DoH EB-5 Regional Center Investment Program
The EB-5 investment opportunities program was established to first create a minimum of 10 full-time jobs in any American business and draw at least $1 million from foreign nationals with the incentive of U.S. residency for themselves and their immediate family members.The program, administered by the U.S. Citizenship and Immigration Services, sets aside up to 10,000 visas for immigrants who invest at least $500,000, or $1 million in many areas, to create new jobs through new business enterprises or by investing cash infusions in existing businesses to sustain jobs currently in place through an employment creation multiplier effect. This must be done through a certified EB-5 Regional Center Program.
EB-5 investments must be made in designated Targeted Employment Areas (TEA), and Empowerment Zones (EZ) also known as HUD Zones or Renewable Communities at the county level, all counties, with exception of those counties included in metropolitan statistical areas, qualify.
Cities with populations in excess of 20,000 located in rural counties are excluded from the designation unless the 150 percent national average unemployment provision is met.
Cities, towns, census designated places, census tracks or blocks groups meeting the 150 percent of the national average unemployment rate provision located inside metropolitan statistical areas are automatically designated as TEA's and EZ's.
The 150 percent of the national average unemployment rate used for this year's (circa; 2012) determination is 13.88 percent.
Discoveries of Hope Foundation (DoH) will facilitate these means, as a certified and approved USCIS Regional Center (pending approval). DoH will offer various investment projects for foreign investors, which will support our EB-5 Education and Jobs creation program.
We offer investment opportunities from trade school projects like our Dental Hygienist School Project (which will create indirect/direct jobs and educational opportunities for inner city youth) to a Water Bottling Plant Manufacturing Facility for community job creation and skilled labor training opportunities in TEA and EZ areas.
To make it clear, these Jobs do not have to be directly related to DoH EB-5 projects and can, for example, be a certain EB-5 affiliated housing construction project which has jobs that are at risk during the construction phases of the project and can be saved by a new cash infuse is fileion, or jobs created at other businesses as a result of the EB-5 project being developed (new, renewed or expanded jobs) qualify as well.
The jobs must be proven to exist at the time the EB-5 visa application is filed or must provide proof that the required jobs will be created before the end of the two-year period of Conditional Permanent Residency.
There will be various other EB-5 Investment opportunities available through DoH Regional Center, for more information please see our contact us page and submit your specific questions. Someone will contact you as soon as your request is reviewed.
The EB-5 Immigrant Investor Visa, administered by the U.S. Citizenship and Immigration Service (USCIS), is available to immigrants seeking to enter the United States in order to invest in a new commercial enterprise that will benefit the US economy and create at least 10 full-time jobs at minimum.
FAQ's about the EB-5 Visa Immigrant Investment Program
What is a regional center, and what are the advantages for EB-5 investor?
How do I apply for an EB-5 visa?
How does the EB-5 Program Work?
How are the 10 jobs per investor calculated?
What jobs multiplier models are used to determine if jobs will be created and/or maintain?
What are indirect and induced jobs?
How big does a regional center need to be?
What kind of businesses qualify?
Do Distressed Properties Count at EB-5 Investments?
Is the regional center program limited to only 3,000 IV numbers per annum? Or in other words, what is the maximum number of EB-5 Visa's issued per annum and how many per family?
Can a regional center based EB-5 project pool the fund and invest in multiple, job-creating projects and divide total jobs?
Can regional centers encompass the entire state or the entire United States?
Does USCIS publish I-526 and I-829 track records for regional centers?
What are not-so-good things about regional center EB-5 program's inherent structure?
May a regional center based EB-5 project invest an alien investor's capital contributions in a non-profit company's projects?
Why do investment structures of various regional centers differ?
Is there a professional association for regional centers operators?
Can USCIS take away or cancel the USCIS designation of a regional center where the RC remains inactive?
What factors are considered in determining whether jobs will be created within a "reasonable time"?
Can a third-party guarantee a NCE's loan to a job-creating entity for a RC EB-5 project?
Also, does it matter whether the third party guarantor is a private insurer, bonding company, or a government entity?
Can a regional center's EB-5 project engage in loan-making activity?
For a "fund" style Regional Center, what is the recent restriction announced by USCIS?
Do Featured RCs have trustworthy escrow system?
Do Regional Centers "guarantee" the investment amounts to individual investors?
Out of all EB-5 cases filed with USCIS currently, what is the percentage of Regional Center cases?
What is a RC EB-5 project involving "troubled business" and associated benefits or disadvantages?
What rights and obligations do I receive when I invest and become a Limited Partner in a Limited Partnership?
Why is escrow account used for Regional Center EB-5 cases to hold investors' funds during I-526 pendency?
Do Regional Centers return investor's money deposited in the designated escrow if I-526 is denied?
Does this money get refunded to the investor in the event I-526 is denied?
Do all Regional Centers require only $500,000 investment, exclusive of any issue expenses?
What is the obligation of investor to participate in Regional Centers' EB-5 projects?
If I-526 petition that I submit through a featured RC's EB-5 project is denied, will I be refunded the investment amount?
Do regional centers have their own U.S. immigration attorneys to prepare EB-5 petitions for Investors?
What are the general roles of the General Partner in the Limited Partnership entity which acts as a new commercial entity?
