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Foreign investors can receive green cards
RICHARD WEINER
Legal News Reporter
Published: July 9, 2014
In a little-known program run by the United States Citizenship and Immigration Services (USCIS), a citizen of another country can receive a permanent residency visa (often known as a “green card”) for a $500,000 investment in a U.S. business.
The Northeast Ohio Regional Center (“NORC”; www.investnorc.com) works with foreign investors in projects that stimulate the local economy, while, at the same time, can grant residence visas to citizens of other countries.
“We are an economic development engine,” said Kevin Burwell, president of the Wooster-based NORC. Burwell became NORC’s first president in May, 2012. He has been “putting together projects” since that time.
Burwell, 44, who graduated from Massillon Perry High School and received a degree in economics from Kent State University, worked for many years in economic development, particularly with the Virginia Ports Authority in Norfolk, before returning home to take this job.
NORC was created in 2009 by two Wooster-based economic development organizations. It is a “foreign investment zone” comprising the 16 counties of northeast Ohio, including Summit, Mahoning and Portage, Burwell said.
Burwell said that regional centers are just one of many tools that the government uses to encourage foreign investment.
According to an October 2013 study by the U.S. Department of Commerce entitled “Direct Foreign Investment in the United States,” the United States has received more than $1.5 trillion in foreign investments since 2006, with $166 million coming over in 2012 alone.
The “immigrant investor” program, also known as EB-5 (“EB” stands for “employment-based), was created by Congress in the Immigration Act of 1990 to spur foreign investment. Under the language of the original act, an EB-5 visa required the investment of $1 million, and the physical location of the recipient of the visa at the place of business.
In 1992, however, Congress created a new category of EB-5 was created called the “pilot program.” This program, geared toward rural and low-employment areas, requires a $500,000 investment, the creation of a “regional center,” and does not require the investor to take up residence at the place of business, Burwell explained.
All regional centers, including NORC, are designed to help economically depressed areas, said Burwell. Each year, up to 10,000 foreign investors can be granted green cards, according to the law, although USCIS statistics show that that number has never been reached, with the top recent number around 80,500.
There are about 300 USCIS-designated regional centers around the country, according to the listing on the agency’s website. Ohio has five, only three of which are currently active. A read through the list shows that a regional center can be as large as a state, or as small as one project. For instance, the Goodyear headquarters construction and revitalization was an EB-5 project.
Under USCIS regulations, a regional center can either be a private, for-profit enterprise, a nonprofit enterprise, or be created by a government entity. It is limited to a geographic area, and a definite set of business categories. NORC, for instance, has limited itself to projects in areas including bioscience, energy, information technology, and economic revitalization.
Creating a regional center is a very complex and expensive undertaking that requires a great deal of time and effort, and money, said Burwell.
It can require upwards of 1000 pages of documentation, including a highly detailed business plan, an economic impact study, and the state’s designation of the region as a Targeted Employment Area (TEA), among many other requirements, he continued. In addition, both immigration and securities counsel needs to be employed, Burwell said.
“The last filing we sent to USCIS was 700 pages long,” Burwell said.
Burwell said that only a handful of economists have experience in regional center impact studies. At the same time, Michael Nelson, professor and chair of The University of Akron Department of Economics, was shown a sample EB-5 economic impact study, and stated that, “this would appear to be quite similar to (other, non-EB-5 impact studies) that I have done in the past.”
Each project undertaken by a regional center has to create ten new jobs per visa applicant, either directly, or indirectly by provable economic impact, said Charles Hutton of the Florida consulting firm Wright Johnson, which specializes in EB-5 work. A follow-up study also has to be done after the project is up and running.
“The beauty of the regional center is you count direct, indirect and induced jobs thus, maximizing the amount of EB-5 money that can be raised,” said Hutton.
Hutton said that projects that have already started are prioritized as “exemplar” projects during the application process. If exemplar status is granted, investment money can be sought immediately. If the project has not yet begun, money cannot officially come in to the regional center until the project is approved by USCIS, Hutton said.
The regional center application process with NCIS is costly and lengthy, both Burwell and Hutton agree. Firms that offer a complete EB-5 service, from research and application writing filing, to approval, like Wright Johnson, charge about $70,000 to $80,000, or around $700 per hour. The process takes about eight months, if all goes well, Hutton said, although Burwell said that many applications are currently taking 18 months or more for approval.
Besides the original investment amounts, regional centers also charge investors additional subscription fees that are generally around ten percent of the investment amount, said both Hutton and Burwell.
Once created, though, a regional center can funnel a considerable amount of money into a project in a very short period of time. “EB-5 investments are generally looked at as a ‘fill-in,” for when a project needs additional funding,” said Burwell, although he said that there are numerous projects that are stand-alone, as well.
Burwell said that most regional center- based projects start at $10 million (20 investors) and up, although they can start at lower amounts. “You need a lot of investors in the project, to spread the costs out,” Burwell said.
In the next five years or so, Burwell expects NORC to have developed $100 million in projects. One currently active project involves a Cleveland hotel; another project “looking for money” involves the Ohio State Wooster campus.
Burwell and his organization are always on the lookout for projects that fit their parameters. He said that NORC is looking for, “solid, marketable projects.” Anyone in this readership is certainly welcome to contact NORC with ideas.