A federal government program that gives foreign investors green cards to invest in business ventures in the United States is being tapped to spur the Texas clean economy.
At least that's the goal of Lee Leffingwell, the mayor of Austin, Texas.
On Monday, Leffingwell announced a proposal to create the state's first "EB-5 Regional Center" geared specifically to clean energy development and green job creation. The target is to get more renewable energy plants up and running and to lure investment in advanced battery and green construction companies, among other clean economy projects.
"This has the potential to pump millions of dollars into the Austin region, while creating jobs for our residents," Leffingwell said at a press conference at Sol Austin, a sustainable community in the eastern part of the city.
The EB-5 visa program, created in 1990, allows foreigners who invest between $500,000 and $1 million in projects to get a two-year visa. Projects that create at least 10 full-time jobs can earn investors a permanent green card. The program is run by the U.S. Citizenship and Immigration Services (USCIS).
In 1992, the USCIS started designating entire areas as "EB-5 (Immigrant Investor) Regional Centers." To get that status, a local entrepreneur, business owner or city like Austin must apply to own and operate the center, and to focus investments in one or more sectors. If approved, "owners" are eligible to bring in foreign investors to finance projects or businesses of their choosing—including their own. The immigrants are then fast-tracked through the visa process.
So far, the EB-5 program has created at least 43,300 full-time American jobs and attracted more than $2.2 billion in investments, according to USCIS data provided to InsideClimate News by the agency. At least half that activity occurred since 2008, and most was in real estate development.
But more and more developers and cities are turning to the program to get their clean energy projects off the ground, said Peter Joseph, executive director of the Association to Invest in USA (IIUSA). IIUSA is the trade association of active EB-5 Regional Centers.
Austin would become the eighth EB-5 center to focus solely on renewable energy projects out of the roughly 200 centers nationwide. Other green energy zones are in Arizona, California, Michigan and Nevada.
An USCIS spokesperson said the agency doesn't have data on the number of green jobs created by EB-5 centers so far. Around 3.1 million people were employed in the clean economy in 2010, according to a report from the U.S. Bureau of Labor Statistics released last week.
Michael Bauer, an owner of the Arizona Alternative Energy Center, an EB-5 center for solar power installations, said the program is especially attractive to U.S. developers of large-scale renewables projects. Energy developers often rely on banks or private investors to help them cover upfront project costs needed to secure long-term power-purchase agreements with utilities to buy their electricity. The problem is that many American financiers won't invest in a solar or wind farm until that agreement is secured, leaving projects in a financing bind.
Overseas financing "can get these projects moving forward," Joseph of IIUSA said. It helps that the EB-5 program targets rural and high-unemployment areas—where massive clean power installations are more likely to get built.
These days much of the foreign investment is coming from China, which has set its sights on leading the global race to develop clean energy.
Chinese investors accounted for 80 percent of the 3,800 visa applications filed last year through the EB-5 program across all industries. They made up 60 percent of the 1,570 visa approvals last year, up from 30 percent of all visa approvals in 2007, according to USCIS data.
In total, Chinese direct investment in U.S. clean energy projects was $261 million in 2011, up from $42 million in 2010, according to Rhodium Group, a New York-based investment research firm.
Ching Liu, an American co-founder of the Inland Empire Renewable Energy regional center in Riverdale, Calif., said that her center mainly targets Chinese investors.
Liu's two-year-old EB-5 center works like a small lending bank for solar panel installer SolarMax Technology, where she serves as executive vice president. In 2008, SolarMax began installing rooftop solar panels and offering loans of $10,000 to $30,000 to its customers. At the time, the mayor of Riverside, Ronald Loveridge, suggested to the firm that it create an EB-5 Regional Center to expand its operations, Liu told InsideClimate News.