Forming and Operating an EB-5 Regional Center:
A Guide for Developers and Business Innovators
Editors: Angelo A. Paparelli and L. Batya Schwartz Ehrens
Contributing Editor: Maurice Berez
Pre-publication orders accepted now
Multiple players - each with different expectations and conflicting interests in the EB-5 RC process
- Why the EB-5 Regional Center (RC) program offers financing and business opportunities for developers and businesses innovators ($500,000 per investor for investments in targeted employment areas [TEAs] or $1,000,000 per investor everywhere else).
- EB-5 RCs as a viable and legitimate funding source for commercial and real estate development projects when banks are still reluctant to lend on favorable terms
- Economic opportunities for developers (short and long term projections)
- Green cards for investors, spouse, children under 21
- Job creation requirement: EB-5 syndicated investments -- 10 directly created jobs per investor; RC program -- 10 directly and/or indirectly created jobs per investor
- Characteristics of a "reasonable" methodology for estimating job creation.
History of Program, Narrowed Scope of the RC Designation over Time, and Challenges Created Along the Way
- Members of Congress and the Executive Branch
- Government agencies involved in the EB-5 RC process: U.S. Department of Homeland Security (U.S. Citizenship and Immigration Services [USCIS]), Department of State (U.S. consular posts and embassies), Commerce Department's Bureau of Economic Analysis (BEA), U.S. Treasury's Office of Foreign Asset Control (OFAC), the Securities and Exchange Commission (SEC), and State and City economic development agencies
- Immigration agency senior officials, adjudicators, counsel, government economists, and business advisors
- Project developers and other parties involved: property owners; building contractors; experts in land use, planning, zoning and government compliance; project management firms; operating companies; leasing companies; HR management firms; investors; business brokers; investor marketing firms; escrow agents; fund administrators; private economists; business plan writers; lawyers with expertise in business, tax, securities and immigration law, and professional associations
Understanding the Basics of the EB-5 Program for RCs
- Government policy/administration - a history of troubled evolution and uncertainty until EB-5 case law clarified some of the rules.
- The early forms of the RC program and subsequent iterations show that what is happening today is not what happened in the past.
- Early approvals of RC designations prior to 2003 created broad geographic designations and broad and unspecified business activities.
- Post 2003 RC approvals are limited in geographic scope and more finely delineated in commercial industry scope.
- Immigration agency programs, policies and interpretations have evolved and changed, but with little transparency. Continuing lack of consistency, predictability, structure, strategy and clarity concerning adjudication/regulatory guidelines leads to delays in approving RC designations and amendments, and confusion and frustration amongst those private, State and City parties desiring to engage in the EB-5 Immigrant Investor Pilot Program opportunities.
- More recently, specialists from other disciplines (economists, business lawyers, "Entrepreneurs in Residence") advise and guide USCIS, sometimes in conflicting directions.
- Defining targeted employment areas (TEAs) by delegation to state or subordinate authorities
- Statistics on approvals and denials
Applying for RC Designation and Amendment
- Basic concepts and requirements - job creation, job counting and forecasting methodologies, investment amount, "at risk" investment, nexus between investment and created jobs, new jobs rather than churned jobs, tenant occupancy, lawful source of investor funds, reasonable methodologies, credible business plans, steps in the green card process, permissible investment liquidation events.
- Timelines for submission and adjudication of immigration Forms I-924, I-924A, I-526 and I-829
- Costs - Legal, filing, business plan, economists, tax advisors, management, accounting, short term costs, ongoing/long term costs, funding/budgeting for promotional activities, etc.
- Role of the business plan and plan writer - Evolving demands of what a business plan should contain - Matter of Ho - changing/evolving standard for what makes a business plan "credible."
- Determining geographic area, targeted employment areas, investment amount
- Economic forecasting and reasonable methodologies for at least 10 new full time jobs created directly or indirectly
- Type of industry and business entity to be the focus of the new commercial enterprise and the job creating enterprise
- Oversight, monitoring, and reporting of capital investment activity
- Investors - How to find them? How to vet them? How to relate U.S. business culture to them? How to comply with securities laws? How to make sure that investment funds are lawfully procured?
