The United States Congress is likely to pass a long-term reauthorisation of Employment-Based (EB-5) Investor Immigration Programme in March before the programme expires on March 23, 2018, that would reform and extend the popular immigration through investment programme and help the US create more jobs, a top official said.
“The US Congress finally appears close to passing a long term reauthorisation of the EB-5 programme with reforms by the March 23 deadline,” Stephen Strnisha, a Board Officer of Invest in the USA (IIUSA), the EB-5 industry trade association, and Chief Executive Officer of Cleveland International Fund (CIF), said.
“EB-5 enjoys bipartisan support from both Republicans and Democrats and the anticipated passage next month will demonstrate the US’s commitment to immigration through investment and provide for an improved programme that foreign investors can have even more confidence in.
“The reauthorisation would provide various incentives to spread the economic benefits of EB-5 investment to more areas in the United States. Congress finally appears close to passing a long term reauthorisation with reforms by the March deadline.”
With increased demand and a set limit of available visas per year the current result is a programme with a line of investors waiting to get their green card upon initial approval by USCIS of investors I-526 application. Because of how the program's visas are allocated, however, ‘retrogression’, as it is called, currently only affects applicants from China, the country generating the vast majority of investor demand to date.
The length of this wait for Chinese investors has now reduced demand from that country which has in turn caused regional centres to spend more time and effort actively soliciting investors from other parts of the world.
“This is a positive development for all interested individuals in the Middle East, where there is no retrogression and an increasing number of regional centres providing a variety of offerings for investor consideration,” Stephen Strnisha, who will address potential investors in Dubai this weekend, says.
The move will help increased investment inflow into the US where the Trump administration is focussing on creating new jobs for US citizens. Instead of job-seeking immigrants, the EB-5 focuses on attracting job-creating immigrants and therefore falls in line with both President Trump’s immigration policy but also holds wide support from both Republicans and Democrats in the U.S. Congress. .
US Government offers up to 10,000 Green Cards per year under the EB-5 Investor Immigration Programme to investors who inject US$500,000 into job-creating projects through designated ‘Regional Centres’.
Under the programme, an investor typically receives a modest economic return – in the form of interest or profit – but receives permanent residency in the United States and is able to receive its money back after 3-5 years. The condition for the investment programme is that the project receiving the EB-5 funds will have to generate 10 jobs per investor utilising in its financing.
With a potential 10,000 number of visas, the annual EB-5 programme could generate US$5 billion and up to 100,000 jobs for Americans per year.
GCC investors, who have taken advantage of the EB-5 programme in a big way, can now look at greater opportunities once the new reforms are passed by the US legislature, he says.
“Progress is being made on this front with a strong possibility that Congress will pass legislation that will achieve these goals by the upcoming deadline. The result should have the following impact in the near and mid-term for investor immigration in the U.S,” Stephen Strnisha says.
“The investment amount for most EB-5 offerings will increase immediately from $500,000 to most likely $925,000. There will also be greater compliance requirements for regional centres which will increase their cost of operations but also bring greater integrity to the programme."
“Finally, it is also unlikely that there will be any increase in the 10,000 annual visa limit. This should have the effect, however, of regional centres becoming even more active in markets like the UAE and GCC and also likely to lead to EB-5 offerings proposing higher rates of return to its investors.”
Difficulties in accessing traditional domestic financing brought on by the global financial crisis of 2008-10, along with a rise in the number of wealthy investors in developing countries, led to a rapid increase in interest in the EB-5 Immigrant Investor visa programme over the past 7-8 years.
“Facing slow economic and job growth, many US state and metropolitan leaders are searching for innovative means of rousing their economies. The EB-5 Immigrant Investor visa programme has enjoyed renewed interest since the 2008 economic downturn made traditional bank financing more difficult to access,” said a report by Brookings-Rockefeller report.
“Recently, many state and local government and business leaders have looked abroad, especially to emerging markets, for capital to help local economies grow by creating jobs through foreign direct investment (FDI). Fuelling this interest in global capital is the anticipated growth in ultra-wealthy individuals:
“While centa-millionaires are projected to grow by 37 percent worldwide over the next ten years, they will double in China and India. In this context, the underutilised EB-5 Immigrant Investor visa programme has been discovered as a potential strategy for job creation.”
