With cutbacks in spending, governments have had to look for creative ways to finance infrastructure and redevelopment projects. Increasingly, many city and state governments are turning to EB-5 funding as a cost-effective way to get these projects completed.
The EB-5 program was established by Congress in 1990 to help stimulate the United States economy and create jobs. The program works by having foreign nationals invest a minimum of $1 million, or $500,000 if certain qualifications are met, into projects here in the U.S. where a minimum of 10 new jobs must be created for each investment. Unlike any other job-creating initiative in the country, the EB-5 program is entirely self-funded. That means it does not cost the U.S. taxpayers a dime!
Using EB-5 capital in partnership with private sector developers is a win-win. For the local economy, jobs are being created and important development projects are being completed.
These ventures are known as public-private partnerships (PPP). A public-private partnership is a government service or private business venture funded and operated through the partnership of a government and at least one private sector company.
The State of Vermont is a pioneer in supplementing PPPs with EB-5 capital, having recognized early on the benefits that this could bring to the Vermont economy. Since its inception, the State of Vermont Regional Center has worked with the private sector on several projects that have created thousands of jobs in Vermont.
The City of Miami (as pictured above) is a recent example of a local government that is taking advantage of this model. Having received their Regional Center designation a few short months ago, the City of Miami Regional Center wasted no time in announcing that the Panorama Tower development project will be their inaugural EB-5 initiative. This project is expected to generate more than 2,000 jobs by the time it opens. Once completed, the Panorama Tower will be the tallest building on the eastern seaboard south of New York.
The EB-5 program is the most cost-effective job creation program in the country. The benefits to local and state economies are significant. We expect that PPPs will be one of the most popular uses of EB-5 funds in 2015.
What is EB-5? Find out more by downloading our EB-5 Fund Administration Solution Sheet.