Sunday, September 7, 2014

The millionaire visa & rural area investment

In 1990, President George Bush, Sr. signed a major piece of new legislation while confidently proclaiming, “This legislation...will promote the initiation of new business in rural areas and the investment of foreign capital in our economy.” The former President was referring to a provision in the Immigration Act of 1990, which provided for immigrant entrepreneurs to obtain a permanent residence visa (commonly known as a “green card”) based upon a $1,000,000 investment in a commercial enterprise in the United States. This was coined as the “millionaire visa.”

Relevant to rural areas in the country, the Act reserved 3,000 of the 10,000 available visas for foreigners who invest capital in a rural area or targeted employment area. The capital investment requirement in a “rural area” is only $500,000. What defines a rural area? Under the relevant regulations, at 8 C.F.R. § 204.6, a rural area is defined as “an area, other than an area within a metropolitan statistical area or within the outer boundary of any city or town, having a population of 20,000 or more.”

Clearly, a goal of the millionaire visa was to encourage new business in rural areas. Simple. However, the visa faced two major problems- one practical and one philosophical. First, the visa’s popularity was lackluster in the early 1900s after the law took effect. Only 177 forgin nationals applied for the visa in its first year, and the number rose to only 1,036 by the third year. The second problem with the visa concerns the best method by which to build a thriving and sustainable economy, epically in a rural area. On a theoretical level, a rural area would seem to benefit more from an economically clustered activity than from a single individual commercial business. Let’s use an example to clarify this theoretical point. Anytown, USA is a fictions town that is rural by INA standards. It seems that rural Anytown would greatly benefit from large-scale investment in a single industry, like the car industry was in Detroit or the current technology industry of Silicon Valley. In contrast, Anytown would receive only small-scale benefits from a single immigrant investing $500,000 in a small business. Much to the determent of rural towns, the original investor visa did not allow for polling of investor capital to support large scale projects in rural areas. Visas were granted to relatively small-scale investors.

Fortunately, in 1993, Congress launched a Pilot Program that allowed for the creation of “regional centers” to pool immigrant investor money and apply it to projects designed to increase the economic livelihood of a given geographical area. This Pilot Program has important potential for rural communities. Specifically, the regulations provide that regional centers may be public economic units. Under 8 C.F.R. § 204.6, a regional center means any economic unit, public or private, which is involved with the promotion of economic growth. Let’s once again use Anytown, USA as an example. The local governments of rural Anytown could potentially apply for certification as a regional center with United States Customs and Immigration Service. As a regional center, Anytown could then pool millionaire visa investments and use that capital as funding for a centralized economic cluster, like car manufacturing for example. Anytown, as a regional center, could also use the millionaire visa capital to create infrastructure projects. The possibilities are nearly endless. Here is what would make rurally based regional centers especially popular to foreign national investors looking to apply for the millionaire visa: since the regional center would be in a rural location, the immigration would only need to invest $500,000 to qualify for the visa. The rural regional center benefits from the immigrant’s capital contribution and the immigrant benefits from the 50% discount.


Kate said...

Wow. Really good post. I have never heard of the "millionaire visa." I suppose that could be overall lack of awareness, but I wonder if it has anything to do with the lack of success the program had, both politically and effectively. Nice job.

Ahva said...

I certainly see the benefit that a program like this can have for rural areas, particularly in light of the Pilot Program allowing for the creation of regional centers. Your blog post suggests that the millionaire visa program was not popular when first established. I wonder how much its popularity (or lack thereof) in the United States relates to the existence of similar programs offered by other western governments. For example, Canada recently ended its equivalent of the millionaire visa program. Australia continues to offer a millionaire visa program, but the investment requirement is in the millions. With the expiration of the Canada program and Australia's high investment requirement, perhaps the United States will become an increasingly attractive option for wealthy nationals seeking permanent residency abroad.

Charlie said...

I think this is interesting as it relates to our readings on rural gentrification. The foreign capital can be used to set up new business and perhaps even attract new residents and tourists to the invested area.

I'm curious as to what qualifies as a commercial enterprise, or if the enterprise has to employ a certain number of people.