The Bipartisan Policy Center recently issued a 40-page report entitled “EB-5 Program: Successes, Challenges and Opportunities for States and Localities.” In addition to presenting a brief background of the EB-5 program, the report focused on three major issues:
The Regional Center Program and Growth of EB-5
- Program Outcomes and Economic Impacts
- EB-5 Program Challenges
Here are five key takeaways from the report as published by the Bipartisan Policy Center:
- The program has attracted a minimum total of $4.2 billion in investments and supported the creation of at least 77,150 jobs. These minimums represent a static estimate based on the number of investors who have met the EB-5 requirements and who have been granted permanent residency to date. Less conservative methodologies, such as those used by USCIS to report program outcomes, put the minimum investment total to date (July 2015) at around $11 billion to $12 billion based on initial approvals for conditional residency. Economic modeling studies by the industry group Invest in the USA also show that the program has positive effects on GDP and tax revenue. The latest study found that EB-5 spending contributed $3.58 billion to GDP, created more than 41,000 jobs, and generated more than $805 million in federal and state tax revenue in FY 2013 alone. There have been no economic studies commissioned by the government on the EB-5 program’s wider economic impact since 2010, but USCIS has recently commissioned a new study to assess the program’s impact for FY 2012 and FY 2013.
- Assessing full economic impact and program outcomes has been challenging. Partly due to a lack of data collected and made publicly available on EB-5 projects, both nongovernmental and governmental entities have had difficulty verifying economic impact assessments. Audits have shown that while USCIS collects more complete information on EB-5 program forms, such as the total number of jobs created, the agency does not consistently report outcomes beyond the minimum requirements.
- State and local government interest in the Regional Center Program is growing. A growing number of states and localities are creating partnerships with regional centers or creating their own to attract investments to their communities. Michigan, Vermont, Hawaii, Iowa, and Pennsylvania, as well as the cities of Dallas, Miami, and Philadelphia, are just some of the municipalities with varying levels of involvement in operating regional centers. Many have already seen successful projects. In Philadelphia alone, public-private partnerships with regional centers have attracted more than $620 million in investments for now completed projects.
- The program’s regional focus provides valuable opportunities to states and localities, particularly on civic development and infrastructure projects. The program’s ability to provide long-term, low-interest capital that can complement existing public funds presents valuable opportunities for state and local leaders to address some of their public-spending projects, including in highly underinvested but critical public infrastructure and affordable housing. Many states and localities have already taken advantage of the program for such projects and several plan to do so.
- With increased security, functionality, and integrity, the program has great potential to support regional economic development. Considering its relatively limited size, the EB-5 program alone will not be the primary solution for the country’s most expensive and critical needs. However, with effective reforms to increase the program’s integrity, security, and functionality, the EB-5 program has the potential to provide for incremental but relatively significant opportunities for regional economic development.