What form of legal entity is used by most regional center projects to establish the requisite new commercial enterprise?
On what types of EB-5 projects are investors' funds spent?
Can a regional center contain a provision stating it will return the fund to investor in the event of I-829 denial?
Do all Regional Centers require that the investment fund be deposited into an escrow, and when is the release date?
What is the standard amount to be paid by the EB-5 investor in order toenter into Regional Center program?
Is there a List of EB-5 qualified business proposals currently at the DoH EB-5 Regional Center?
What is a regional center, and what are the advantages for EB-5 investor?
A "Regional Center" is:
1) An entity, organization or agency that has been approved as such by the USCIS;
2) Which focuses on a specific geographic area within the United States; and
3) Which seeks to promote economic growth in the region through investment, or any improved regional productivity, creation of new jobs, and increased domestic capital investment.
Of the 10,000 investor visas (i.e., EB-5 visas) available annually, 3,000 are set aside for those who apply under a pilot program involving a CIS-designated "Regional Center."
Basically, the advantage for an EB-5 investor is that a regional center can employ a "reasonable" methodology to show that the new jobs were created directly, Indirectly or by induced means, or any combination thereof.
This is an advantage because adding indirect jobs definitely increases the number of new jobs created. For direct, individual EB-5 case, they are limited to using only directly-created new jobs.
Note: a regional center EB-5 project can be either $500,000 USD or $1 Million USD investment (or greater). In other words, it can be either a TEA project or non-TEA project. For other questions not answered here please see U.S. Citizenship and Immigration Services website. (back)
How do I apply for an EB-5 visa?
The application is a 3-step process and is outlined on the U.S. Citizenship and Immigration Services Web site. (back)
How does the EB-5 Program Work?
Overview
The primary purpose of the program is to attract foreign investment to the U.S., which will create new jobs. From an economic viewpoint, the key requirement is that each investment must create a minimum of 10 new jobs.
In some cases, the foreign party must invest a minimum of $1 million, while in other cases, the minimum is $500,000. The smaller number applies if the investment is located in (a) an area of high unemployment, currently defined as more than 150% of the national average unemployment rate for 2010, or (b) a rural area, currently defined as an area that is not in an MSA and is not within a municipality with population of over 20,000. Most of the EB-5 applications we have analyzed are based on the underlying assumption of a $500,000 investment per individual. (back)
How are the 10 jobs per investor calculated?
In some cases, only direct jobs can be counted that are actually created by the new businesses that are started. In other cases, indirect and induced jobs can also be counted. For that to occur, the visa applicant must invest through an EB-5 regional center. Which requires additional paperwork, documentation, and economic analysis. However, because the job multipliers are usually at least 2, the incentives to be part of a regional center applies in almost all cases. (back)
What jobs multiplier models are used to determine if jobs will be created and/or maintain?
There are several different input/output models accepted by the USCIS, but the two major ones are IMPLAN and RIMS II. The principal difference is that IMPLAN is an employment-driven model, while RIMS II is an output-driven model.
To the non-economist, this may seem like a distinction without a difference. And in fact, the total number of jobs that are created as calculated by these two models is usually fairly similar. The big difference occurs at the verification stage.
After a proposal has been submitted by the applicant (provided with the application to applicant by the regional center alliance partnership), it takes the USCIS several months to issue a decision. Once the approval has been obtained, individual immigrant investors must then file an I-526 petition, requesting a temporary green card status is filed.
This process also usually takes several months. Once that is approved, another two years elapses. At that point, the immigrant investor files an I-829 petition requesting removal of the conditions on the temporary green card, in other words, permission for the green card to become permanent. It is at that stage that the investor must show that 10 permanent new jobs have been created by the investment that was made at the beginning of the process.
This requirement has led many investors, and some EB-5 developers, to assume that in fact they must produce documentary evidence for all direct permanent full-time jobs in the form of W-2s, I-9s, and quarterly payroll tax records. That is indeed one way to meet this requirement. BUT IT IS NOT THE ONLY WAY.
Immigrant investors and hence their Immigration lawyers along with their EB-5 developers may also meet this requirement by showing that the total amount of construction expenditures, and the total amount of gross (top-line) revenues that have been achieved are equal to or greater than the amount of expenditures or revenues that were stated in the original proposal.
In other words, verification can be made on expenditures and revenues as well as direct employees. If this latter method is used, then the economist uses the RIMS II input/output model for the economic impact analysis calculations.
Thus the EB-5 developer, at the time of the original application, must determine which method is likely to be superior for verification at the I-829 level. An overwhelming majority of projects will use the RIMS II model for the following reasons:
1. Verification of full-time workers may be difficult. Each employee must work 35 hours a week every week. In USCIS arithmetic, two half-time employees do not equal 1 full-time employee. They equal 0 full-time employees. This is particularly critical for construction jobs, and for seasonal and part-time jobs that are likely to occur in such industries as hotels, resorts, or retail sales.
2. All newly hired employees must be U.S. citizens (verified). On the other hand, illegal immigrants may obtain false papers. If the USCIS, with its deeper knowledge and data base of illegal immigrants, determines that false papers have been used, the developer has no recourse, and the I-829 petition will be denied.
