Rural EB-5 Projects and Natural Disasters: How to Mitigate the Risk

  Author: Samuel B. Silverman

The EB-5 visa program offers a unique opportunity for foreign investors to secure permanent residency in the United States by investing in job-creating projects. While many of these projects are located in urban areas, a significant number are found in rural regions.

However, investing in rural EB-5 projects can expose investors to a higher risk of natural disasters. This risk can lead to a complete loss of capital, jeopardizing both the investor’s immigration prospects and their financial security.

The key is for EB-5 applicants to carefully evaluate the location of a rural EB-5 project before investing.

Background on the EB-5 Program and Rural Projects

The EB-5 program allows foreign nationals to obtain a green card by investing in projects that create at least ten full-time jobs for U.S. workers. To qualify, applicants must invest a minimum of $800,000 in a targeted employment area (TEA) project. TEAs are either high-unemployment or rural areas.

Under the EB-5 Reform and Integrity Act of 2022, rural EB-5 projects have experienced a surge in popularity. Investors in rural EB-5 projects now have priority processing of their EB-5 applications, which reduces the wait time for their Green Cards.

Investors from countries with a backlog of EB-5 visa applicants benefit the most from rural projects. Under the RIA, rural project investors from high-demand countries can avoid long delays caused by limited visa availability through the new set-aside visa categories.

This provision can potentially shorten the immigration process for Chinese and Indian investors by several years.

In addition, Chinese and Indian nationals who already live in the United States can immediately adjust their immigration status if they invest in a rural EB-5 project. This allows them to quickly obtain work and travel authorization while they wait for their EB-5 application to be processed.

Rural EB-5 Projects and Fire Risk

Rural EB-5 projects are often located in remote areas with limited infrastructure and access to resources. This can make them more susceptible to natural disasters, particularly fires. Wildfires are a significant risk in many parts of the United States, especially in the western states, where large areas are covered by forests and grasslands. Climate change has further exacerbated this risk, leading to hotter and drier conditions that increase the likelihood of wildfires.

For investors in rural EB-5 projects, a fire can have disastrous consequences. If a project is destroyed or significantly damaged by a wildfire, it may not be able to create the required ten jobs, putting the investor’s immigration prospects at risk.

Additionally, the investor may lose all of their invested capital if the project is unable to recover and fails financially as a result of the natural disaster.

Furthermore, rural projects may lack the resources and infrastructure necessary to combat fires effectively. In urban areas, firefighting resources are often more readily available, with better access to water supplies, advanced equipment, and a higher density of firefighting personnel. In contrast, rural areas may have fewer firefighters and less access to essential resources, making it more difficult to control and extinguish fires.

A particularly risky region to invest in at the moment is rural Montana, including the Big Sky area.

High Risk of Wildfires in the Big Sky, Montana Area

The Big Sky, Montana, area is highly susceptible to wildfires, and with the growing number of EB-5 visa investment projects, the risks are only amplified.

Big Sky is an unincorporated community situated in a one-way-in, one-way-out valley. The U.S. Forest Service has identified the area to have a higher risk of wildfire than 93% of communities in America.

The EB-5 visa investment projects in Big Sky are contributing to the surge in growth, with developers racing to build before stricter regulations are implemented. As the area is not yet an official municipality, there is no local building code or inspection measures in place. This means that approximately 200 homes receive construction permits each year, with 96 percent of these being built in areas with “high” or “extreme” wildfire risk.

Adding to the danger, Big Sky is nestled within the wildland-urban interface (WUI), where homes and other structures encroach on wildfire-prone landscapes. The WUI is the fastest-growing land-use type in the country, and as more people move into these areas, the risk of wildfires increases.

Moreover, the landscape of Big Sky is long overdue for a forest fire, which is a natural occurrence essential for rejuvenation. However, human suppression of wildfires has led to an overgrowth of vegetation, making the area even more prone to high-intensity fires. The increasing amount of dead-and-down trees, combined with early fire suppression, has created a precarious situation for Big Sky and its residents.

The Importance of Investing in Low-Risk Areas

By investing in areas with a lower risk of natural disasters, investors can better protect their capital and improve their chances of obtaining Green Cards.

In addition to considering the location of a project, investors should also carefully research the project’s management team and track record. A well-managed project with a strong history of success is more likely to overcome the challenges posed by a natural disaster, whereas a project with poor management may struggle to recover financially.

It is also advisable for investors to consider the type of development they are investing in. Construction projects that are less susceptible to fire damage, such as those made of fire-resistant materials or located in fire-resistant landscapes, can offer a higher degree of protection for the investor’s capital.

Additionally, projects with built-in fire prevention and suppression systems can help reduce the risk of a devastating fire. These factors will largely depend on the expertise and reliability of the developer.

Immigrate Faster Through a Rural EB-5 Project

Rural EB-5 projects can offer unique immigration opportunities for foreign nationals seeking permanent residency in the United States—especially Chinese and Indian nationals.

However, these projects are also uniquely subject to higher-than-average natural disaster risks, particularly fire. For EB-5 investors, a natural disaster can have severe consequences, including the potential loss of their invested capital and jeopardized immigration prospects if the project fails to create the required jobs.

Given these risks, the best practice for EB-5 investors is to invest in projects located outside of areas with high natural disaster risks, such as fire-prone regions.

By focusing on areas with lower disaster risk, investors can better protect their capital and improve their chances of successfully obtaining permanent residency in the United States.

For more information on how to immigrate faster through a rural EB-5 project, schedule a free consultation with EB5AN.