For a minimum investment of $500,000, a foreigner may obtain permanent residency status that can mature into U.S. citizenship under the federal EB5 program, which the Guam Economic Development Authority (GEDA) employs as an incentive tool to build Guam as a preferred investment destination in the Asia Pacific region.
For Asian investors, Guam — dubbed “America is Asia”— may seem like the most logical passport to American citizenship. It turns out, most foreigners who are seeking permanent residency prefer America in America.
“GEDA has not seen any quantifiable data regarding the success of this program in Guam. In fact, based on discussions with various organizations and individuals with knowledge of the program, Guam has not seen one successful EB-5 project get underway in Guam,” GEDA Administrator Jay Rojas said.
The program, which requires a minimum investment of between $500,000 and $1 million and the creation of at least 10 jobs, was created in 1990 to spur economic activity in the U.S. and its territories.
Earlier this year, two U.S. senators proposed the termination of the controversial investor visa program which is popular with Chinese investors. President Trump's son-in-law and senior adviser, Jared Kushner, figured in an EB5- related scandal recently. New York federal prosecutors subpoenaed Kushner Companies, a real estate development company, over its use of a visa program. It wasn’t clear what the violations were. But Sens. Dianne Feinstein (D-CA) and Chuck Grassley (R-IA) described EB5 as “inherently flawed,” suggesting the program commodifies U.S. citizenship. “It is wrong to have a special pathway to citizenship for the wealthy while millions wait in line for visas,” they said in a joint statement.
The U.S. Congress has agreed to extend the program until the end of September this year.
Racing to beat the program’s expiration, wealthy Chinese have been raising funds to put up investments in the U.S. mainland for a convenient way to obtain green cards and bring their family members.
Guam does not see the same trend though, Rojas said. “GEDA has not seen any significant increase in inquiries to GEDA regarding the program,” he said.
The US Citizenship and Immigration Services awards roughly 10,000 visas each year, with more than 85 percent going to Chinese investors in 2014, according to a study by Savills Studley, a real estate services firm.
Investors often put their funds into government-approved EB-5 regional centers that pool foreign investment money for development projects.
Last year, Capital Bridge Corp., a financing company owned by Saipan-based businessman John Baldwin, proposed to build a $450-million hotel and resort complex in the old Greyhound Park using the EB5 program.
“Bridge Capital did meet with GEDA in May 2016 to discuss their proposed hotel development, in particular, to discuss the project’s eligibility to apply for a Special Hotel Qualifying Certificate,” Rojas said.
GEDA has received Bridge Capital’s letter of interest to apply for a Special Hotel QC, Rojas said. “Based on continued discussions with Bridge Capital, they are still interested in developing the old Greyhound Park for use as a hotel, and they did indicate that they were interested in utilizing the EB-5 program as a tool for them to obtain investors.”
However, Rojas said he was not aware if Bridge Capital has been successful in utilizing EB-5 for the proposed project.
Invest Guam Regional Center is the only remaining EB5 regional center on Guam. The USCIS website showed Guam Strategic Regional Center and Marianas Stone Regional Center were among the 135 EB-5 regional centers nationwide that received notices of “intent to terminate” between September 2016 and July this year. The EB5 designation is revoked if the center “fails to submit required information to USCIS” or “no longer serves the purpose of promoting economic growth,” according to the website.
Immigration lawyer Richard W. Hamlin said most investors on Guam prefer to make direct investments instead of going to the regional centers.
“Regional centers on Guam are not as competitive as their successful counterparts in the mainland,” Hamlin said. Local centers, he said, often have problems complying with reporting requirements and business performance.
Hamlin said most investors from Taiwan, South Korea, Hong Kong, Japan and other allied countries bring their business to Guam through the E-2 Treaty. This program, a nonimmigrant classification, allows a national of a treaty country to be admitted to the U.S. when investing a substantial amount of capital in a U.S. business.
Although the temporary visa granted to an E-2 investor does not progress to permanent residency, Hamlin said, this investor program is more favored in Guam because it has lower requirements. “From the business standpoint, EB5 is not practical. It may take as long as six years to process their petition,” Hamlin said.
Rojas agreed that Guam has certain limitations that curb its chances of competing with other jurisdictions. “The amount of investments and number of families allowed to participate in the program is capped annually, which makes receiving an EB-5 visa an extremely competitive undertaking.”
He explained that jurisdictions that have more immediate access to professionals and projects for EB-5 are much more competitive. “The requirements of EB-5, such as the minimum investment amounts and minimum job creation amounts, can be more difficult to achieve in Guam than in other jurisdictions in the United States due to the size and scale of many of the projects in Guam,” he said.
Rojas said GEDA is not aware of any project on Guam that has been built, or is being built, through EB5 funding mechanism.
“There are examples of government projects in other jurisdiction that have utilized EB-5 investor funding as a portion of the financing for the project,” Rojas said.
The potential does exist regarding the government of Guam utilizing EB-5 as a vehicle to obtain some financing for projects, he said. “Of course, the government will have to do its due diligence to ensure that the mechanisms to obtain any EB-5 investment is in accordance with all government laws and regulations prior to us implementation.”
GEDA continues to provide some cursory information regarding the EB-5 visa program on its website. “We do our best to provide information regarding the program when potential investors and/or interested parties inquire about the program,” Rojas said. “However, GEDA continues to rely on our growing economy and improving economic indicators along with our strategic geographical location as “America in Asia” as the main reasons why potential investors should invest in Guam.”