Communities Hope to Advance TBED Plans with EB-5 Visa Funds

As news on the economy turns darker shades of bleak, communities across the country are looking for alternative ways to finance their innovation strategies. Some of their approaches will be the topic of two breakout sessions at SSTI's upcoming conference, Encouraging Regional Innovation. This story looks at one example. For more information on the conference, visit: http://ssticonference.org/

Earlier this month, the non-profit Wooster Growth Corporation in Northeast Ohio voted to authorize $50,000 to cover the application costs for creating an EB-5 visa regional center through the U.S. Citizenship and Immigration Services (USCIS). Community leaders hope the designation, if selected, will produce a funding source from wealthy immigrant investors to assist in the construction of buildings within the BioHio Research Park. The research park is planned to be adjacent to the Ohio Agricultural Research and Development Center, a facility of 200 scientists owned by The Ohio State University.

While the BioHio Research Park already has acquired a $750,000 federal grant to convert an existing building into an incubator and $3.2 million from the state for road and infrastructure development, a source of funds is needed for future construction on the site. According to a recent article in the Akron Beacon Journal, if the one- to two-year application process is successful, an LLC would be created with the pooled money, with potential investors obtaining a return from rental costs at the research park.

But what exactly is the EB-5 visa program?

In 1990, Congress established a new immigrant investor visa category (EB-5 visas), which provides a green card to those seeking permanent resident status in exchange for $1 million in direct business investment. This investment must accomplish a required impact, and 10,000 of these visas are available each year.

Starting in 1993, the Regional Center Pilot Program was incorporated, which reduces the amount of investment per visa to $500,000 if the funds are targeted to designated employment areas. These pre-approved areas can only be rural sections of the U.S., or areas with an unemployment rate 150% of the national average. These regional centers also allow individual investments to be pooled to support larger projects. The annual allotment of visas under this mechanism is 5,000 per year, or half of all the EB-5 visas available.

Since these programs have been instituted, their annual quotas have never been reached. In fact, according to an April 2005 GAO report on the EB-5 visa program, only 6,024 out of the allowed limit of 130,000 visas were issued between 1990 to 2004,. However, in fiscal year 2006, 389 people applied for the program, increasing to 779 in FY2007 - a much larger amount than in the earlier years of this decade.

The Regional Center Pilot Program is set to expire in November 2008, and needs Congressional support to be extended. HR 5569 was passed by the House on June 9, 2008 to support the program for another five years, and is currently referred to the Senate's Committee on the Judiciary.

The Akron Beacon Journal story, "Wooster Applies for Region Center Status", is available at:

http://www.ohio.com/business/28124649.html

An overview and eligibility requirements for EB-5 visas from the USCIS can be found at:

http://www.uscis.gov/portal/site/uscis

The April 2005 GAO report, Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors, can be accessed though:

http://www.gao.gov/new.items/d05256.pdf

Information about HR 5569 to extend the Regional Center Pilot Program can be found here:

http://thomas.loc.gov/cgi-bin/query/D?c110:4:./temp/~c110PP1V9b