3. Although the USCIS has repeatedly stated that it accepts a variety of recognized input/output models, the USCIS economist recently reiterated her position that she prefers the RIMS II model because of its greater transparency.
Thus unless clients specifically state that they prefer the IMPLAN model and its direct employment approach, we will use the RIMS II model in our economic impact calculations.
Following is a Generic Example using a Retail Shopping Center as a model
To understand how the economic analysis works, consider the following generic example. A foreign investor plans to build a retail shopping center of 100,000 square feet.
The construction costs will vary substantially depending on the location and type of buildings, but for purposes of this example, assume that the actual "hard" construction costs are $100 per square foot.
Total costs, including soft costs, profits, and land purchases, are $200 per square foot. We make this distinction which will be explained in more detail below, the hard costs have some input into the total job count, whereas the other costs do not.
The total hard construction cost is $10 million. This figure is multiplied by the RIMS II final demand multiplier for construction, which varies widely by region and can range anywhere from 5 to 20, although it is usually in the 10-15 range.
Suppose it is 15. That means 150 total jobs would be created from construction activity, PROVIDING that all construction jobs can be counted.
In many cases they cannot. The USCIS has ruled that for projects taking less than 2 years to complete, only the indirect and induced jobs can be counted. They are usually 1/3 to 1/2 of the total jobs.
If the projects really do take more than 2 years, all jobs can be counted. However, in that case, the USCIS will require a timeline showing the expected expenditures each quarter.
Do not be tempted to pretend that, for example, an 18-month project takes 2 years simply by stretching out the last 1% over a 6-month period. In general, a bell-shaped curve for expenditures would be appropriate.
The actual sales per square foot will be based on the mix of stores and the location, but assume that the average is $500 per square foot. That would be a total of $50 million in sales.
Here again, the RIMS II multiplier varies widely by region, but an average figure would be about 8. On this basis, 400 permanent new jobs would be created from the operations of the retail space. If all construction jobs are permanent, a total of 550 jobs would be created in this particular example.
Since the EB-5 regulations require a minimum of 10 jobs per investor, that means there will be a maximum of 55 investors in this project. If each one puts up $500,000, the developer could raise up to $27.5 million, which would more than cover the $20 million total costs. However, it is always advisable to leave a cushion of 10% to 20% in case the sales goals are not met by the time the I-829 petition is filed.
Actual cases will vary from this example. They depend, among other things, on the following parameters. All of these vary by the region chosen.
1. Cost of construction, per square foot
2. RIMS II final demand multiplier for construction
3. Mix of buildings constructed (big box stores, specialty shops, restaurants)
4. Mix of retail stores (including restaurants)
5. Sales per square foot for each type of establishment
6. RIMS II final demand multiplier for retail sales
All this data must be calculated separately for each individual project. The numbers are based on the RIMS II model, Census data, national and regional survey data; construction costs manuals, and individual research for specific projects. The numbers must be collected separately for each project and are not just "pulled off the shelf". The investment can be any industry, we used construction simply for this example only. (back)
What are indirect and induced jobs?
Indirect jobs are created when the business buys goods and services from local firms. For example, a construction firm might buy some of its materials locally, or purchase locally produced doors and windows or roof tiles. A retail store would buy some of its goods from wholesalers. It would probably hire outside firms for building maintenance, waste management, and security. Also, it would probably hire accountants, attorneys, and other professional business services.
Induced jobs are created when the employees of the new business spend part of their paychecks on locally produced goods and services. That would ordinarily include purchases at supermarkets and gas stations, banking and real estate services, and health care. (back)
How big does a regional center need to be?
It can range from a single project in a single location to a wide variety of projects covering an entire state. The amount of investment per regional center currently ranges from under $5 million to over $100 million. (back)
What kind of businesses qualify?
Virtually any legitimate business qualifies for which at least 10 permanent new full-time jobs are created per investor. It can be in manufacturing, retail trade, services, non-profit, research and development, or agriculture. Some of the businesses that have recently been approved include hotels, retail shopping centers and restaurants, office buildings, warehouses, manufacturing plants, research facilities, community centers, hospitals and nursing homes, farms, movie production, inland port facilities, lumber mills, forestry projects, and aquaculture.
However, a few caveats apply:
1. The EB-5 regulations actually state that the contributions of each investor must create 10 new OR SAVED jobs. Hence in certain cases, rehabbing an old structure might also qualify if the existing jobs would have disappeared.
In general, however, this is more difficult to show, and most EB-5 projects work best either with new construction, or with rehabbing old buildings that are currently vacant.
2. In general, residential buildings don't work, unless they are combined with others. The problem is that residences create very few direct jobs, and only indirect and induced construction jobs can be counted.
In general, residential construction projects supply less than half of the jobs needed to meet the EB-5 target. You have to be able to borrow more than 50% of the funding in order to make residential projects work.
3. The 10 new jobs must represent a net increase. For example, suppose someone builds a new shopping center next to an old one, and people start shopping at the new place, so the old one closes down and people lose their jobs.
In that case, the total net effect would be a lot smaller than the number of new jobs at the new shopping center. The report must also to show there will not be a net loss of jobs elsewhere in the region when this new project opens. (back)
Do Distressed Properties Count at EB-5 Investments?
