Some Observations on EB-5
by Jeff Campion
I want to tell you a story about an incident I saw take place in a restaurant last night. I am a regular at the fine dining establishment. In walked a very wealthy individual from out of town. It was clear because of his accent. Nonetheless, he sat down at a table next to me and said to the waiter, "I'll have the most expensive bottle of wine, and the best filet." The waiter commented, "Of course, sir. The wine is Screaming Eagle -- $4,500 a bottle - and the steak is $150 prepared specially by the head chef Oscar style." The customer said, "I'll take it. And, since it is so much, let me give you my black AMEX card in advance so you know I can pay." The waiter was very pleased. He said, "Thank you" and left. Five minutes passed and the restaurant general manager came out with a smile on his face and said, "Sir, we won't be able to serve you." The customer asked, "Why, was my card declined? I have another." The general manager said, "No, it was approved. You have more than sufficient money, but, quite frankly, I just don't want to be bothered." The customer, puzzled, got up and left.
Ok. Maybe that wasn't a totally true story of what took place. But it is what takes place everyday at USCIS with EB-5 Alien Entrepreneur investors. And, we should be puzzled, maybe, even outraged. Now, I understand what I am about to speak involves politics and a hot button in politics - immigration. But, before you allow emotion to overtake your senses and cloud objective thoughts, I ask that you pause, process, and then draw your own conclusions. As Steven Covey said in Seven Habits of Highly Effective People, "diagnose before you prescribe," or conclude.
The EB-5 program is a job creation program that requires each investor create ten (10) jobs by investing $1,000,000 (reduced to $500,000 if located in a Targeted Employment Area ("TEA")). Most investors invest in a Regional Center which is an entity that has demonstrated to USCIS through substantial documentation that if allowed to move forward with certain projects in a defined geography there will be substantial economic benefits including job creation. In the Regional Center context, there are direct jobs, indirect jobs, and induced jobs which come from two sources - construction and operations. The USCIS allows economic analysis to show job creation. When using such, the models and the inputs are quite clear. For example, the RIMS II model - created by the Bureau of Economic Analysis within the Department of Commerce - uses multipliers to calculate job creation. The inputs for the multipliers are actual expenditures or actual revenues which then provide the economist with the total jobs created. I would note that these same models are used by government officials at all levels to determine economic impact of certain governmental economic initiatives.
With respect to the economic impact of the Regional Centers, I would point out that David Kay's peer-reviewed impact study commissioned by The Association to Invest in the USA showed that spending associated with EB-5 investors supports over 16,000 U.S. jobs each year and contributes $1.3 billion to U.S. GDP. Additionally, investor spending adds $713 million in federal tax revenue, annually, and $109 million in state and local tax revenue. All of that is at no cost to the U.S. people. When you understand that these individuals are opting for the most expensive visa classification and are adding so much worth to the U.S. economy, you wonder whether or not the U.S. government treats them like the wealthy customer at the restaurant. The U.S. government - many times -- smiles and says, "No thanks." Or, "You will have to wait eighteen (18) months." In what other industry would this type of customer service be allowed to exist? And, what happens when there is that type of customer service? The reason these questions are so important is because the answers will impact the future of EB-5.
Obviously, the issues are much more complex than ordering wine and steak at a restaurant. The U.S. government must do its duty to ensure that the money being invested is from a legitimate source. It also must ensure to the best of its ability that the investors are not threats to national security (which must be done with any other visa classification). That being said, it seems like the government should be acting with speed and efficiency to welcome some of the wealthiest individuals in the world to the United States by making the process more streamlined. In other immigrant visa applications, the wait time can be as little as fifteen (15) days. And, those individuals are not investing $500,000 with the requirement to create ten (10) jobs. While the applications in the EB-5 classification are certainly more complex, twenty (20) months is certainly unacceptable. USCIS has a goal of eight (8) months for adjudication of the EB-5 petition. While this is better than the twenty (20) month actual time, it is still too much time. I would argue that a more reasonable time is four (4) months or less. And, there are some simplistic methods to achieve that.
With respect to the questions raised previously, some of the investors go elsewhere. Many have chosen to go to the EU where some of those countries simply require a real estate investment such as a home of a $500,000 to obtain residency. The point here is that there are other viable options for wealthy individuals. And, while the U.S. should ensure that the money is from a legitimate source and there are no national security concerns, instead of making it more difficult or time consuming the opposite should be done.
I believe that, in spite of the issues mentioned so far, the future of EB-5 is bright. The EB-5 program is becoming more mainstream. Large national and international developers are now using it as a source of alternative financing to make projects more profitable. Cities are forming Regional Centers or are partnering with existing Regional Centers to attract foreign investment. These factors will only continue to make the program more important and will put pressure on politicians to fix the issues mentioned previously.
When I go back to that restaurant, I hope another person from out of town comes and orders the same wine and steak. Only this time, I hope the General Manager smiles and says, "We appreciate your business so much, may I offer you some hor d'oeuvres on the house?" The restaurant would be wise to do so and so would the U.S. government.
I look forward to that day.
Reprinted with permission.
Jeff Campion is an attorney that specializes in representing foreign high net-worth clients and their businesses. His firm continues this representation before the US Citizenship and Immigration Services (USCIS), U.S. Departments of Labor and State, and state employment agencies. His clients include individuals and families that have or currently appear on the Forbes List for the wealthiest individuals in Latin America. He regularly travels to Latin America to speak on complex immigration-related issues, including citizenship and immigration operations. Mr. Campion received his J.D. with Honors from the University of Florida College of Law in 1997. While in law school he also completed the coursework for a Masters in Arts Latin American Studies. He received his B.B.A. in International Finance and Marketing in 1993 from the University of Miami graduating Cum Laude with Departmental Honors and from the Honors Program. Mr. Campion speaks conversational Spanish and Portuguese.
He is a member of the American Immigration Lawyers Association and was a board member for the Miami Chapter of the United States-Mexico Chamber of Commerce. Mr Campion is also a member of the IIUSA Best practices committee, a board member of the AILA Mexico chapter and is "EB5 verified" by EB5investors.com