Invest in biz, get a green card: Visa program brings jobs, growth to metro Detro

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Originally Published: November 28, 2010 8:00 PM Modified: November 29,
2010 10:17 AM
Invest in biz, get a green card: Visa program brings jobs, growth to metro
Detroit
By Marti Benedetti And Dustin Walsh
DUSTIN WALSH/CRAIN'S DETROIT BUSINESS
John Thomas, CEO of Alte LLC, says foreigners are investing in his
electric powertrain company, motivated by a program that gives them
U.S. residency in exchange for their investments in new or existing
U.S. businesses.
EB-6 program proposed with $250K threshold
An additional type of visa is in the works for immigrant investors in U.S.
businesses.
U.S. Sens. John Kerry, D-Mass., and Dick Lugar, R-Ind., introduced the
StartUp Visa Act of 2010, aka the EB-6 visa bill (employment-based sixth
category visa), in Congress earlier this year. It would give immigrant
entrepreneurs who invest $250,000 or more in a business a path to
permanent U.S. residency for the investors and their families.
The bill is awaiting consideration in the Senate Judiciary Committee. When
Congress resumes in January, the legislation will be reintroduced,
according to an e-mail from Kerry press secretary Whitney Smith.
For their investment, the entrepreneurs would receive a two-year visa.
After two years of being in business and creating at least five full-time
jobs, a green card would be approved, according to U.S. Citizenship and
Immigration Services.
Five EB visa categories already exist. They range from EB-1, for priority
workers, to EB-5, reserved for those who invest $500,000 or more in a
business.
Marti BenedettiAn obscure federal visa program called EB-5 has enabled
investors from South Korea and China to bring economic growth and jobs to
metro Detroit.
One such investment through the employment-based fifth category visa
program was made in October to Auburn Hills-based electric powertrain
manufacturer Alte LLC.
EB-5 allows immigrant investors to obtain legal U.S. residency status for
themselves and their immediate family in exchange for $500,000 or more of
investment into a new or existing U.S. business -- like electric
powertrain upstart Alte.
"The world is indeed flat," said John Thomas, Alte CEO. "Foreign investors
aware of these opportunities are pursuing them for the return on
investment they're seeing in companies like ours."
Congress created EB-5 in 1990 as a way to get immigrants to invest in new
businesses that would create at least 10 full-time jobs over two years.
It has been getting more notice lately, especially in states like Michigan
that have been hit hardest by the recession and are trying to generate
economic investment and jobs.
Proponents and organizers say they expect jobs related to EB-5 to
accelerate in coming years as awareness of the program builds and there
are more local success stories. To date, California boasts the most use of
the program.
Still, it is mostly underused. A January Washington Post article reported
that the number of EB-5 visas each year falls far below the maximum 10,000
allowed, even though the number of foreigners willing to invest $500,000
or more in a U.S. business in exchange for a visa roughly tripled in the
past fiscal year. The U.S. State Department reported the number of
immigrants (investors and their immediate family members) who obtained
EB-5 visas jumped from 1,443 in fiscal 2008 to 4,218 in the fiscal year
that ended Sept. 30, 2009.
Alte, founded by former employees of Silicon Valley-based electric
carmaker Tesla Motors Inc., is the recipient of $13.5 million in EB-5
funding from the Green Detroit Regional Center, which collects the foreign
investment dollars, as its first investment. The center will provide $20
million to Alte in two phases, Thomas said.
Simon Ahn, principal at SMS Investment Group LLC and founder of the Green
Detroit Regional Center, said foreign investors are interested in emerging
technologies in the United States.
Thomas led the Michigan Technical Center for Tesla. Tom LaSorda, former
Chrysler LLC president and vice chairman, serves on Alte's board.
The investment allows Alte to speed up hiring and create more than 300
jobs by the end of 2011 as it prepares to retrofit fleet vehicles with its
electric drivetrain. As reported by Crain's in February, the company plans
to invest $51.3 million in its Auburn Hills assembly plant to manufacture
the hybrid-electric vehicle powertrains.
The EB-5 funding also allows Alte to meet matching requirements for a $64
million alternative energy loan from the U.S. Department of Energy, which
Alte has been pursuing for 23 months. A decision on the loan is expected
soon, Thomas said.
"The EB-5 (funding) provides Alte with momentum," Ahn said. "This also
helps Alte get to market much more quickly."
Alte demonstrated its technology at the Ford Proving Grounds in Dearborn
in early November to other potential investors.
The Green Detroit Regional Center is one of four approved U.S. Citizenship
and Immigration Services centers in Michigan. There are roughly 140
regional centers in the country. The five EB-5 authorized counties in the
state are Wayne, Lapeer, Livingston, Macomb, Oakland and St. Clair.
Foreign investors, in turn, get their hands on a U.S. visa, something
that's typically not for themselves, Ahn said.
Ahn said most investors are looking for the green card to support their
children's college education, not their own.
During the recession, interest in the program has accelerated, said
Maureen Krauss, director of economic development and community affairs for
Oakland County.
Krauss said the county is aware of the EB-5 program but has not used it
because of the costs involved in setting up a regional center. The county
would prefer to work with a center regionally. "We know it has worked
successfully other places, " she said.
Applicants apply to the USCIS for visa qualification by submitting
immigration forms, personal financial information, business plans, legal
briefs and other documents. Funds must be placed in escrow before
submitting an application.
Steve Tobocman, former state representative and Democratic house majority
leader, wrote a Global Detroit study this year funded by the New Economy
Initiative, the Detroit Regional Chamber and the Skillman Foundation.
The study came up with recommended strategies, one being the creation of
an EB-5 investor regional center in Southeast Michigan.
"We brought all the counties and economic development groups in the
Detroit area and talked about what EB-5 centers can do," Tobocman said.
"It can be an important tool for leveraging low-cost capital."
Ben Melitz, executive director of the nonprofit Macomb Cultural and
Economic Partnership, wants to bring a regional center to Macomb County.
"We have businesses that would like to expand in our county that can't get
loans," he said.
However, facing budget woes and the November election, Macomb County
Commissioners voted down instituting an EB-5 program in the county in
September.
Meanwhile, Ahn said his firm is going to invest in other "green" Michigan
projects -- a wind turbine company and a lithium-ion battery company --
through the regional center this year.
"We're going to do at least $30 million to $40 million this year," he
said. "I hope we can hit $50 million next year."
Other investment firms can fund projects through the Green Detroit
Regional Center but will need Ahn's approval.
"Cash is king, and nobody is willing to invest in anything," Ahn said.
"The only way to make these companies work is EB-5 funding."
 Dustin Walsh: (313) 446-6042, dwalsh@crain.com
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