EB-5 allows for investors to be eligible to receive their investment back after completion of their sustainment period. Based on current United States Citizenship and Immigration Services (USCIS) processing times that period is approximately 4-5 years for investors from countries not impacted by retrogression.
Since 2010 Cleveland Investment Fund (CIF) has raised over $240 million for ten different development projects ranging from various branded hotel types to over 1,000 new units of housing and finally to developments that retained and expanded major corporate headquarters in Cleveland, Ohio such as Ernst and Young and American Greetings Corporation.
These projects have in turn created over 14,000 new jobs. While never a majority of the funding for any one project EB-5 funds secured and deployed by CiF have most often been the key to turning the vision of a development into reality.
“This track record, achieved in less than eight years, has made CIF a critical player in advancing economic development in Northeast Ohio, so much so that our regional Chamber of Commerce sought an ownership interest in our enterprise,” Stephen Strnisha says.
“Our success has also led us to expand our focus to two other States and six other metropolitan areas resulting in CiF now serving a significant portion of the U.S. Midwest between Chicago and New York, comprising a population of over 13 million people.”
CIF is in the process of developing a new group of funds which will be available to EB-5 investors who have repaid. These funds will be investing in similar types of projects as CIF's current portfolio.
These funds will be expected to yield a return to investors of between 7-14 per cent depending on their investment focus (e.g. Debt vs Equity funds) and produce that return along with a return of an investors' capital within a 3-5 year period. The choice on whether to invest in such a fund will be solely the choice of the EB-5 investor once they are repaid, Strnisha says.
EB-5 Investor Immigration Programme
The EB-5 visa is a way to get U.S. green card and permanent residency through an investment in a qualifying enterprise. It enables foreign nationals who make a qualifying investment in a U.S. business to obtain a conditional green card, and if the EB-5 visa requirements are met, to potentially become lawful permanent residents, and eventual citizens, of the United States. The EB-5 visa programme is authorised by the USCIS.
EB-5 Visa requirements include US$1 million capital investment or US$500,000 investment in a Targeted Employment Area (TEA). The investment must be made in a for-profit U.S. commercial entity and the investment must create 10 new full-time jobs for U.S. workers for two years.
Based on current USCIS processing times and for individuals from countries not impacted by retrogression the estimated time for receiving a conditional green card is approximately 2-3 years from funding and filing. The estimated time to achieve permanent residency (upon approval of the I-829) for the same group of investors is 5-6 years. The variance in this number and largest factor driving it is the time it takes USCIS to process applications.
About Cleveland Investment Fund
Cleveland Investment Fund (CIF) has a strong track record of achieving success for its investors in terms of obtaining green cards. Of the 443 processed I-526 applications seeking conditional residency (1st step in the EB-5 immigration process) adjudicated by USCIS all but one has been approved, an unprecedented 99.8 percent approval rate, well in excess of the industry average of less than 80 percent.
In terms of I-829 applications which seek to remove conditional status and make residency permanent (the final step in the EB-5 immigration process) 201 applications from CIF investors have been adjudicated by USCIS with every single one approved, a 100 percent approval rate!
CIF has an equally strong record of repaying its investors. Of the $95 million in CIF loans maturing up to this point, the full amount has been repaid and in turn disbursed back to the individual investors. The performance of its current portfolio also gives it confidence that remaining loan balances will be repaid by CIF in a timely manner over the next several years, allowing those investors to also be paid back their original capital.
CIF only provides financing to the projects it carefully selects on a loan basis. This provides for a clearer exit strategy since loans have maturity dates and a more secure position given the higher priority debt has over equity in any capital structure.
CIF's experience in real estate finance also results in selectivity in terms of the projects it chooses to finance. It also means that CIF has the ability to give critical attention to crafting security provisions with its borrowers that provide the best opportunity for repayment and should issues arise provides CIF the remedies needed to pursue repayment on behalf of its investors.
CIF focuses exclusively on EB-5 and as such gives exclusive attention to its investors, assisting and informing them throughout the multi-year process from initial solicitation to USCIS application assistance to regular updates on project status to achieving permanent residency and repayment of principal.
© Press Release 2018
