With second quarter numbers squarely in the books, we're seeing evidence of the economy's slow but sure recovery. And while a healthy 4.6 percent annual rate increase of the GDP means that the U.S. could see the strongest stretch of economic growth since 2004, job creation remains largely inconsistent.
For six years now, political leaders from both parties have produced a litany of proposals to jump start not only employment in America, but investment in critical industries. Consider the calls for expanding domestic energy production, the federal investments made in research and development and shovel-ready infrastructure projects, and an emphasis on education programs that train workers for jobs of the future. The truth is, in today's competitive global economy there is no silver-bullet to create jobs. We need an "all of the above" approach to grow the economy in a lasting and meaningful way.
One of the already existing strategies that merits increased support is the EB-5 foreign investor visa program -- a program designed to attract foreign direct investment in job creating businesses and projects while encouraging immigration of entrepreneurs from around the world at no cost to the U.S. taxpayers.
The EB-5 program was authorized by Congress in 1990, with bipartisan support, and has grown exponentially in the last few years. Today, EB-5 investments contribute much-needed capital to many of the industries targeted by policymakers as those primed for growth -- health care, alternative energy, science and technology fields -- as well as those that really needed a post-recession lift, like commercial real estate development.
In upstate New York, EB-5 investments helped get the award-winning Gates Vascular Institute up and running -- supporting thousands of jobs in the Buffalo area -- while EB-5 funds in Arizona were critical in launching the Green Valley Hospital, set to open early next year. SolarMax, a large solar panel manufacturing and installation facility currently revitalizing the economy in Riverside County, California, used EB-5 capital to get started; as did the first new ethanol facility in North Dakota.
In Philadelphia, $18.5 million in EB-5 capital supported development at the Philadelphia Naval Shipyard, a site that once housed numerous military facilities. After rehabilitating the site for commercial tenants, the Navy Yard is now an important regional employment center home to 130 companies and 10,000 employees. Similar developments in California funded by EB-5 turned a defunct military base into a thriving regional airport and business distribution center.
Unfortunately, much of the good EB-5 contributes to our economy is overshadowed by persistent misunderstandings about the program, and the bad acts of a few.
In the last year, a handful of high-profile cases of fraudsters manipulating the program for their own gain have come to light. As the Executive Director of the Association to Invest in the USA (IIUSA), the leading trade association of EB-5 Regional Centers, I have stood shoulder to shoulder with the U.S. Citizenship and Immigration Services (USCIS) and the Securities Exchange Commission (SEC) to take action against such criminals and strengthen the oversight provisions governing EB-5. As an example of this ongoing effort, IIUSA filed an amicus brief supporting SEC action in one case and is advocating for a number of measures included in congressional immigration reform bills that would protect the integrity of the program.
But the misdeeds of a few should not be used to color an entire industry. The fact is, the positive impact of EB-5 investments is felt in communities across the country that have seen new business and economic development projects get off the ground as a direct result.
Indeed, a comprehensive economic impact study found that investments made in FY2012 through EB-5 contributed $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs overall.
Under the program, foreign nationals who invest between $500,000 and $1,000,000 dollars in approved U.S. businesses are eligible for permanent residency if their investment creates or saves at least 10 American jobs within two years. By law, there can be no guaranteed return for an EB-5 investment. Investors must accept the same risk that exists with investments in stocks or equity funds. And, the legally required job creation must be demonstrated to receive the immigration benefit. As part of the application and review process, EB-5 investors must show that their investment funds were earned lawfully and they are subject to the same background checks and national security screenings as applicants in any other visa category.
More than 20 countries, including Australia, Spain, and the United Kingdom, use similar programs to attract foreign investments -- but most do not require the level of risk or proof of job creation that the U.S. program requires.
The fact that the EB-5 program has grown exponentially in the last few years -- even with more stringent risk requirements than similar programs in other countries -- says a lot about the global desire to be part of the American dream.
It also speaks to global confidence in the American economy and in the American legal and regulatory system. Investors must accept risk and do their own due diligence, but they also need to know that there is a system in place to protect them or seek redress. A silver lining in recent enforcement actions is the strong signal sent to the marketplace that U.S. enforcement agencies will take action if anti-fraud and securities laws are broken.
As the EB-5 program realizes its potential, oversight by enforcement agencies and administration of the program must come of age as well. In the last year, USCIS has added expertise to evaluate proposed EB-5 projects and job creation data and beefed up interagency collaboration, particularly when it comes to background checks and national security screenings. Additional measures aimed at strengthening program oversight were passed as part of the Senate immigration bill, and are included in several House of Representatives proposals.
Congressional Districts across the country are seeing the benefit of EB-5 investments in their communities and should pass these reforms to permanently authorize the EB-5 program. With job growth continuing to fluctuate and the competition for investment dollars increasing, we need EB-5 on the list of strategies to help keep our economy growing.