Transcript EB-5 Visas: Investments and New Jobs

EB-5 Visas: Investments and New Jobs
Presented by:
Kate Kalmykov
Kate Kalmykov  [email protected]  www.eb5insights.com
©2012. All rights reserved.
Overview of the EB-5 Program
 Congress created the EB-5 category in 1990
 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
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Overview of the EB-5 Program
How much Capital can be raised?
 Depends on job creation
Economist report projects job creation
Divide by 10 = maximum number of
investors
Multiply by $1 million or $500,000 =
maximum capital raise
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Regional Center Basics- What are Our
Options
 Form New Regional Center
 Have Project “Adopted” By an Existing
Center
 Buy a Dormant Regional Center
 Pool Individual EB-5 Investors for
projects that have sufficient direct
employment
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Regional Center Basics
 What is a Regional Center?
□ Entity, organization or agency USCIS
designates
□ Focus on a specific geographic area in the
U.S.
□ Seek to promote economic growth through
increased export sales, improved regional
productivity, creation of new jobs, and
increased domestic capital investment
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Overview of the EB-5 Program
Regional Center EB-5
 Investment may create 10 full time jobs either
directly or indirectly
 Six-fold increase of USCIS designated RCs in 3
years (over 200 approved)
 Main advantages
 Indirect employment counts
 Investor is geographically mobile
 Participation Limited- Investor does not have
to be directly involved in the day to day of
business operations
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Overview of the EB-5 Program
 Basic Requirements for the Job Creating
Enterprise
□ New Commercial Enterprise
□ Benefit the U.S. economy
□ Create at least 10 full time jobs for U.S.
workers
□ Invest $1 million or $500,00 (if in Targeted
Employment Area (TEA))
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Regional Center Basics
Professionals Involved in Regional Center Designation
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Immigration Lawyer
Economist
EB-5 Business Plan Writer
Securities/Corporate Attorney
Bank/Escrow Agent
Marketing Firm/Commissioned Agent
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Regional Center Basics
Regional Center Application to USCIS
Business Plan
Geographical area (TEA?)
Operational Plan
Offering Memorandum
Subscription Agreement
Economic Report
 Job creation
 Marketing Plan
 Bank (Escrow Agreement?)
 Project preapproval (optional)
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Regional Center Basics
Procedures/Timeline for Regional Center
Designation/Exemplar I-526
 File I-924, Regional Center Designation Application,
with USCIS
□ Approximate processing time 9 months but may
be longer (premium processing tabled)
 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 7 to 8 months
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Regional Center Basics
When is Money Available to Developer?
 Investor must invest 100% (usually $500,000) before I-526 filed
 Money can go
 To project immediately
 To escrow
 100% of the funds or a portion is released when investor’s I526 is approved
 Release can also be triggered upon I-526 filing
 So How Long Did That Take?
□ RC designation –9 Months I-526 approval – 7-8 Months
□ Total – 15 – 17 months (not including time to prepare and
submit RC designation or time it takes to find investors)
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Regional Center Basics
What entities are involved?
 Regional Center – administers the EB-5
projects
 New Commercial Enterprise – investors
subscribe to this entity
 Job Creating Entity – recipient of the
EB-5 funds that creates the actual jobs
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Regional Center Basics: Structure
Investors
Securities Act of 1933
Regulation S
Regulation D
Anti-Fraud Provisions
Private Placement Memorandum
Broker-Dealers/Finders
Securities Exchange Act of 1934
Pooled Investment Vehicle
Investment Advisers Act of 1940
General Partner
Investment Company Act of
1940
12(g) – 1934 Act
Regional Center
Administrative
Agreement
Project Company
Investment
Hot Topics
Regional Center EB-5s
 Tenant Occupancy
 Material changes in business plans
 Capital investment after job
creation/“cause and effect” issues
□ Bridge Financing
 Timelines/delays
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Advantages
 Developers can count indirect and induced
employment opportunities, and not just direct
jobs, in meeting the ten jobs per investor
requirement.
 A particular project within the regional center may
be pre-approved by USCIS.
 Regional center certification provides an aura of
legitimacy or endorsement that may help in
marketing to foreign investors.
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Advantages
 Regional center designation is a onetime designation allowing future
projects to be marketed without
incurring delays.
 In addition to funding their own
projects, regional centers can profit
by funding projects developed by
others.
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Disadvantages
 Regional center certification takes a long time.
 Regional center certification may entail a significant
expense, including hiring an economist, hiring a
business plan writer, hiring immigration and
securities attorneys and other expenses.
 Regional center certification is not the same as
approval of any particular regional center project.
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Disadvantages
(cont’d)
 Regional center certification is no longer a small,
privileged group. Over 215 regional centers have now
been certified.
 Many regional centers have not been able to attract
any investors. Newer regional centers find it difficult
to compete in their marketing efforts with longexisting regional centers with a track record of many
immigration approvals, some with both I-526 and I829 approvals.
 Regional centers have ongoing administrative and
filing requirements with USCIS in order to avoid decertification.
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