More than four years have passed since many prominent economists declared an end to the Great Recession that plagued the North Texas economy from December 2007 through the better part of 2009. Our economy is heading in the right direction, but it continues to grow slowly. We can speed up the pace of our economic growth, diversify our economic base and create more jobs, but Congress needs to support a key Foreign Direct Investment (FDI) vehicle that will help drive our economy forward. The North Texas economy is primed for growth. Last year, our region grew approximately 4.3 percent, according to the U.S. Bureau of Economic Analysis. We can attribute this growth to our considerable assets, which include a pro-business culture, world-class infrastructure, strong presence of industry-leading companies, strategic location and a superior quality of life. While the North Texas economy outpaced the state in 2013, we need more FDI to take advantage of these significant assets. One way to attract and deploy foreign capital is through EB-5 regional centers, which are public-private partnerships. This structure is made possible by a federal government program enabling regional centers to attract job-creating investments from overseas investors. Under the program, each investor is required to demonstrate that at least 10 new jobs will be created as a result of the EB-5 investment, which must be a minimum of $1 million, or $500,000 if the funds are invested in high-unemployment or rural areas. EB-5 regional centers pool capital from multiple investors and invest it in important economic development projects. The cities of Dallas and Fort Worth have established public-private partnerships with Civitas EB-5 funds designed to attract FDI and create jobs at zero cost to taxpayers. Through these partnerships, which align with each city’s economic development priorities, Civitas has invested more than $300 million of EB-5 capital in a wide range of job-creating projects.
And nationally, a comprehensive peer-reviewed economic study commissioned and recently published by the Association to Invest in the USA (IIUSA) found that the EB-5 program contributed approximately $3.4 billion to the U.S. gross domestic product and supported over 42,000 U.S. jobs during fiscal year 2012. This is more than a 100 percent increase from the average annual impact result reported in 2011. One example of a successful project in our backyard is the NYLO Dallas South Side Hotel, which was completed in 2012. Matthews Southwest developed the $20 million project, which included $5.5 million in EB-5 financing from the city of Dallas Regional Center. The funds were used to transform a nearly 100-year-old building into the first full-service hotel opened in southern Dallas in over 50 years. In addition to creating more than 100 direct and indirect jobs, the hotel’s opening marked an acceleration of the emergence of the Cedars neighborhood as one to watch as Dallas’ urban renaissance continues. Economists expect the EB-5 program to have an even greater economic impact in 2013 as investor applications are on the rise. Currently, there are over 7,000 pending EB-5 investor applications, representing $3.5 billion in potential investment and 70,000 jobs. The competition for FDI is strong, with more than 25 countries, including Australia and the United Kingdom, using similar programs to attract foreign investment. The American program is more stringent than many others, requiring substantial risk for investors in terms of both their financial investment and immigration status. And because Congress has not permanently authorized the EB-5 program, potential investors face a risk that is not present in other countries, placing North Texas – and America – at a disadvantage. To continue attracting investment in our communities, we need to level the playing field. Congress can do this by permanently authorizing the EB-5 program, an idea that enjoys broad bipartisan support. Three different bills have been introduced in both the House and Senate that would do just that, as well as strengthen EB-5 program oversight, increase the program’s capacity to fund job-creating projects, and index the minimum investment amount to inflation – all needed reforms.
North Texas is competing against other regions and countries for investment dollars. In the globalized world in which we live, international investors can finance projects and build businesses almost anywhere. We need to channel these global capital flows to our community, where we can put them to good use. The EB-5 program has been successful and it can do even more, particularly in our region, if Congress welcomes investors by making a long-term commitment to the program’s success.
Dan Healy is the CEO of Civitas Capital Group, a leading independent specialty asset management and financial services firm with operating divisions focused on alternative investments, EB-5 funds and wealth management. He serves as a director of the Association to Invest in the USA (IIUSA), the trade association representing the EB-5 Regional Center industry. More information can be found at civitascapital.com and iiusa.org.