Thursday, May 29, 2008

EB-5 Milwaukee

The EB-5 visa program is catching on:

Scott Harrison wants Milwaukee to look back in 10 or 15 years and admire the economic contributions of its Chinese community with the same appreciation it reserves for the breweries of a previous generation.

Harrison belongs to a small clutch of investors who on Wednesday launched a private-equity fund that seeks Chinese investment in southeastern Wisconsin. The program uses a federal program that grants U.S. residency rights to qualified foreigners who create at least 10 jobs by investing within the metro area.

Milwaukee entrepreneur Robert Kraft is leading the venture, called FirstPathway Citizenship Fund, which cleared its final legal and bureaucratic hurdles this week.

Kraft and Harrison see the fund as a way to build the Chinese community in Milwaukee, making the city more international and linking it more closely to the movement of people and capital around the world.

If Milwaukee fails to connect with the Asian economy, "the region will be left behind," Kraft said.

The program is administered by the U.S. Department of Homeland Security and deals with a category of visa called the EB-5. While many classes of U.S. visas are oversubscribed - leaving U.S. employers and universities chafing at the inability to recruit workers from abroad - Washington seldom reaches its cap of EB-5 visas.

Since Cleveland is looking to fund a similar initiative, FirstPathway Citizenship Fund might be a great model to copy. If they haven't already, other EB-5 visa regions (e.g. Pittsburgh) could do the same. I'm curious as to why the EB-5 visa is so underutilized. Lack of publicity? Difficult to manage? Inexperience?

1 comment:

D Holmes said...

The impact of the EB-5 program on Milwaukee has been quite extraordinary in the years since this post. I have been told that the investment in the Milwaukee area has been over $350 million to date. My understanding is that the Milwaukee area programs have had greater success than Chicago in attracting investment through this program. Many of the project funded have been real estate developments. These have included the Global Water Center (the focus for Milwaukee's water technology initiative), and five projects totaling over $70 million at the former Pabst Brewery. The Pabst Brewery may have no comparable focus area for Chinese investment of this type in the United States (most of the EB-5 investments are one-off projects in scattered locations). Interestingly, the EB-5 is now generating additional Chinese investment (non-visa motivated) such as a $6 million equity investment by a Chinese individual in an apartment development (also at the Pabst site).

The quotes regarding trying to expand Milwaukee's ties with Asia are a little misleading. Although I don't have data for other states to compare, my understanding is that over 400 Milwaukee area companies have operations in China - some of these (such as for Johnson Controls with over 23 plants) are enormous. This connectedness to China is actual one of the underappreciated legacies of the historical and continuing manufacturing companies in Southeast WI. The manufacturing companies that exist today are companies that have already adapted to globalization and which for the most part have long ago implemented a China strategy. I don't have the data to prove it, but I would not be surprised if Milwaukee was better connected to China than cities such as Portland and Austin.