Many EB-5 prospects are asking about purchasing distressed properties at 1/3 or 1/4 of the previously assessed value, finding tenants for these properties, and then reselling them later at a substantial profit. In the meantime, because the cost of purchase is so low, substantial income can also be earned on the rents received before they are sold.
Is this an appropriate model for the EB-5 program? As usual, the answer is "it all depends" but here are some guidelines to help you make a decision.
1. If it is an existing building, there won't be any jobs generated by new construction. However (see the next topic) that may not be a negative, because the USCIS often takes a jaundiced view of counting temporary construction jobs.
2. You will only get credit for new jobs, so for practical purposes the building should be nearly or completely vacant. You need the job credits by filling up the buildings with new tenants. If there are existing jobs there, you can only count them if you can prove they are part of a troubled business, which is often difficult to show.
3. Many new jobs can be created from retail, office, and industrial buildings; far less from residential. For practical purposes, there will be a few jobs from operating the residences, but the numbers only work out if you can buy the properties with substantial leverage (e.g., only 20% from EB-5 money, the rest borrowed from banks).
4. You want to be in a TEA; however, if the building is vacant, it may well be in a high-unemployment area, so this is not generally a very high hurdle.
5. In summary, then, you want to buy a vacant retail, office, or industrial building at 1/3 to 1/4 of its previously assessed value, find new tenants, collect the rents, and then sell out for a substantial profit in the next five years.
6. And now for the tough part: virtually every client asks us, how can I write a business plan and have you generate an economic report if I don't have the properties yet? I need EB-5 money to pay for them, so it seems like a chicken and egg problem. So here's the answer. Choose several likely properties and get USCIS approval on that basis. You will then be approved for those specific industries. If the properties fall through, you can then file an amendment for the specific property that is different from the one you originally planned to purchase. This method is OK with USCIS as long as you inform them of the change. (back)
Is the regional center program limited to only 3,000 IV numbers per annum? Or in other words, what is the maximum number of EB-5 Visa's issued per annum and how many per family?
USCIS interprets the set aside of visas to ensure that a minimum of 3,000 visas are available for regional center based applicants. We do not see the set aside as limiting the number of visas that can be granted to regional center based applicants. This is good news for regional center program; therefore, up to 10,000 IV numbers per annum is available to regional center cases. Assuming an average family number of 4 members per 1 family, this means a maximum of 2,500 families per annum can obtain immigrant visas via regional center EB-5 program. (back)
Can a regional center based EB-5 project pool the fund and invest in multiple, job-creating projects and divide total jobs?
Although it is legally permissible, practically, it is very difficult to divide up the pooled investment in multiple job-creating projects at the same time. USCIS' statements indicate as much. (back)
Can regional centers encompass the entire state or the entire United States?
Legally speaking, there is nothing in the EB-5 law that says the entire United States cannot form a regional center geographical area. However, to date, there is no regional center with the entire USA as its scope. Some regional center designations have also managed to include the entire state.
We think USCIS should allow the entire USA territories to form the base of its regional center designation in certain business structures. (back)
Does USCIS publish I-526 and I-829 track records for regional centers?
No. USCIS doesn't have the resources or staff to really do this kind of stuff. The reason? All the money received from EB-5 cases do not go into supporting EB-5 services, but instead, get drained for usage in other areas of immigration. Therefore, large filing fees for EB-5 cases do not lead to better services for EB-5 cases. (back)
What are not-so-good things about regional center EB-5 program's inherent structure?
First, because you as an investor are a limited investor, you will not have the right to manage on daily basis. You will have the right to vote as a limited partner on important decisions facing your investment and immigration status. This cannot be helped as if each limited partner investor had the right to do as he or she wishes, there would be no way to run a project. Second, the limited partner investor's investment is locked in for a certain period of time, usually for 5 years. This also cannot be helped because if every investor had the right to pull out their investments, the project could not be run properly. (back)
May a regional center based EB-5 project invest an alien investor's capital contributions in a non-profit company's projects?
No, but it can certainly invest the capital contributions received from alien EB-5 investors into a non-profit, job-creating company's project which would in turn create new jobs. Read Matter of Izummi, AAO precedent case. The precedent AAO case says it can, so that should be that. (back)
Why do investment structures of various regional centers differ?
Investment structures of various regional centers differ because of different industries their EB-5 projects are involved in, offering documents, job-calculation methodology and capital investment structures contained in regional center applications submitted to and ultimately approved by CSC.
From a broad perspective, approved regional centers can be divided into two types of investment structures: the controlling New Commercial Enterprise entity engages in EITHER full or part equity participation or the controlling New Commercial Enterprise engages in lending activities. There are advantages and disadvantages in both kinds of investment structures, depending again on the nature of projects.
Therefore, although one can say investment structures of regional centers are pretty much similar, different EB-5 projects can vary in important aspects. The best analogy we believe in comparing regional centers is comparing cars. The same manufacturing company can own and operate several brand names, and each brand car has slightly different emphasis that appeal to different consumers. (back)
Is there a professional association for regional centers operators?
