A visa program that puts rich foreigners who invest in the U.S. on the road to citizenship is picking up steam and could one day lead to hundreds of jobs and tens of millions of dollars in Bay Area investments, backers say.
In recent years, the once-sleepy EB-5 visa program has become the focus of global entrepreneurs on the hunt for secure investments and U.S. officials looking for ways to buoy a flailing U.S. economy.
Under the program, noncitizen investors who spend a million dollars — or $500,000 in an area with at least 150 percent of national unemployment — can qualify for an immigration visa that leads to a green card in two years. The catch: Their investment must create or maintain at least 10 U.S. jobs.
More such visas were requested last year than in any year since the program began in 1990, according to Marie Sebrechts, spokeswoman for U.S. Citizenship and Immigration Services. A staggering 40.9 percent of those came from China.
Yet none of several regional center chiefs could name a single Bay Area project already undertaken with EB-5 money.
In fact, many centers have had trouble closing a single deal funded by EB-5 investors.
Launched by Congress in 1990 as a way to stimulate job creation and capital investment, the EB-5 program has created more than 40,000 jobs and brought some $2.1 billion in primarily commercial enterprise investments to the states, according to Sebrechts. But it has never come close to realizing its potential.
Federal law permits 10,000 EB-5s to be issued annually, yet no more than 5,000 have ever been awarded in a single year, according to the U.S. State Department. And while applications for the visas have tripled since 2008, only 3,706 were issued in 2011.
Nonetheless, the growing enthusiasm for such programs has led Sens. Chuck Schumer, D-N.Y., and Mike Lee, R-Utah, to compose a bill that would grant residence visas to foreigners who spend at least $500,000 to buy houses in the U.S.
To meet expanding demand, California in the past two years has sprouted some 30 federally approved EB-5 regional centers, which exist to channel foreigners’ money into qualified investments, said Christina Lau, chief manager of a regional center in San Mateo that seeks investors for wineries in Napa and Sonoma counties.
Immigration Services’ website lists 10 regional centers serving San Mateo County and eight serving San Francisco County, but the San Francisco Bay Area Regional Center — which names former San Francisco Mayor Willie Brown as a principal — stands out among them.
In September, the center began marketing the massive Lennar Homes commercial and residential development at Hunter’s Point Naval Shipyard to EB-5 investors.
“This is a tangible way to incrementally bring jobs into the Bay Area,” said the center’s chief, Ginny Fang, who telephoned from China, where she was looking for $30 million from EB-5 hopefuls.
Fang said she also is optimistic about expanding investments into San Mateo County.
Program's backers say restrictions are too tight
Some 200 centers across the United States now promote projects to foreign investors interested in obtaining EB-5 visas, yet only a handful “are notably doing something,” said Ginny Fang, chief of the San Francisco Bay Area Regional Center.
The problem, said Fang, is that EB-5 restrictions are too tight.
In August, the Department of Homeland Security announced that it intends to streamline the rather onerous approval process for EB-5 investor petitions.
But even if EB-5s are expedited, the program is still dependent on regional centers being able to demonstrate that their projects represent secure investments for foreigners and meet the government requirements, said Fang.
A number of centers have run into legal troubles after promising to create jobs they couldn’t deliver or packing together “creative financing” arrangements, said Marc Yelnick, a South San Francisco-based immigration lawyer who has processed about a dozen individual EB-5 visas in the past 20 years.
Even the $50 million-plus EB-5 investment into New York’s Naval Shipyards has run into trouble because marketers promised returns on investments they couldn’t deliver, blocking investors who received EB-5s from receiving green cards, said Christina Lau, chief manager of a regional center in San Mateo.
But San Francisco’s massive naval yard project at Hunters Point, probably the largest EB-5 project ever proposed in California, is different, Fang said.
The project is credible, bringing together local government and the nation’s second-largest developer, Lennar Homes, Fang said. And its sheer size and scope ensure that lasting job creation will not be a problem, she said.
But Brendan Heafey, vice president of the California Bay Area Regional Center in Oakland, is concerned that the project is being “pre-marketed” to investors before it has received all the necessary permits.
Whatever happens at Hunters Point, the feeling is widespread among those who work with foreign investors that it’s high time for the EB-5 program to accomplish its stated goal: exchanging immigration for investment.
“These are the kind of people we want in the U.S.,” said Kung. “They bring money and they bring jobs. It’s not a drain on the system.”