Thursday, February 9, 2017

Sub-minimum investment amount needed for rural areas

Sens. Chuck Grassley and Patrick Leahy have proposed increasing the EB-5 Program minimum investment amounts to $800,000 (EB-5 projects in TEAs or rural areas) and $1.2 million elsewhere. DHS has proposed increasing these amounts even more to take into account inflation.
Most of the EB-5 investment capital, thus far -- some say as much as 90 percent -- has gone to huge real estate projects in so-called "gateway cities" in California, Florida, and New York. This leaves regional centers and EB-5 projects in rural areas out of the picture.
My regional center -- America's Center for Foreign Investment -- is a southeastern United States regional center. Most of ACFI's EB-5 projects are in rural areas. Trying to find investors for ACFI's projects -- although in growing industries -- is extremely difficult.
ACFI pursues industries I think are likely to be successful.  My regional center is active in affiliating independent- and assisted-living investment projects as well as manufacturers of modular homes and buildings made from hardened materials, such as steel and hardy plank, which resist hurricanes, tornadoes, fire and earthquakes.  These structures are ideal for the Gulf Coast and for tornado-prone areas of the United States.
ACFI would be delighted to entertain other manufacturing projects in rural areas of Alabama, Florida, Georgia, Mississippi and Tennessee (which is ACFI’s geographic area), but the EB-5 investment capital will not arrive because of the preponderance of EB-5 investment capital going to huge real estate projects in the gateway cities in California, Florida and New York.
To address this issue, I propose a minimum investment amount of $650,000 in rural areas, whether or not the location of the EB-5 project is within or outside a Combined Statistical Area or Standard Metropolitan Statistical Area (SMSA).  My rational for the former is that we have many cows and cow pastures in Montgomery County, where a manufacturing plant might be located, but the cow pastures are in an SMSA, so the current lower investment amount of $500,000 is not applicable unless the EB-5 project is within an area of high unemployment, defined as 150 percent of the national average (which fluctuates, of course).  The Office of Management and Budget has repeatedly written to Congress that SMSA’s are created for “statistical purposes only” and were not meant to enable a particular federal program to operate within or outside an SMSA
I feel confident that this lower minimum investment amount of $650,000, exclusively for rural areas, would substantially benefit manufacturing and agricultural industries in the southeastern United States, and create many more good jobs for U.S. workers and others within ACFI’s geographic area than the huge real estate projects in gateway cities.