Yes, it's called IIUSA, and their website is at: www.iiusa.org. There is an annual fee, and members of the IIUSA are composed of regional centers and immigration attorneys and other professionals who work or are interested in the area of regional centers. Anyone interested is encouraged to contact IIUSA directly for more information. (back)
Can USCIS take away or cancel the USCIS designation of a regional center where the RC remains inactive?
Yes, if a particular regional center no longer serves the purpose, and inactivity could be the reason for such action. However, no particular inactive period is used, and any decision will be made on a case-by-case basis.
Practically, USCIS does not have sufficient staff to really oversee the activities of all designated regional centers. Therefore, any revocation or notice of termination of already-given designation will be very rare. (back)
What factors are considered in determining whether jobs will be created within a "reasonable time"?
What factors are considered in determining whether the necessary jobs will be created within a "reasonable time" in adjudicating an I-829 petition, per 8 C.F.R. § 216.6(a)(4)(iv)?
Section 25.2(e)(4)(D) of the Adjudicator's Field Manual lists some factors in making the reasonable time determination, but how do CSC adjudicators apply those factors in actual cases?
For example, what if a regional center has an approved job creation methodology, proof that the investment has gone into the project, and has leased up the project but the tenants have not moved in when the I-829 is filed?
What if the project is almost but not completely leased?
Will USCIS approve an I-829 in such a case?
If so, what documentation would be required?
USCIS answer(s) is as follows:
CSC adjudicators follow the guidance put forth in the Adjudicator's Field Manual (AFM) at section 25.2(e)(4)(D), which states: In making the "reasonable time" determination, officers should consider the evidence submitted along with the petition that demonstrates when the jobs are expected to be created, the reasons that the jobs were not created as predicted in Form I-526 , the nature of the industry or industries in which the jobs are to be created, and any other evidence submitted by the petitioner.
If after considering the evidence, the officer determines that the jobs are more likely than not going to be created within a reasonable time, Form I-829 should be approved consistent with 8 CFR 216.6(d)(1) if the petitioner is otherwise eligible to have his or her conditions removed.
If, however, the officer determines that the jobs will not be created within a reasonable period of time, Form I-829 should be denied consistent with 8 CFR 216.6(d)(2).
CSC adjudicators apply the factors outlined above when analyzing the facts in each individual case using the preponderance of evidence standard. Note: It is not possible to answer "what if" questions such as this question in the abstract. Whether a particular case will be approved is dependent upon the determination of eligibility, based upon the specific evidence of record. (back)
Can a third-party guarantee a NCE's loan to a job-creating entity for a RC EB-5 project?
At the October 19, 2009, AILA EB-5 conference in San Francisco, CSC officials indicated that an acceptable EB-5 investment in a regional center context may consist of an equity investment in a commercial enterprise that in turn makes a loan with the invested capital to a borrower.
CSC officials also appeared to state at the conference that the commercial enterprise could receive a guarantee from a third party that the borrower would repay the borrowed funds to the commercial enterprise. Please confirm that this is acceptable.
It should be, since even a third party may not be able to pay the guarantee (e.g., AIG). Similarly, the borrower may not be able to repay the commercial enterprise, even if it receives money from the third party (e.g., General Motors). (back)
Also, does it matter whether the third party guarantor is a private insurer, bonding company, or a government entity?
Let's see what USCIS says clearly on this issue, and then our comment.
Yes, there is currently nothing in the statute or regulations to preclude the guarantee from the third party as long as the alien investor's capital is still "at risk", and the arrangement does not constitute a redemption agreement or a guaranteed buy-back arrangement for the alien investor's investment in the commercial enterprise.
A determination as to whether a specific third party guarantee is contrary to the statutory and regulatory requirements has to be made on a case-by-case basis.
Actually, whenever USCIS says there is "nothing in the statute or regulations", they can go either way. In other words, USCIS could have prohibited such arrangement based on the same rationale that there is "nothing in the statutes or regulations" which specifically permit such arrangement.
Actually, USCIS should have held that where such third-party guarantee falls within the "standard commercial practice", it is permissible. (back)
Can a regional center's EB-5 project engage in loan-making activity?
Of course, the question already assumes that a particular regional center has been designated as a regional center by USCIS for an investment structure involving pooling funds from investors and using such fund to make loan(s) to job-creating business(es). Otherwise, the answer would be "no". With this understanding, see below.
This question had already been answered in the affirmative by the precedent AAO case, Matter of Izummi case. Basically, a Regional Center project can form a limited partnership and receive capital contributions from individual EB-5 investors and then the limited partnership, as a new commercial enterprise, can make a loan to a job-creating business or businesses, as long as such investment structure has been submitted and approved by USCIS as a regional center.
Also, during October 19th 2009 AILA EB-5 Conference in San Francisco, CSC adjudicating officers present at the panel again specifically confirmed that "third-party" guarantee of the loan made by a limited partnership to the job-creating borrower (but not any guarantee on investor's investment into a limited partnership) is also permissible. Basically, we believe that any such guarantee has to fall within the real-world, commercial practices. (back)
For a "fund" style Regional Center, what is the recent restriction announced by USCIS?
A "fund" style Regional Center involves offering multi projects in which investors' funds will be spread around, similar to mutual fund. Is there any restriction imposed by USCIS?
