program or the Regional Center Pilot Program. Whereas the Basic Program requires investment in a commercial enterprise located anywhere within the US, the Regional Center Program requires investment in a regional-center-affiliated new commercial enterprise or a troubled business within a designated regional center. Regional Centers are USCIS-designated geographical locations defined as economic units, public or private, involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment. The major advantage of the Regional Center Pilot Program is that investors can bypass the normal requirement of creating 10 new full time jobs in the Basic Program by creating indirect employment.
However, not all investment opportunities and regional center programs are a guarantee. Recently, bankruptcies and an FBI investigation have cast a pall over foreign investment ventures in South Dakota, where the local government failed at tried to pick winning investments, according to an article in the Washington Examiner.
The South Dakota investigation is focusing on five projects essentially hand-picked by the SDRC and the Governor’s Office of Economic Development: Dakota Provisions of Huron, Northern Beef Packers of Aberdeen, NextEra Energy’s Day County 2 Wind Farm, Basin Electric’s Deer Creek generation plant at Elkton, and the Deadwood Mountain Grand hotel and casino.
The SDRC and the Governor’s Office of Economic Development used the federal investor-visa program to pump millions of dollars into the now-bankrupt Northern Beef Packers plant. The $100 million slaughterhouse, funded largely by Asian EB-5 investors, was auctioned off for $4.8 million in cash and $39.5 million in the cancellation of what North called a “somewhat murky debt.”
The failed beef plant is only the tip of the iceberg of South Dakota’s questionable EB-5 ventures. The state has favored mega-dairies with EB-5 cash at the expense of small local dairies, asserted Cory Allen Heidelberger, a political blogger with the Madville Times. Overall, the audit concluded that the Governor’s Office of Economic Development didn’t adequately monitor the EB-5 program as run by SDRC.
Choosing the right investment option for you is perhaps the most important part of your EB-5 application. Although nothing, except death and taxes, is a guarantee, Buda Law Group has a track record of successful investment ventures and regional center program options. Call us today for a consultation about what EB-5 qualifying investment is right for you, and our team of experienced professionals will guide you every step of the way.
Thank You,John B. Buda, Esq. www.budalawgroup.net office: 310-452-1872 firstname.lastname@example.org 3301 Ocean Park Blvd. Suite 205 Santa Monica, CA 90405