A Voice Crying in the EB-5 Wilderness....
I know, I know. It's been so long since I wrote on a regular basis that most of you who remember my penchant for melodramatic EB-5 rants haven't even put your teeth in this morning. I understand. Come back to this after your coffee and Centrum Silver, this will still be here.
For the rest of you whippersnappers who don't know me, here's a few things to ponder regarding 2016's Great Showdown between the GINORMOUS EB-5 behemoths ("BIG EB5") and the rest of us trying to make EB-5 work the way Congress intended way back in 1990 ("We b5" or, easier "Web5"):
- When Congress thought up the EB-5 - an investment based path to U.S. residency -- all hell broke loose about the concept of "selling green cards". After Americans understood that paths to U.S. migration via investment were as old as our country (starting with European migration pre-Industrial Revolution and long stabilized via the L, Eand TNvisa categories - the latter two permitting an unlimited number of years in a "temporary" status), everyone calmed down. The U.S. did what Australia, Canada, and other very smart countries had done decades ago, except twisting the plot to require a mandatory element of "risk".
- After a floppy first decade in the 90's where many investors - mostly Chinese - lost their money AND their green cards, the USG shelved the program, only to have it emerge from the ether years later.
- Six years ago, my Florida Regional Center - American Venture Solutions - was the 39th approved. Suddenly the whole world was talking about EB-5 and, presto, we now have almost 800 USCIS-approved Regional Centers, the bulk of them stumbling around like extras in the woods on the set of The Walking Dead.
In light of this explosion of interest - and in light of the rapid involvement of leading U.S. developers like Forest City Ratner, CIM Group and The Related Group -- the business of EB-5 has grown. But as it has grown, it has grown further and further from what Congress intended when they crafted a law designed to stimulate job creation in those places where it was most needed. Today, the numbers say it all: the vast majority of EB-5 projects are NOT going up in rural America or, for that matter, in impoverished urban areas. They are going up instead in the gentrified (man, I HATE using that word but it is the only one which says it correctly) parts of America’s most thriving urban centers.
Is that a BAD thing in and of itself? No! There is no doubt in my mind that what BIG EB5 is doing DOES have a favorable economic impact and DOES create jobs, etc. But the “bad” part is that by entering the EB-5 market with unlimited budgets and little interest in “Congressional Intent”, those precious few 10,000 EB-5 visa slots per year – and remember, that includes the investor AND his/her family members – are being gobbled up by projects that will do ZERO to help those areas Congress expressly intended to help when it created the EB-5.
Consider the numbers, according to RealDeal.com:
· In 2015, the Related Companies spent at least $730,000 in lobbying fees related to the viability of the EB-5 visa program, according to data from OpenSecrets.org, a website that tracks lobbying expenses and campaign finance, created by the nonprofit Center for Responsive Politics. (Interestingly, $690.000 of that went to Greenberg Traurig, a very large law firm which has expanding its EB-5 practice geometrically in the past years.) As impressive as that figure sounds, $730,000 is a tiny fraction (0.12 percent) of what Related has raised in EB-5 funds for its Hudson Yards megaproject, about $600 million according to various media reports. As EB-5 stands today, Related's investment in lobbying against change is the ONLY intelligent business decision for them.
· OpenSecrets also reported that next up as far as EB-5 lobbying money was CIM Group, which spent $480,000 in 2015, up from $280,000 in 2014, according to OpenSecrets. This year, the investment firm hired law firm Brownstein Hyatt Farber Schreck to monitor “EB-5 and related matters,” according to OpenSecrets.
· Next in the lobbying line, according to OpenSecrets, was Forest City Ratner, spending a combined $140,000 on lobbying in 2014 and 2015, according to the database. According to published data, over 1,100 foreign investors pumped $577 million into Pacific Park Brooklyn, a joint venture between Forest City Ratner Cos. and Greenland USA.
Now, before you go all Ted Cruz on me and accuse me of Big Apple bashing, let's get this straight: I ? NY(C) probably more than any non-Manhattanite I know and am ALL FOR EB-5 investments in big cities...but do you see what's happening here?? Each of these three BIGEB5 developers – and there are countless more of smaller scale—is a de facto superpac, if you will, putting formidable political influence which the rest of us – the WEB5ers – are absolutely powerless to counter. And at the end of the year, with their financial firepower, they succeeded in yet AGAIN tabling EB-5 reform by extending the program without changes for another nine months, and no doubt that the vast majority of EB-5 dollars for FY2016 will be gobbled up by the big guys.
As someone with projects in Canal Point, Florida [Pop. 525, with about 20% of families living below the poverty line] and (soon) in rural – and I mean THE BOONIES, Tennessee – I think that the EB-5 structures AVSEB5 is offering – all backed by Fortune 400 U.S. owners with every bit the credibility and proven success of BIG EB5 - DO conform with the spirit of the EB-5 visa. Look, I don’t want or need rural “quotas” and I'm not asking for a handout. I certainly don’t want BIG EB5 stopped/limited/restrained, and I’ll go toe-to-toe with any BIG EB5 project on the subjects of careful stewardship of investor funds, realistic projections, and mechanisms in place to do everything legally possible to realize PERMANENT residency for our investors.
All I want – both for me and for the rest of us who are not BIG EB5 -- is a fair playing field where the metrics of job creation represent reality, not numbers games. EB-5 NEEDS reforms that limit bogus job counts via the whole “tenant occupancy” nonsense and absurd TEA manipulations that result in EB-5 funded high-rises adjacent to buildings selling $3M condos!
It’s time to cut the baloney and give the WEB5 Regional Centers like AVSEB5 a fair shot at bringing some of that EB-5 money to the truly poor parts of both rural AND urban America, for which it has always been destined.
This post originally appeared on latourlaw.com. Reprinted with permission.
José E. Latour heads EB-5 Public Relations, a marketing and media firm providing international events and publicity services for USCIS-approved EB-5 Regional Centers. His law practice, LatourLaw, P.A., is a boutique business immigration practice based in Miami, Florida. He authors www.immigrationinsider.com , a widely-read blog exploring various developments in U.S. immigration, particularly investment-based immigration. He works primarily with private investment advisors in assisting international clients in exploring their U.S. immigration options.