USCIS recently announced during September 16, 2009 Stakeholders conference that this type of fund Regional Center must state at I-526 petition submission stage what projects the investors will be investing in.
This appears to mean the projects' descriptions cannot be general in nature, such as "will be invested in hotel construction and/or shopping center construction" but must be specific description. The logical rationale for this policy is to make this "fund" type of regional center to have specific projects set up for investors' participation, instead of the other way around.
However, in the real-life commercial context, it's very, very difficult to line up multiple numbers of EB-5 projects in which investors' funds will be spread around. (back)
Generally, what kinds of investment structures are utilized by USCIS-designated Regional Centers?
Although USCIS-designated RCs involve numerous industries or targeted business areas, they generally use one or more of the below investment structures permissible under the EB-5 law.
It should be noted that limited partnerships formed pursuant to the Uniform Limited Partnership Act of applicable states are used by most RCs because the entity allows for participation by multitude of EB-5 investors.
1. Form a limited partnership to "pool" capital contributions from individual EB-5 investors and then use the total funds to make an equity investment (and receive equity stake) in a job-creating business.
2. Form a limited partnership to "pool" capital contributions from individual EB-5 investors and then use the total funds to purchase a real property and/or make substantial renovations to attract commercial tenants who create new jobs.
3. Form a limited partnership to "pool" capital contributions from individual EB-5 investors and then use the total funds to make equity investment in a business entity developing a real estate project.
4. Form a limited partnership to "pool" capital contributions from individual EB-5 investors and then make loan(s) to job-creating borrower business(es) operating in various industries, including developing real estate projects.
Now, there are advantages and disadvantages with any one of the above investment structures (the structure of the specific EB-5 project has to be closely examined); but generally speaking, the trend of the investment structure utilized by RCs appears to be moving towards the number 4. Also, the trend set by various leading RCs appears to be moving towards big projects. (back)
Do Featured RCs have trustworthy escrow system?
Yes, the Featured RCs work with well-known, third-party banks to open escrow account for each EB-5 case. This is very important to make sure that the EB-5 investor's escrowed funds are released only pursuant to the agreed-upon terms and conditions in the escrow agreements with the full advance consent of EB-5 investors and also in compliance with the EB-5 law. (back)
Do Regional Centers "guarantee" the investment amounts to individual investors?
No, absolutely not. No EB-5 Regional Center, Limited Partnership or any immigration attorney handling your EB-5 Project is allowed to "guarantee" the return of the investment amounts directly to individual investors.
That would be not only be against EB-5 law but unethical and dumb thing to do. However, it is well-established under the EB-5 law (Matter of Izummi, a precedent AAO decision) that the Limited Partnerships can make loan(s) to a job-creating borrower-entities, and when the Limited Partnerships make loan(s) to borrower-business, that borrower can and do issue signed documentary promissory notes and/or loan agreements to the Limited Partnerships which act as lenders.
That's how the loans are made in the real commercial world. In other words, commercial rules and practices of how business is done in the real world govern.
However, these loan agreements or promissory notes to the Limited Partnerships are only strong as the borrowers' financial conditions are, and these are not direct guarantees to the individual investors by these borrowing companies or lending Limited Partnerships; they are promises by borrowing, job-creating company to repay the loan amount to the lending limited partnership. This is how loans are made in a real world. (back)
How many immigrant visa numbers per year are available for Regional Center cases and/or TEA cases?
Every year, there are 10,000 immigrant visa numbers (the 10,000 number includes immigrant visas for dependent family members) available for investors and their dependent family members.
Out of this 10,000 immigrant visa numbers per annum, 3,000 is set aside for applicants who invest in TEA cases, and additional 3,000 is set aside for applicants who invest in Regional Center cases.
This means if you assume each Investor has 3 dependent family members, there are only enough Immigrant Visa numbers per annum for approximately 2,500 EB-5 cases.
Practically speaking, since most RC cases are also TEA cases, there are at minimum 6,000 immigrant visa numbers available for RC/TEA cases, which translate into 1,500 RC/TEA cases. This also is not all that many. (back)
Out of all EB-5 cases filed with USCIS currently, what is the percentage of Regional Center cases?
According to the information disclosed by USCIS during February 27, 2009 stakeholders meeting, Regional Center EB-5 cases compose of approximately 90% of all EB-5 cases filed with USCIS.
This is in line with our personal experience. The problem is that USCIS does not keep a clear stats on RC vs. non-RC cases; therefore, this is an estimate.
However, we are almost certain RC EB-5 cases will continue to make up at least 80% + of all EB-5 cases filed with USCIS. Reason being, good RC EB-5 projects offer the best way to meet the job-creation requirements. (back)
What is a RC EB-5 project involving "troubled business" and associated benefits or disadvantages?
Under the relevant regulation, EB-5 project can involve a "troubled business". Troubled business means a business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve or twenty-four month period prior to the priority date on the alien entrepreneur's Form I-526, and the loss for such period is at least equal to twenty per cent of the troubled business's net worth prior to such loss.
For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.
The regulations confer certain benefit(s) to an EB-5 project involving "troubled business", as follows:
(ii) For troubled business to show that a new commercial enterprise which has been established through a capital investment in a troubled business meets the statutory employment creation requirement.
