An EB-5 Regional Center is typically a private company that has been granted permission by the U.S. Citizenship and Immigration Services (USCIS) to promote “economic growth, including improved regional productivity, job creation, and increased domestic capital investment.? The USCIS administers the Regional Center Program, which was first established as a pilot program by the U.S. Congress in 1992. The principal, unique and key difference between being a regional center is that a foreign person investing in a new commercial enterprise affiliated with and located in a regional center is job creation. As a regional center (RC), an investor is not required to demonstrate that the new commercial enterprise itself directly employs 10 U.S. workers. Rather, the investor and those responsible for the project can prove job creation as a result of indirect job creation and improved regional productivity.
How is a Regional Center Formed?
Forming an RC is a complex undertaking. Many call it the “rocket science” of immigration law. To qualify, the organization that is seeking designation as an RC must be a public or private group. Regional centers themselves are typically limited liability companies or corporations formed for the purpose utilizing the EB-5 Immigrant Investor Program. Today there are over 600 regional centers (with more approved each month) across the United States. A select few are owned, administered or controlled by public government groups, such as the City of Miami, State of Vermont, or the City of Philadelphia. Some of the core requirements to form a regional center and receive USCIS approval are:
- A geographical area within the United States that is clearly identified and contiguous. Regional centers can encompass an area as small as a neighborhood block, an entire city or county, or even multiple contiguous states.
- A detailed description of how EB-5 capital investment within the geographic area of the regional center will create qualifying EB-5 jobs, either directly or indirectly. This analysis is supported with a comprehensive business plan and an economic impact study, supported by economically and statistically valid forecasting tools.
- A detailed prediction of the proposed regional center?s predicted impact regionally or nationally on household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and outside of the geographic area of the proposed Regional Center. Again, this is provided via an economic impact study, as well as a business plan.
- A description of the plans to administer, oversee, and manage the proposed Regional Center. This would include a description of how the RC can be promoted to foreign investors; how it can identify, assess and evaluate proposed immigrant investor projects and enterprises; how it will structure its investment capital, e.g., whether the investment capital to be sought will consist solely of alien investor capital or a combination of alien investor capital and domestic capital, and how the distribution of the investment capital will be structured, e.g. loans to developers, venture capital, etc.; and a description of how the RC will oversee all investment activities affiliated with, through or under the sponsorship of the proposed Regional Center.
In essence, there are two general procedures for the consideration of Regional Center Proposals: (1) Initial Regional Center Proposals and (2) Regional Center Amendment requests. Initial regional center proposals are filed with USCIS on application Form I-924 and are generally composed of two types of proposals:
1. Hypothetical Proposals. A hypothetical project is a project used to demonstrate how an actual investment project will be capitalized and operated in a manner that will create at least 10 direct or indirect jobs per foreign investor for the desired industries. Hypothetical projects must still show, in verifiable detail, how jobs will be created and how the regional center through the project will positively impact the region utilizing reasonable economic methodologies. Approved hypothetical projects will not be named in the RC’s approval notice, and those projects will not be given “deference” by USCIS upon the filing of actual project investor petitions.
2. Actual Projects. An actual project is a project that will meet established EB-5 eligibility requirements. Generally, this would be a project that has advanced to the stage where work may begin immediately upon approval of the project. An Actual Project can also have an exemplar Form I-526 Petition reviewed USCIS, which can be pre-approved if supported by all supporting documentation to determine if it is in compliance with established EB·5 eligibility requirements. If approved, an actual project, and, if applicable, an exemplar Form I-526 Petition, will be included in the RC’s approval notice by name. Having a pre-approved I-526 petition may provide better investor confidence in a project, as well as providing potentially faster processing times for actual foreign investors.
Who Benefits from a Regional Center?
There are two mutual core benefits for a regional center: yatırımcılar who can seek lawful permanent residence based on their at risk investment in the United States; and U.S. economic interests, which benefits through the creation of jobs for lawful U.S. workers (e.g. U.S. Citizens, permanent residents, and other lawful workers) and the infusion of economic activity which results in improved industrial markets and regional growth. As a result, U.S. companies can receive capital investments in their private and/or private businesses at potentially better interest rates than available in the U.S. commercial and banking markets. In today’s EB-5 market, this typically means foreign investors can receive a green card in exchange for potentially low interest loans to an EB-5 project, or equity interests in the EB-5 projects. Some EB-5 projects utilize a combination of the equity models and loan models for the projects, with varying interest rates, offered rates of return, or membership unit interests.
How should a Regional Center structure its organization, and Potential EB-5 Projects?
Regional centers have various compliance objectives that need to be adhered to. Immigration laws and regulations are not the only concern for a potential owner of a RC. Other legal issues involve corporate law, business law, and importantly, federal and state securities laws. In general, an EB-5 Regional Center must be structured so that it can monitor its EB-5 projects for legal and marketing concerns. With a competent EB-5 Team, a regional center can learn how to comply with with the various requirements, and the ultimate achievements of raising capital, creating jobs, improving the U.S. economy, and successful lawful permanent residents.