Ron Schults, CEO, Edgewater Resources LLC and his partners raised approx. $18 million from 38 international investor in India and China for a $30 million project. The overseas nationals used federal program to seek a permanent green card of the US, in return of the investment they had done.
It’s a challenge for the real estate developers like Schults, who seek to encourage wealthy foreigners, as many potential foreign investors see Michigan as the flyover country.
Under this EB-5 program, permanent visa is granted those qualified overseas investors who invest a minimum of 5 lakh dollars or 1 million dollars in a commercial project, depending on its location. This program requires projects to create 10 jobs, although the program in Michigan State requires projects to create 25 jobs.
The investors is fast tracked for green card under this program, due to this, for their investments they are tend to accept low interest rates, which helps the developers in saving the money.
It’s unclear that whether Michigan State will continue accessing this tool as this EB-5 program is all set to expire in the end of September month.
The EB -5 program proof to be controversial at some time because many people view it as a program of cash for green card. The intention of this EB-5 program is deploying capital for the projects in the undeserved areas, in rural areas of America or high unemployment urban areas, but this was not the case in recent two years.
Many projects under this program occur in metropolitan areas along the West and the East Coast where money is not needed badly, Schults and other companies which are having EB-5 expertise says that this program is not working as it was meant to do.
Federal government rules for the EB-5 program sets the thresholds for job creation and it also specifies that the project should be located in the targeted area of employment, which clearly defined as the rural area or an area with unemployment rate with minimum of 150 % of national average.
Bills in the House of the US and Senate differs in some way or the other, both are seeking in bringing more transparency and placing a regulatory framework to this program.
It has remained unclear whether the Congress will be acting before the expiry of the program. Both Banninga and Schults had indicated that given the nature of bills, they are confident that EB-5 program will get renewed.