The petition must be accompanied by evidence that the number of existing employees is being or will be maintained at no less than the pre-investment level for a period of at least two years.
Photocopies of tax records, Forms I-9, or other relevant documents for the qualifying employees and a comprehensive business p lan shall be submitted in support of the petition.
The non-legal problem with an EB-5 project involving a "troubled business" is a negative connotation associated with the troubled business.
Many potential EB-5 investors may say rightly or wrongly "I don't want to invest in an EB-5 project if it's troubled."
Also, certain undetermined issues related to "troubled business" EB-5 project is whether there must be 10 or more full-time jobs at pre-investment point of time.
For example, if there were only 7 full-time jobs at the pre-investment point of time, can this qualify? What if 3 new full-time jobs are created in addition to maintaining 7 full-time jobs that pre-existed? As you can see, the questions remain. (back)
What rights and obligations do I receive when I invest and become a Limited Partner in a Limited Partnership?
You receive all the rights and obligations that you are entitled to as a Limited Partner in a Limited Partnership formed pursuant to the Uniform Limited Partnership Act (the "ULPA") of the particular state.
Under ULPA, certain standard provisions have been included to protect the interests of the Limited Partner. These rights are essentially to participate in policy formation via being able to vote on important issues facing the Limited Partnership, according to the terms of the Limited Partnership agreement.
Also, as a Limited Partner, your liability is limited to the amount of your investment. You, as a Limited Partner, should receive Unit of Certificate, which basically says that you have Limited Partner interest in a particular Limited Partnership formed pursuant to ULPA.
You can also ask questions to General Partner and review the progress reports and discuss and make suggestions to General Partner.
The fact is that without this kind of arrangement, there is no way multiple group of EB-5 investors can participate in large EB-5 projects.
Basically, without the presence and role of a General Partner and structures imposed by a Limited Partnership, none of Limited Partners will be able to agree on any important issues. In addition, this is how it's done in commercial settings.
Therefore, the Regional Centers are not in some way trying to "limit" your powers for some ulterior motives; but, the rights of Limited Partners in a Limited Partnership is generally "limited"; yet this arrangement is specifically allowed under the EB-5 law, because USCIS and Congress recognizes the reality that without such arrangement, large Regional Center EB-5 Program simply cannot exist or function.
This is akin to the U.S. business law allowing legal entities of corporations and limited partnerships. Otherwise, no one will conduct any business. (back)
Why is escrow account used for Regional Center EB-5 cases to hold investors' funds during I-526 pendency?
For two reasons; One, RC cannot have the investor's money wired into the Limited Partnership's bank account until I-526 is approved, because under the EB-5 law, there should not be any commingling of money that is not of lawful source.
Therefore, it is always prudent to wait until I-526 petition is approved before releasing the money in the escrow account to the Limited Partnership's account.
Second, this is to protect individual investors who do not want to release their moneys until at least their I-526 immigrant petitions are approved, because the chances is if their I-526 petitions are approved, they should in all likelihood obtain Conditional Permanent Resident (CPR) status.
However, as noted in another section, USCIS already released an official statement stating that it is in violation of EB-5 law to guarantee the return of the initial investment in case I-829 is denied for any reason, because this comes close to a guarantee.
Therefore, do not even ask the RC if they can guarantee the return of your money if you're I-829 is denied. Even if the RC wants to do that, they cannot. It's like asking them if they are willing to violate EB-5 law to help you.
Basically, any RC must comply with the governing rules and parameters set by USCIS for Regional Centers, so that their RC designation is not taken away by USCIS.
Their second goal is to try to minimize the risk that investors' initial investments are not lost, while enough new jobs are created so that all investors can acquire Lawful Permanent Resident (LPR) status.
Really, their last goal is to try to increase the return of profit to Investors. However, you tell me how much profit the RC projects can really generate for you when the RCs have other goals to achieve?
To be frank, an EB-5 investor should stay away from an EB-5 project that says they can generate very high profits while achieving other objectives.
If any RC can consistently generate very good profits while achieving the above-described objectives, the principals of that RC are either geniuses or incredibly lucky people. (back)
Does this money get refunded to the investor in the event I-526 is denied?
Yes, the escrow agreement contains a provision mandating that the money be released from the escrow account directly to the investor in the event of i-526 denial.
Therefore, the money does not even go to the Limited Partnership's account; the money is released directly to the investor from the escrow account. (back)
Do all Regional Centers require only $500,000 investment, exclusive of any issue expenses?
Note that the Regional Center concept has nothing to do with the amount of investment; it has everything to do with the way you are allowed to create jobs directly, indirectly or induced.
Therefore, a Regional Center can, and often do, require $1 Million USD investment. The TEA concept governs the amount of investment, not RC concept.
That's why an easy way to remember is to repeat "It's good to have TEA in RC". (back)
What is the obligation of investor to participate in Regional Centers' EB-5 projects?
The investor must be "active" in the management of the investment by engaging in the management of the new commercial enterprise, either through day-to-day managerial control or through policy formation.
However, the law does specifically allow that an investor will qualify as a "limited partner" as defined in the Revised Uniform Limited Partnership Act.
The Limited Partnership (the "LP") meets all the regulation requirements by enrolling the investor in the investment as a limited partner.
