By Matthew Khalili and Kerry MacLaine
Today’s conventional EB-5 projects have a more difficult time creating permanent, solid working jobs in America. The typical regional center-sponsored project is in real estate development: hotels, resorts, multipurpose complexes and condos. Hudson Yards in Manhattan, Pacific Park in Brooklyn and Hunters Point in San Francisco are some of the largest real estate developments and well-known EB-5 projects, accounting for nearly $1.5 billion in EB-5 funds.
For direct EB-5 projects, restaurants, nursing homes and other healthcare facilities make up a significant share. But with approximately 90 to 95 percent of all EB-5 visa applicants investing in a regional center project, hard hats, shovels and cement trucks are common attributes of the standard EB-5 project. As a result, many of the jobs created by EB-5 funding tend to be either low-skill, homogenous, low-wage or short-term.
However, a growing trend is entrepreneurs and startup companies seeking EB-5 funds for their innovative projects. One company that has gone that route to fuel its growth is Xtreme Green Electric Vehicles (XGEV), which designs and manufactures electric specialty vehicles for police, military, security, landscaping and off-road commercial users in United States.
“Today, too few jobs created by EB-5 are sustainable over longer periods,” said Byron Georgiou, the CEO of XGEV.
His voice is just one among a growing number of advocates that want to see the EB-5 program be leveraged in a way that truly benefits the country over the long haul. Many hope that a greater share of EB-5 funds go to projects that propel U.S. innovation forward, creating skilled, diverse and well-paying jobs that last. That was the original intention when the United States Congress’ Immigration Act of 1990 introduced the EB-5 program.
In 1992, when Congress permitted foreign nationals to invest in regional centers as part of the EB-5 program, the vision was for innovative U.S. companies to benefit and become more competitive on the world stage. At the same time, American workers would profit from the creation of longer lasting, meaningful jobs. Today, the opportunities to drive innovation and create diverse, good jobs through EB-5 funding still exist, but it requires that regional centers and investors step outside their comfort zone and into some less conventional projects. As a result, the jobs will tend to be better paying, higher skilled, sustainable, and diversified.
Here are some success stories of innovative projects that were funded by EB-5 capital.
As manufacturing becomes increasingly competitive, the U.S. turns to high-tech solutions to regain its competitive advantage. Coherix, Inc. is one such company that has leveraged EB-5 funds to drive innovation. The company, based in Ann Arbor, MI, develops and manufactures high-speed, high-definition 3D machine vision products. Using 3D data, Coherix allows companies to assess and improve their manufacturing processes. This results in less waste and greater throughput. The company received its first EB-5 investment of $500,000 in 2013. In total, Coherix is a $10 million project and will create 200 much-needed jobs in Metro Detroit.
Port of Wilmington Cold Storage is another example of a non-conventional use of EB-5 funds. The roughly 3-million cubic-feet cold storage warehouse facility is the only such facility in North Carolina, strategically located to provide importer and exporters with logistical benefits. In addition to serving the food industry, Port of Wilmington Cold Storage assists pharmaceutical clients when vaccines and biologic drugs, for conditions such as rheumatoid arthritis and Type 2 diabetes, must be stored in controlled temperatures. The storage facility raised $15 million in EB-5 funding through 30 investors, helping bring food, medicine, and other necessities to the people of America and around the globe.
As American leaders and lawmakers look to reduce the country’s reliance on other nations for energy, EB-5 funding can play a major role in enhancing the United States energy independence. Some alternative energy companies have taken note and have managed to secure millions in EB-5 capital. In North Dakota, Midwest AgEnergy Group started operations in 2015 at its new biorefinery thanks to $75 million in EB-5 investments. The Dakota Spirit AgEnergy biorefinery produces 65 million gallons per year of ethanol, which amounts to 20 percent of North Dakota’s annual fuel demand. Nearly 2,000 direct and another 2,000 indirect jobs are projected to be created as a result of EB-5 investment.
GLIMPSE OF THE FUTURE
As the EB-5 program is expected to undergo changes over the next several years, many hope that the USCIS mandates regional centers to invest in more innovative companies.
While creating innovative jobs is more difficult than creating conventional ones, never shying away from a challenge is what America was built on. If greater EB-5 dollars are allotted to innovation and disruption, America might find itself closer to becoming fully energy independent, curing diabetes and solving climate change.
(Editor’s Note: Chinese translations may vary slightly as published.)