by M. Keil Hackley and Summer Robertson

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In 1990 Congress created the immigrant investor program as the fifth preference within the employment-based category commonly referred to as the EB-5 Program. This was the first time in the history of immigration law that the Immigration and Nationality Act made lawful permanent resident status available to foreign investors. This employment-based preference category allots 10,000 visas to qualifying investors, their spouses, and children under the age or 21.

The EB-5 process begins with the prospective investor filing the Form I-526, “Immigrant Petition by Alien Entrepreneur,” with the U.S. Citizenship and Immigration Services (USCIS.) The I-526 petition must be accompanied by documentation demonstrating that the investor has invested, or is actively in the process of investing, lawfully gained capital in the amount of $1 million in a new commercial enterprise within the United States, or $500,000 in a designated targeted employment area. Additionally, the petition must be supported with proof, usually in the form of an economical analysis, that the investment will create 10 full-time jobs for U.S. workers.

Upon approval of the I-526 Petition, the immigrant investor is granted lawful permanent resident status (“green card”) for a conditional period of two years, after which the condition may be removed if the investment was sustained over the two year period and the requisite number of full-time permanent jobs were created.

Initial participation in the EB-5 program was low because of investor uncertainty combined with a flawed adjudication process. Thus, in 1992, in an attempt to invigorate the program, Congress created the Immigrant Investor Pilot Program as an adjunct to the EB-5 Program. The pilot program allowed immigrant investors to invest the required capital in government-designated Regional Centers established to promote economic growth and job creation. Regional Center projects are held to a modified job-creation requirement inasmuch as the job creation may include indirect or induced employment, rather than direct employment.

Because of the Regional Center’s less stringent job creation requirements, together with the marketing efforts of private sector promoters, by 1996 EB-5 filings rose with investors’ willingness to go forward on Form I-526 Petitions. Still, the EB-5 Program’s success was compromised by the fact that so many of the filings failed because the financial arrangements turned out to be debt investments or investments that really did not put the investor’s capital at risk, as required under the statute. Now, in 2009, there has been a sharp increase in the number of Regional Centers designated by the government alongside of the number of successful petitions. Knowledgeable immigration lawyers, reputable private sector marketing companies, and wisely educated investors are realizing that the EB-5 program can, in fact, be a viable track to the green card.

M. Keil Hackley, Senior Partner, Hackley & Robertson, P.A. is the Former Deputy Chief Counsel of the Immigration and Naturalization Service (now Department of Homeland Security.)