On July 1st, The Initiative for a Competitive Inner City (ICIC) hosted an event at the Harvard Kennedy School in Cambridge, MA titled “Putting Foreign Capital to Work Through EB-5” and released its 52-page report on the potential of the EB-5 program as a tool for impact investing in inner cities.
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Kim Zeuli, Senior VP and Director of Research at ICIC presents shares research on how EB5 investments can create jobs in inner cities
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| IIUSA Executive Director Peter D. Joseph answers audience questions on how the EB-5 Program works |
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IIUSA members Taher Kameli, Executive Director of Chicagoland Foreign Investment Group (CFIG) and Gonzalo Lopez Jordan, Manager of American Regional Center Group (ARCG) discuss EB-5 as a source of capital for businesses
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IIUSA members Gabriel Hidalgo, Managing Director of Civitas Capital Group and Birch Capital LLC Principal Ben Cummings, Brooklyn Navy Yard Development Corp President, David Ehrenberg, and present on real estate/infrastructure models that have successfully used EB-5 capital
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For over 15 years, ICIC has advised cities about cluster-led economic development and growing inner city businesses to drive urban revitalization in America’s inner cities. This focus of the event was to facilitate EB-5 investment that addresses economic development issues in inner cities.
In the morning session, IIUSA Executive Director Peter D. Joseph took part in a Q & A session with conference attendees on how the EB-5 Program works and help tackle inquiries into what type of projects are viable for the EB-5 Program.
Next, IIUSA Director and Jay Peak Resort President/CEO Bill Stenger and Jillian Fortuna, COO of EB-5 Jobs for MA Regional Center teamed up on a panel to discuss the challenges and opportunities of structuring EB-5 deals. Mr. Stenger who has successfully attracted 550 foreign investors from 60 countries to invest $275 million for a redevelopment of the Jay Peak ski complex and Ms. Fortuna, who has completed smaller scale projects in Allston and New Bedford, MA used personal experiences to illuminate how variables such as waiting on EB-5 adjudications, U.S. Citizenship and Immigration Services (USCIS) policy changes can effect their decisions in the marketplace. In fact, on July 11th, the Boston Business Journal published an Op-ed piece written by Ms. Fortuna, titled “Don’t let the sun set on investor visa program” which evidences how EB-5 is an essential tool to drive investment into Boston neighborhoods that need a boost.
The next panel focused on real estate and infrastructure models that have successfully used EB-5. This panel included IIUSA members Gabriel Hidalgo, Managing Director of Civitas Capital Group and Birch Capital LLC Principals and Ben Cummings. The subsequent panel highlighted EB-5 as a source of capital for businesses and included IIUSA members Taher Kameli, Executive Director of Chicagoland Foreign Investment Group (CFIG) and Gonzalo Lopez Jordan, Manager of American Regional Center Group (ARCG).
To read the full event agenda, including speakers and bios, click here.
ICIC report suggests EB-5 can increase employment and revitalize urban communities
The Initiative for a Competitive Inner City (ICIC) report by Kim Zeuli and Brian Hull titled “Increasing Economic Opportunity in Distressed Urban Communities With EB-5” takes a close look at recent EB-5 growth trend and ways in which EB-5 capital can be deployed to impact more cities nationwide.
Executive Summary:
Impact investing holds significant promise for directing more resources to America’s distressed urban core. The EB-5 program could be an effective investment tool to achieve this goal but it is underutilized.
The EB-5 program was created by the U.S. government in 1990 to improve economic conditions, especially in high poverty and high unemployment urban and rural areas, by attracting foreign capital
to support investments that create local jobs. Interest in EB-5 as a new investment tool was relatively limited until the recent recession and subsequent contraction of more traditional sources of capital. Today, there are approximately 440 EB-5 regional centers operating across the U.S. and last year the government received over 6,300 applications to the EB-5 program. A recent report by Brookings (Singer and Galdes, 2014) estimates that since 1990 the EB-5 program has captured approximately $5 billion in direct investments and created over 85,000 full-time jobs.
Given the lack of publicly available data, it is unclear whether the program has benefited the nation’s most economically distressed areas, including inner cities. The EB-5 program seems to have been largely overlooked by city governments, economic development corporations, foundations and other organizations actively promoting inner city investment. This may be due in part to the relative obscurity and complexity of the program. The program also unfortunately suffers from a negative reputation due to a few high-profile cases of fraud and the bureaucratic labyrinth associated with many government programs.
Our extensive research identified 178 EB-5 projects across the U.S. and numerous examples of successful projects that could be replicated to increase employment and revitalize urban areas.
We present five case studies in this report:
- University of Miami Life Science and Technology Park: Miami,
- NYLO Dallas South Side Hotel: Dallas, TX
- Memory Care Centers: Chicago, IL
- E3 Cargo Trucking: Indianapolis, IN
- Education Fund of America Charter Schools ICIC
The purpose of this report is to stimulate a new dialogue by offering insights into the potential of the EB-5 program as a tool for impact investing in inner cities. A set of recommendations is offered to the community of organizations engaged in impact investing to help them fully leverage this tool to maximize economic opportunity in distressed urban areas.
Recommendations
- Develop an educational campaign to increase awareness about the opportunities and challenges of the EB-5 program, particularly in connection with traditional economic development tools.
- Build a nexus of eB-5 experts that could be leveraged in urban areas across the U.S. to provide the necessary technical assistance.
- Identify and invest in EB-5 projects to direct more projects to distressed urban areas, accelerate EB-5 deals in target neighborhoods, and ensure successful outcomes.
