Two Connecticut real estate investors have quietly sought and won approval for the state's first EB-5 visa center, which works with federal authorities to offer green cards in exchange for foreign investment.
Zhifeng "Jack" Yang, a licensed real estate broker and managing partner of Richfield Real Estate Investment in Westport said he won approval for the center from U.S. Citizenship and Immigration Services in late April.
He and his business partner, Scott Garrett, only recently announced the creation of the New England Federal EB-5 Regional Center.
The two men, who opened an office in Shelton, are scanning the state for real estate deals and other types of investments.
"We are in in-depth discussions with several developers about helping them raise capital through EB-5," Yang said. "It's a low-cost financing vehicle."
EB-5, created by Congress in 1990, may be an avenue to low-interest loans for companies or developers, but it's not cheap for the immigrant investor.
Under the program, foreign nationals can invest $500,000 or $1 million in the hopes of getting a green card, and ultimately, permanent residency in the United States.
An investor gets conditional residency for two years while the investment is put to work. The investment must create 10 full-time jobs by the end of a two-year period for the investor to have a shot at permanent residency.
Yang expects most of the capital to come from China, where he is originally from.
That wouldn't be unusual. Much of the $6.8 billion in EB-5 capital that has been deployed across the country since 1992 comes from China.
The center can make competitive loans, Yang explained, because EB-5 investors are more concerned with getting U.S. residency than a strong return on their investment. A loan that a bank might not make, the center might approve.
But that doesn't mean Yang and his team — which includes real estate, financial and compliance experts — aren't looking for good investments, he said. Though Yang and Garrett have the first mover advantage in Connecticut, there are about 400 EB-5 centers across the country to choose from. Reputation will matter.
"In order for us to continue our operations successfully in the long run, I'm seeing that our strength is to really care for the investors and make sure that the projects we bring to them are good projects that will help them secure the immigration request as well as the return on capital," he said.
Dana Bucin, a Hartford immigration attorney with Updike, Kelly & Spellacy who has advocated for Connecticut to get an EB-5 center, said the visa program will likely mean an increase in foreign investment in the state.
But she said the EB-5 business is getting more competitive. With a growing number of both EB-5 applications and centers in recent years, foreign investors are starting to care more about return on investment.
"The days are gone when you could get away with strictly an immigration incentive to attract a foreign investor," she said.
Of course, foreign investors must also weight the fact that the government caps the number of visas issued annually at 10,000. The cap hasn't been hit, but may be soon.
There aren't many rules about what ventures qualify for EB-5 investments. The capital can go to a new commercial enterprise, a troubled business or in pooled loans through a regional center like Yang's or the others across the country.
"We can take all shapes and forms," Garrett said. "We can make some loans banks might not be making, or we can provide a layer of financing to allow a developer to go get a bank loan."
Garrett expects to focus on real estate investments initially, and then expand to other areas. There are some rules about where the money can be invested, depending on the amount.
If an investor wants to bet the minimum $500,000, the investment must go to a rural area, or an area that has an unemployment rate 150 percent above the national average.
That means Hartford, East Hartford, Bridgeport, New Britain, New London, Plainfield, Waterbury and Windham all qualify (as of July's unemployment numbers).
If an investor chooses to invest $1 million, there are no rules about unemployment rates. The investment can be deployed anywhere, according to a USCIS spokesman.
Wayne Benjamin, Hartford's director of development services, who has met with Yang, said the EB-5 center could be an important development tool in the city.
He wants Yang to open a Hartford office.
Of course a program that involves both foreign capital and immigration has created controversy.
The U.S. Securities and Exchange Commission in February, for example, charged a Chicago hotel developer who had raised $150 million in EB-5 capital with misleading investors into believing they would make a profit. Guaranteeing a return is against the rules of the program. The money must be put fully at risk.
Correction: The original version of this article incorrectly stated the year Congress created the EB-5 visa program. It was 1990.
A quote referring to relocated jobs counting toward the EB-5 requirements has also been removed, as they must be new jobs to qualify.
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