The second state-run EB-5 regional center in the country is aimed at bringing foreign talent and investors to Michigan.
The EB-5 Regional Center is an employment-based “fifth preference” visa program designed to attract foreign investors who will fund a new commercial enterprise in Michigan and, in return, allow them to obtain permanent residency for themselves and their families.
“I think this is just an opportunity for a new source of revenue for the state and the folks who live here and the people that do projects — developers, manufacturers, those types of folks. It is a relatively new source that we are not used to in Michigan. I think it is something we can (use) to provide some pretty competitive rates in relation to the private sector be able to help spur some of these projects,” said Joseph Borgstrom, director of the Michigan EB-5 Regional Center.
The visa program requires the foreign investor to create at least 10 direct or indirect employment positions in Michigan. The focus is on attracting foreign investors who will invest between $500,000 and $1 million in a qualified project. Other visas, such as EB-2 or EB-3, are employment-based visas for highly skilled professionals and workers, and do not require large investments.
For the EB-5, the general minimum requirement for investment is $1 million, according to U.S. Citizenship and Immigration Services; however, in a targeted employment area, or high unemployment area of at least 150 percent of the national average rate, the venture must be at least $500,000.
Sources for potential investors can include individuals and contacts made through academic institutions throughout Michigan in an effort to retain and attract students and alumni, according to the press release. Although the technical name under federal law refers to immigrants as investors, Borgstrom said the program is also aimed at attracting foreign talent, since the individuals typically have high skill sets.
Gov. Rick Snyder said the approval of the EB-5 Regional Center program is an important step in attracting top talent and international investment to Michigan to continue the state’s economic comeback.
“Our state needs outstanding talent to help drive the new economy,” said Snyder in the press release. “Immigrants are net job creators. In return, Michigan offers a wonderful place to live, work, play and raise a family.”
Each project has to gain approval from USCIS in order for the foreign investor to be eligible for a green card. The center works with each enterprise to ensure that strict underwriting standards satisfy federal requirements.
“We evaluate projects independently from financing it, and then we also go out and recruit the investor. So when we go talk to investors, we have applied government underwriting standards to potential projects and we are not just shilling around projects,” said Borgstrom. “To the development community, they know that when we go talk to an investor, we have to make sure they are accredited investors.”
According to Borgstrom, officials are in the process of gathering information on potential projects, and there has been a significant amount of interest in the past year as they completed due diligence of the program.
“We are wide open on what that could be,” said Borgstrom, in reference to industry-related projects. “That could be mixed used, it could be senior housing, manufacturing; it could be hotel, condo/tourism properties.”
Scott Woosley, executive director of MSHDA and president and CEO of MCDC, said Michigan is eager to deepen relationships internationally and develop investment, employment and new resident opportunities through the program.
“It’s anticipated that, once up and running, the regional center will generate $30 (million) to $50 million of new private equity for projects each year and create 600 new jobs in communities where they are much needed,” said Woosley in the press release.
With a federal green card, foreign investors who have qualified through the EB-5 program have the ability to move outside the state.
“The key here is that we are selling the state as part of all of this. We are the first regional center to tell them we want them to live here, and that goes a long way,” said Borgstrom. “We start telling them some of those quality of life issues … and they really start to become interested in what Michigan is about as a place to live.”
Borgstom said combining business industry strengths in automotive manufacturing, furniture manufacturing and agriculture with competitive rates for investments — in addition to the quality of life allure — will set Michigan apart as a place to work, live and invest. When the EB-5 program has failed, it’s often because investments have failed to produce a return on capital or have not resulted in the requirement of 10 direct or indirect employment positions.
“There is a lot to sell in terms of the business side, and it is also the quality of life, so it is a combination of those two things. We are trying to give them good investments,” said Borgstrom. “I think we can offer some pretty competitive interest rates for folks to go out and make money on coming into EB-5, but also still be competitive rates for people in these markets to use the capital to do projects.”