This role allows the investor to continue to engage in his or her own business without needing to participate in the day-to-day management operations. However, the limited partner is required to participate in the formation of policy activities for the Partnership.
The limited partnership business structure allows the investor to live where he or she pleases, and gives him or her the option to enter and exit the U.S. without any obligation to manage the daily affairs of the investment.
Most importantly, the limited partner, like the corporate shareholder, is only liable to the enterprise to the extent of the agreed-upon investment. The RCs uses this business structure to protect the investor. (back)
If I-526 petition that I submit through a featured RC's EB-5 project is denied, will I be refunded the investment amount?
Yes. If the petition was submitted in good faith, the full investment will be returned to the account from which the funds originated. (back)
How is Investor-limited partner interest protected for the featured RC's EB-5 project?
The USCIS requires that some financial risk be involved so there are no Regional Centers and/or immigration attorneys that can guarantee the return of the investment to any individual EB-5 investors, but the featured Regional Centers make best efforts to minimize the amount of risk by making sure that the investment loans are properly collateralized and that the borrowing companies are in strong financial standing. All limited partners will receive semi-annual reports with financial and partnership information from the General Partner. (back)
Do regional centers have their own U.S. immigration attorneys to prepare EB-5 petitions for Investors?
Most Regional Centers, for consistency purposes, may have their own designated, preferred, recommended, or allowable U.S. immigration attorneys for EB-5 investors.
From an efficiency point of view, the RCs want to work with experienced U.S. immigration attorneys who can represent the Investors well; but at the same time, from a marketing point of view, the RCs might have to work with any U.S. immigration attorneys to have a greater chance of attracting Investors to their EB-5 Projects.
It all depends on the philosophy and needs of a particular RC. Obviously, any RC would probably like to work with a proven U.S. immigration attorneys who know their system and requirements.
It should be noted that there is a healthy competition among Regional Centers, and at the same time, they are bound by common goal of furthering the interests of the Regional Centers and EB-5 law to better accommodate the needs and interests of Regional Centers. (back)
What are the general roles of the General Partner in the Limited Partnership entity which acts as a new commercial entity?
This differs for each designated regional center, but in general, the General Partner is the entity that is running the day-to-day activities of the Limited Partnership (new commercial enterprise).
They follow the changes or progress of the EB-5 project, monitors the job-creation developments, reports to Investors, answer your questions, and then also calls for voting on any significant issues that require voting of limited partners pursuant to the limited partnerships.
In some limited number of regional centers, the General Partner may also work with a governmental economic development agencies on these matters.
In most regional centers, the participation of the limited partner investors are pretty "limited", meaning you can reside anywhere in the U.S. and do not have to be near the EB-5 project. U.S. immigration attorney of EB-5 investors work and communicate with the General Partner to keep you abreast of the important developments. (back)
What form of legal entity is used by most regional center projects to establish the requisite new commercial enterprise?
For various reasons, most Regional Centers use the Limited Partnerships formed pursuant to the Uniform Limited Partnership Act of the applicable state law. But there is no reason not to use corporations, etc. (back)
On what types of EB-5 projects are investors' funds spent?
First, regional center designation letter controls the type of project, structure and the specific geographic region. Therefore, any EB-5 project must comply with the conditions of the RC designation letter.
Most RC projects involve building or expanding big buildings, such as Pennsylvania Convention Centers, UPENN hospital, building shipyard factories, hotels, real estate development projects, and helping film production studios make movies. (back)
Can a regional center contain a provision stating it will return the fund to investor in the event of I-829 denial?
Unfortunately no. USCIS recently ruled that this blanket provision stating the return of the money in the event of I-829 denial is not allowed.
The rationale for this is that if this was allowed, there would be almost no risk for EB-5 investors. We can tell you that if this was allowed, many regional centers would accommodate such provision, but it's not allowed, so that's that.
Also, practically speaking, it's hard to return the investor's money once the money has been invested into a EB-5 project towards the job-creation activities. (back)
Do all Regional Centers require that the investment fund be deposited into an escrow, and when is the release date?
Probably yes, because this is designed to protection to EB-5 investors and at the same time hold the funds in a designated escrow account until it has been demonstrated to be of lawful source through I-526 petition approval.
The release date may vary according to regional centers. Most require the release after the approval of I-526 petition, to be safe, because this date is a balance between the need to wire the money as soon as possible to help the EB-5 project, and also to make sure that EB-5 investor will be protected. (back)
What is the standard amount to be paid by the EB-5 investor in order to enter into Regional Center Program?
Regional Center Programs require the minimum $500,000 USD investment amount. In addition, they generally have additional costs and fees of $25,000 to $55,000 USD.
The difference in the additional costs and fees might be due to the difference including immigration attorney fees or having the investor pay the immigration attorney fees on his/her own. (back)
Is there a List of EB-5 qualified business proposals currently at the DoH EB-5 Regional Center
This specific information is reserved for only qualified EB-5 applicants. However a copy of the USCIS approval letter can be viewed (pending approval) on this site, which will list all industry investment areas approved as legal USCIS ventures for DoH Regional Center Program. For other questions not answered here please see U.S. Citizenship and Immigration Services website. (back)
