Transcript Overview of the EB- Program

GIVE ME THE EB-5 FACTS, A NO-NONSENSE NEW-YORK
PANEL
Kate Kalmykov
Dawn Lurie
Greenberg Traurig, LLP
Premier Sponsor:
©2012. All rights reserved.
Overview of the EB- Program
 Congress created the EB-5 category in 1990
 The Immigrant Investor Pilot Program was created
by Section 610 of Public Law 102-395 October 6,
1992)
□ Effective1993
□ RCs first applied in August of 1993
□ Only 300 visas were initially available for first 5 years
□ Focused on exports
The EB-5 Program Had a Bleak
Future…
 Program almost faded away
 Individual petitions were more interesting at that
time
 Lax oversight by legacy INS
 No SOF review
 Schemes began to emerge including part loans,
promissory notes using US funds
 INS became concerned with guaranteed interest
payments and redemptions
BOOM- Government Scrutiny
 The memos started coming
 No APA review
 No grandfathering
 No stability
 All EB-5 cases on hold Dec 1997
 The Tiger Team created-really!
It gets worse…
 Team reviewed what was no longer compliant
 To cover their tracks the program was then
slammed with 4 precedent AAO decisions
 We still live with them today and now they even
apply to the Regional Center context
It gets better…
 Chang vs. the United States (2003)
□ No retro on I-829s where I-526 was approved before
precedent decisions
 2000 Amendment
□ No more exports required
More Amendments
 2002
□ RCs now must provide a business plan
□ Definition of “new” business modified
□ Added LP as acceptable entity structure
□ Other specifics on pending petitions
 2003
□ Program extended until 2008
□ I-526 RC priority for adjudications
And where we are today
 10,000 green cards available to foreign nationals
each FY
 Two options under the program:
□ Individual Investment
□ Regional Center (RC) Investment
 90-95% of EB-5 petitions filed through RCs
Historical Usage
Fiscal Year Total EB-5 Visas Issued
 FY09 4,218
 FY08 1,360
 FY07 806
 FY06 744
Latest Statistics for
Approved Regional Centers
 Fiscal Year 2007 11
 Fiscal Year 2008 25
 Fiscal Year 2009 72
 Fiscal Year 2010 114
 Fiscal Year 2011 174
 Fiscal Year 2012 194
Source: California Service Center
Report Date: April 23rd, 2012
Latest Statistics I-924 petitions
(initial RCs, amendments,
pre-approval/ exemplars)
 Fiscal Year 2010
Receipts: 152 Approvals: 78 Denials: 41
 Fiscal Year 2011
Receipts: 278 Approvals: 123 Denials 58
 Fiscal Year 2012 1Q
Receipts: 60 Approvals: 14 Denials 22
 Fiscal Year 2012 2Q
Receipts: 54 Approvals: 8 Denials 9
Source: California Service Center
Report Date: April 23rd, 2012
The Latest Stats:
I-526 petitions
The Latest Stats:
I-829 petitions
Sources of Law/ USCIS Policy
 Statute
 Regulations
 AAO Precedent Decisions
 Memorandums
 New Hybrid Process of Memos for Public
Comment…waiting for Memo 3
 Stakeholder Engagements
Choosing an EB-5 Team
 Immigration Lawyer
 Economist
 EB-5 Business Plan Writer
 Securities/Corporate Attorney
 Bank/Escrow Agent
 Marketing Firm/Commissioned Agent
More Choices to Make
 Apply for Regional Center Designation
 Have your project adopted
 Buy an existing regional center
 Pooled individual EB-5s
Dictionary.com
 Business Plan
 Geographical area
 TEA
 Operational Plan
 Offering Documents
 Economic Report
□ Indirect vs. Direct Job creation
 Marketing Plan
 Escrow Agreement
 Project preapproval, shovel ready, exemplar, hypo….
What is a Regional Center?
USCIS has stated:
“A Regional Center is not merely a defined geographic area
but rather is a business entity that coordinates foreign
investment within that area in compliance with the EB-5
statutory, regulatory and precedent decision framework”
Purpose of a Regional Center
Promote economic growth through:
 increased export sales (if any)
 improved regional productivity
 job creation, and
 increased domestic capital investment
What do we need to show USCIS?
 operate?
 promoted
 funded?
 positive impact on national or regional economy
 verifiable detail of how indirect jobs will be created
 Sample offering documents
 Marketing plans
 Business Plan
 Economic Report
 Bios of operators
 Information of intended raise
What’s a TEA?
 TEA is defined as a rural area
□ which is either in a
 high unemployment area, (calculated as an area with an
unemployment rate that is at least 150% of the national
average),
 or a Rural Area (outside a town of 20,000) and outside a
metropolitan statistical area)
Capital Investment Requirements
 Not necessary at I-924 stage but rather when
Investor files individual I-526 application
 Targeted Employment Area (TEA)= $500,000
□ In addition to the Regional Center’s Administrative fee of
$39,000 to $70,000 or more
 Outside TEA =$1 million
Designation of a Geographic Activity
 Does it have to be Contiguous?
 More than one counties or a whole state
 Overlapping-more than one Regional Center in
the same area
 Yes you can establish more than one Regional
Center
 Jurisdiction can be expanded by filing an
amendment
Job Creation is Key
Direct
 Actual identifiable jobs
 located within the new commercial enterprise
Indirect
 Those shown to be created collaterally
 Or as a result of the capital invested in the NCE
What Else and Why?
 Number of indirect jobs created through an EB-5
investor’s capital investment is based upon a
business plan and a detailed economic analysis
 Evaluated and approved by USCIS during the
approval and designation of a regional center
Timing of Regional Center Process
 File I-924, Regional Center Designation
Application, with USCIS
□ Approximate processing time 4 to 10 months (expedite
option was expected in Spring 2012 but no more…)
 Option to file exemplar I-526 for a specific
project
 Regional Center may begin marketing projects
once USCIS approves the I-924
 Investors file EB-5 petitions (Form I-526)
□ Approximate processing time 5 to 8 months
Timing- When Will I Be Able to Use the EB5 $$$?
 Investor must invest 100% (usually $500,000) before I-526
filed
 Money can go
□ To project immediately
□ To escrow
 Released when investor’s I-526 is approved
 Considerations for voluntary or mandatory withdrawal
 So How Long Did That Take?
□ RC designation – 6-12 Months I-526 approval – 7-8 Months
□ Total – 13 – 20 months
□ excluding time to prepare and submit RC designation or time it
takes to find investors
□ Processing times are fluid
Regional Center Costs
 Professional fees
 Government filing fees
 Regional center recoupment of costs through
charges to investors
 Cost of Capital
 In-House Counsel/ Team
 Overseas Team
 Marketing
 Insurance
Enhancements
 Possible Premium processing
□ shovel ready projects
 Specialized Intake Teams
□ Economist
□ Business lawyers
□ EIR
 Expert Decision Board
□ Open communication
□ Economist, adjudicators and supported by USCIS counsel
Dealing with USCIS
 Unpredictable
 Hard to Navigate
 Rules of the game are not always written in the
book
 History repeats itself
 The more things change the more they stay the
same
 Take this process seriously and be successful