by Hilary Niles August 9, 2013 vtdigger.org In a bid to shore up the controversial EB-5 Immigrant Investor Program, Senator Patrick Leahy, D-Vermont, has proposed a roster of improvements: stronger oversight, better reporting and streamlined reviews of business plans and visa applications, among them.
His revisions also would tweak the job creation requirement to define full-time employment not as someone working at least 35 hours per week, but by the equivalent of a full-time job, ‘regardless of how many employees fill the position.’
The changes would be written into a new statute that codifies and makes permanent what is now a pilot program. So-called regional centers help private businesses pool investments from would-be immigrants, at either $1 million or $500,000 apiece, depending on the regional center’s location.
The regional center program is a variation on an earlier immigrant investor program, established in 1990, that encourages foreigners to come to the United States to start their own businesses. If they create 10 jobs within two years, their conditional visas will turn into green cards.
That’s more or less how the regional center program works, but the job creation requirement is looser: The positions can be new, or preserved. They can be direct additions to payroll, or indirectly attributed to the investment. They can be in the same area as the regional center, or anywhere else in the country.
A sewing and yarn shop on Newport’s Main Street directs customers to its new location. The block is being cleared of tenants in preparation for demolition, to make way for a new mixed-use block that’s part of a larger development on Lake Memphremagag. Photo by Hilary Niles/VTDigger
And if the Senate’s immigration reform bill makes it through the House with Leahy’s amendment intact, those jobs could be full-time, or full-time-equivalent.
It’s a tweak that carries a range of potential implications for developers and investors, not to mention construction and part-time workers and the communities the investments are meant to improve.
Gov. Peter Shumlin is a strident supporter of the EB-5 program and the state’s EB-5 Regional Center, in particular ‘the only such center wholly operated by a state government. Shumlin said recently that he will be traveling to Asia in September to help recruit investors for projects affiliated with the regional center.
Shumlin said he was not aware of the full-time-equivalent detail in the amendment, but he trusts Leahy’s judgment.
‘Sen. Leahy is the champion of the EB-5 program in Washington,’he said. ‘And I’ve never known him not to be right about it.’
Full-time (or equivalent) in Vermont
Currently, all jobs that are created through EB-5 investments must be full time, or at least 35 hours per week. This is the standard that applies to regional center projects now, and would continue to apply to all related visa applications a full year after Leahy’s amendment takes effect, if it’s passed.
But under Leahy’s plan, the full-time math would change to allow two or three or more jobs to add up to one full-time-equivalent (FTE) position.
This especially matters when tallying construction employment, which by many accounts has come to dominate EB-5 investment opportunities. Contrary to permanent positions such as a retail clerk or an engineer, construction work typically is done in short spurts by people with distinct responsibilities.
A plumber, for example, might work three months on one project, followed by an electrician for three months, then a drywall technician and later a painter, all for three months. That would equal one year’s worth of one full-time equivalent job.
Construction is named as the example and reason for the proposed switch to FTE in a sectional analysis of Leahy’s amendment, provided to VTDigger by the senator’s office. But the definition of ‘full-time employment’would change across the board in the EB-5 regional center statutory language. Instead of 35 hours per week per person, the equivalent of full-time positions would suffice.
This tweak would apply to both direct and indirect job creation, Leahy’s office confirmed.
Technically, therefore, it could mean that not only short-term construction jobs, but also long-term operational positions could employ multiple people part time, and count as full-time job creation.
Brent Raymond, who heads Vermont’s EB-5 Regional Center, said the full-time equivalency also would apply to other seasonal work.
In Vermont’s case, ski resorts are a prime example, Raymond said. A ski lift operator employed in the winter may be added up with a different summer job to total one full-time equivalent, even though each employee only would be working for the EB-5 investment project for half the year.
Jay Peak Resort co-owner Bill Stenger, who with his business partner Ariel Quiros already has completed EB-5 projects and has four more in the works, said by email that job creation is ‘the all important issue for all eb5 projects,’but that it must be balanced with other financial obligations.
‘I don’t want to see a too liberal job formula,’Stenger wrote, ‘because raising more funds might be attractive but we have a moral obligation to try and repay the investor.’
That said, Stenger thinks smaller projects might benefit from the looser definition of full-time: ‘Small projects struggle with job creation,’so a more liberal formulation may help them take advantage of EB-5 capital, he surmised.
‘Small projects are more common in rural communities and that is indeed the focus of the eb5 original mandate,’he wrote.
It’s that rural characteristic so predominant in Vermont that makes it a special case among regional centers.
The regional center pilot program has come to include a special designation for areas very rural or with very low employment. For projects within these targeted employment areas, the minimum investment was cut in half, to just $500,000.
The idea was ‘and remains, because the pilot program has been reauthorized ‘to encourage ambitious economic development in areas that need it most.
And Vermont qualifies as an area that needs it most; virtually the entire state is designated as a targeted employment area.