Will Snyder’s Proposed Immigration Reforms Boost Entrepreneurship?

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GTRI’s partner organization.

“I think you’ll see Governor Snyder recognized quickly at the national level as a Republican with pro-immigration policies,” Tobocman says. “His support on this issue is really going to be key.”

Michigan already offers a friendly home to ambitious immigrants, says Tel Ganesan, who came from India to Michigan to pursue his Master’s degree at Wayne State University in Detroit. After graduating, he earned an MBA from the University of Michigan and founded Kyyba, a Farmington Hills company that helps connect IT and engineering talent to jobs.

“Michigan is extremely conducive to entrepreneurs,” Ganesan says. “Comparatively speaking, the bureaucracy still needs to be improved, but if someone has the right spirit, it’s a great place.”

But could the state do more? While the idea of getting 50,000 EB-2 visas earmarked for the state won’t fly, Snyder could have more success with his plan to attract immigrants with money to invest. In a program that began in the early 1990s, the U.S. Congress created a visa category called EB-5 for immigrants willing to invest at least $500,000 in an American business or project that creates at least 10 jobs over three and a half years in a targeted area, like Detroit.

In return, each immigrant investor gets a green card, which grants legal residency. Tobocman says this type of program has been very successful in other countries like Canada and Australia. In fact, he says, it’s rumored that Toronto and Vancouver boomed largely because of investments from Asian immigrants. “EB-5 makes a lot of sense because it’s low risk and high capital,” Tobocman explains. “A good EB-5 investment is a big construction project, like a stadium.”

The EB-5 program usually operates through regional centers that connect immigrants with investment-worthy projects. According to the U.S. Citizenship and Immigration Services website, Michigan already has nine of these centers mostly run by economic development outfits such as the Lansing Economic Development Corporation and the Green Detroit Regional Center. But none are operated by the state. And thus far, those centers haven’t been very effective, says Tobocman, because local organizations often don’t understand the program and its complicated rules.

Snyder wants to fix that by establishing a regional center run by the Michigan State Housing and Development Authority (MSHDA). That should help, says Tobocman. “MSHDA is among the most sophisticated offices I’ve dealt with,” he says. To get federal approval, the state must file an application and pay a few hundred thousand dollars in fees. That’s what Vermont did. It was the first state to set up a state-run center and get federal approval.

The approach seems to work, Tobocman, says. When he called Vermont’s state-run EB-5 center for advice during the development of the Global Detroit study, officials told him that the state didn’t do much business until its office was endorsed by both the state and federal governments. Then, a flood of capital from China flowed into the state. Now, Tobocman says, Chinese investors are very familiar with the list of projects endorsed by the state of Vermont. “Suddenly, it has marketing cachet,” he says.

Getting federal approval for an EB-5 office run by MSHDA might be time-consuming. But it’s definitely within the realm of possibility, unlike persuading Congress or the Obama administration to allot 50,000 employment-based EB-2 visas over five years.

What is clear is that, except for a few examples like these state-run centers, states still have their hands tied by the federal government when it comes to immigration issues. In 2011, Utah tried to initiate state immigration reform. The state legislature passed bills … Next Page »

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One response to “Will Snyder’s Proposed Immigration Reforms Boost Entrepreneurship?”

  1. Bob WilcoxAll Hat, No Cattle says:

    So the plan is to bring 50,000 immigrants to the US, because of course immigrants who are wealthy and want a visa are optimal entrepreneurs. Entrepreneurs already in the US can’t be enticed to Detroit? EB-5 and EB-2 have strong track records building economies in other cities? Swinging befuddled ideas around like a dead cat is not quite the same thing as good government, nor is it good economics.

    Detroit’s strengths are its cost of living, location, and youthful professionals. Its weaknesses are brand, infrastructure, debt-burden, education level, and poverty level. Bankruptcy court is addressing debt burden, and good state government could address infrastructure with eminent domain law, and address educational attainment with money. Poverty and brand can only be reversed with economic growth.

    A state government with ideas could grasp the burgeoning entrepreneurial energy apparent on the streets, feed that native excitement with infrastructure and education, and attract immigrant dollars and brains from all over the US. The governor’s idea is predicated on ignoring the strengths and weaknesses of Detroit, and hoping that a magic painless cure will arise from “somewhere else”.