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Reid Thomas, executive v.p. with EB-5 fund administrator NES Financial believes history proves EB-5 can be a major force in the economic recovery from COVID-19. He points to the recession of 2008 as evidence the program gave developers much-needed capital and contributed to job growth. He sees reform to the program as now vital: “If we ignore this opportunity to expand EB-5, the economic recovery will take longer and cost more.”
Specialty fund administrator NES Financial made EB5 news headlines last week when they were purchased by JTC PLC, a global provider of corporate and private wealth services. Together, the two represent over 900 employees and over $130 billion in assets managed.
The NES executive vice president and general manager of specialty finance administration believes that EB-5 is needed now by America to provide capital and create jobs. He points to the recession of 2008 to show how the immigration by investment program was a major positive factor in getting the economy to rebound. He notes that while the big banks were given bailouts, they were not lending money, and that’s where EB-5 was able to step in. Developers and corporations in both urban and rural markets were able to benefit from the EB5 investment program.
With Congress just passing a $2 trillion stimulus package, Thomas is “disappointed” to see that package did not include EB-5 reform. He says that with soaring unemployment numbers EB-5 could be creating scores of jobs — without a price tag attached. He cites estimates that the jobs saved or created by the stimulus package will cost between $540,000 and $4.1 million each. “Unlike other forms of economic stimulus, EB-5 is the only program that creates jobs at no expense to the U.S. taxpayer.”
This is a mantra of Reid’s — EB-5 means job creation at no cost. He also alluded to a U.S. Department of Commerce study whose numbers reinforce the fact that EB5 immigration has been a “massive contributor” to jobs in the country, at no taxpayer expense. Reid, seemingly speaking about future stimulus packages, offers this warning: “The US could miss out on the chance to minimize the overall cost of numerous stimulus packages and save taxpayers money in the process.”
Reid bristles at the notion propagated by some opponents that EB-5 is a “Green Card for sale” program. “It is really unfortunate that this false narrative is out there. It seems to be politically motivated and keeps the real facts from getting heard.” He reminds us that the Congressional intent of the program was to create jobs by means of strictly regulated foreign investment. Reid also reminds us that investors must make very significant investments that are put at risk — and they sometimes lose both their money and Green Card opportunity. “There are other programs in the world where investors can buy citizenship. The U.S. EB-5 program is not that at all.”
Using the 2008 recession as recent proof, Reid says that expanding the EB5 Green Card program would be extremely beneficial during this economic crisis. Lenders will pause and developers will need alternative forms of capital. Once again, Reid points to a U.S. Department of Commerce stat that indicates an additional 1,500 EB-5 visas would create 8,000 permanent U.S. jobs.
While Reid sees EB-5 as an “overwhelmingly positive force in economic stimulus,” he acknowledges the need for transparency to protect both the government and investors. He also admits that the Green Card by investment program, like virtually all specialized investments, is subject to fraud and abuse. However, with transparency and integrity as guiding principles, he feels the program has much many more pros than ‘cons’ (pun intended).
The following are some examples of what Reid sees as ideal program best practices:
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