Investing In Citizenship: For The Rich, A New Road To The U.S.
Saturday, January 26, 2013
The traditional immigrant story is a familiar one.
Someone who longs for a better life makes the tough journey, leaves behind the hardships of his or her native land and comes to the United States to start again. That story, in a lot of ways, helped build this country.
These days, however, there's a very different kind of immigrant who wants to come to this country -- the rich -- and they have a different set of dreams.
Anthony Korda was a barrister, or lawyer, in England who vacationed frequently in the U.S. with his family.
"Each time we left the nice weather of Florida, we were more depressed about having to leave," Korda tells NPR's Robert Smith.
Korda says they did not look forward to slogging through the London rain, so he made a lifestyle choice: He was going to immigrate to the U.S. and live in a place where you could get a real tan.
Korda found pretty quickly, though, that the last thing the U.S. needed was more lawyers, so a standard or employment-based visa was unlikely. But then he saw a shortcut to becoming an American in a small, obscure federal program called EB-5, designed for people like him to get into the country -- if they had enough money.
"It looked too good to be true," he says.
All Korda had to do was cash out most of his savings -- about $500,000 -- and invest in an American business. If he could help create 10 jobs, then he would get a green card.
Korda's investment was a ski resort in Vermont that was looking to improve its infrastructure. So he put down his money and got to move to Florida and vacation in Vermont. He and his family got the American dream, but what did America get in return?
A Path For Rich Immigrants
The immigration program for the rich was designed to provide a boost to the U.S. economy, and it costs very little to give out the visas. The program allows 10,000 people a year to immigrate using the investment method. It's never reached that limit, but it is getting more popular every year. In 2012, about 7,600 made use of the program.
Some of those dollars are going to the Barclay's Center, the new home of the NBA's Brooklyn Nets.
Bloomberg News reports that more than $200 million of the loans to build the arena came from foreigners who were using the investment to get into the U.S. The business plan predicts that in the end, it will create more than 5,000 jobs.
That's how it's supposed to work, but often the projects funded by the EB-5 visas are not quite as glamorous.
David North, a fellow at the Center for Immigration Studies, says the government's rules for these visas encourage investment in depressed areas, rural places and inner cities. These are places where private investment is scarce and often risky.
"The investments that are open to an EB-5 investor are really rock-bottom, marginal investments," North says. "These are essentially small, usually real estate investments of some kind [and] small construction investments."
North says one of the other problems with the rules is that the investors have very few responsibilities to make sure the project works.
"We're not bringing entrepreneurs to this country in this program," he says, "we're bringing passive investors."
Economic Or Immigration Program?
The federal government doesn't release numbers to show how many of the investments succeed or fail. Dune Lawrence, an investigative reporter with Bloomberg News, has tried to figure it out. She tells NPR's Smith that the program has several problems.
"The basic problem starts with the fact that it's an economic development program run by an immigration agency," Lawrence says. "The immigration agency is focused on immigration."
That focus by the agency, of handling the applications and paperwork concerned with the investor's immigration status, makes it unprepared to handle the economic side of the program, Lawrence says.
The only data released by the government is how many green cards were issued through the program, she says, which doesn't tell you how many investments actually succeeded in the long term.
"It's all based on the economic assumptions that were made at the beginning of the project," she says, "and if they can show that they're in the process of spending the money then that's that."
Despite all the questions, defenders of the program say that money is money. Maybe some rich foreigners could lose their stake and perhaps some won't create the right number of jobs, but it is a real -- if relatively tiny -- bump in investment in U.S. businesses.
Mark Jones, a political science professor at Rice University in Texas, says that overall he thinks the program is good for the economy.
"It is bringing in money ... and investment to the United States that otherwise might not have come here," he says.
Jones says just as you can find anecdotal evidence of failure, you can find a bunch of examples of successful projects funded with foreign investment. In Texas, he's looked at successful strip malls, horse-racing enterprises and real estate projects funded by immigrants that seem to be working.
Korda, the lawyer who wanted to live on the beach, says he has seen only a modest return on his investment in the ski resort, between 1.5 and 2 percent.
Though he could have done much better in the stock market or bonds, the tradeoff for Korda is he's now living in Florida instead of London. He now consults with other wealthy foreigners wanting to use the program to come to America.
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