- Investors must place money "at risk" - parameters acceptable to USCIS. Immediate investment vs. holding investment funds in irrevocable escrow.
- Complying with EB-5 precedent decision (Soffici, Izummi, Hsiung, Ho)
- After RC Status approved - filing the supplement for each fiscal year
- Immigration requirements and steps for investors
Best Practices and tips to avoid common pitfalls and USCIS requests for additional evidence
- The process of applying for RC Designation - outlining the I-924 and instructions in a checklist
- Material changes requiring request for amended RC designation
Problems, Concerns and Best Practices
- Provisions that have been challenged (put options, lack of nexus between investment and job creation, certain loan structures)
- Timing of cash out
- Dealing with visa quota backlogs delays in filing the petition for removal of conditions on lawful permanent residence
- What constitutes "acceptable" timing and role of interim/bridge financing
- Investments that fail
- Amending RC designations
- "Leasing" RC designations
- Burdensome RFEs
- Far ranging denials/unfair and costly denials
- Material changes to the business entity and business plan
- Unforeseen and un-predictable sudden changes in USCIS interpretations and eligibility criteria
- Public policy concerns over economic development and job creation
- Role of government - Promoter of investment success and job creation? Or, "policeman" enforcer of a constrictive view of regulatory compliance?
- Dual/Multiple Party Representation -- Best practices and tips to avoid troubles.
- Legislative materials
- Government forms
- Government regulations
- Government policy memoranda
- Sample business plan
- Case law - Soffici, Izummi, Hsiung, Ho
Angelo Paparelli is a partner of Seyfarth Shaw LLP. Practicing bi-coastally from offices in Los Angeles and New York City, he is well known for providing creative solutions to complex and straightforward immigration law problems, especially involving EB-5 Regional Centers, investor visas, mergers and acquisitions, and employer compliance and defense in immigration matters. His practice areas include EB-5 and E-2 investor visas; legislative advocacy; U.S. and foreign work visas and permanent residence for executives, managers, scientists, scholars, entrepreneurs, professionals, students and visitors; immigration messaging and speech-writing; corporate policy formulation; and immigration litigation before administrative agencies and the federal courts. He is also the Founder and immediate past President of the Alliance of Business Immigration Lawyers, a 40+ law firm global consortium of leading immigration practitioners. He is an alumnus of the University of Michigan where he earned his B.A., and of Wayne State University Law School where he earned his J.D. Paparelli is admitted to the state bars of California, Michigan and New York. He co-edited The Immigration Compliance Book, a comprehensive reference book on worksite enforcement and E-Verify. He also co-authors the New York Law Journal's 'Immigration' column, writes an immigration public policy blog on America's dysfunctional immigration laws and procedures (www.nationofimmigrators.com), and is frequently quoted and interviewed on immigration law in leading national media outlets.
L. Batya Schwartz Ehrens is an immigration attorney specializing in employment-based immigration law. She advises investors and entrepreneurs, as well as companies of all sizes, on visa strategies and immigration compliance in the United States. She also represents professionals in all fields to secure nonimmigrant visas and permanent residence for executives, scientists, physicians, artists, and others. As a passionate advocate for economic growth through the contributions and ingenuity of immigrants, Ms. Schwartz Ehrens has written articles and spoken extensively on a range of specialized topics including employment-based immigration options, E-Verify, I-9 Compliance, naturalization, and grassroots advocacy. She also co-edited The Immigration Compliance Book, a comprehensive reference book on worksite enforcement and E-Verify. Ms. Schwartz Ehrens is an adjunct professor of Business Immigration Law at the City University of New York (CUNY) School of Professional Studies' Advanced Certificate in Immigration Law program. She is a member of the American Immigration Lawyers Association (AILA) and is active on the Corporate Practice, Department of Labor, and Advocacy committees of AILA's New York Chapter. She is also the New York Ambassador of the American Immigration Council and has served on the Board of Directors of the Hebrew Immigrant Aid Society. Ms. Schwartz Ehrens received a Bachelor's degree in International Relations from Emory University and both a Juris Doctorate and M.B.A. from The American University. She is proficient in Spanish, Hebrew and Japanese. Ms. Schwartz Ehrens may be reached at email@example.com.
Maurice Berez is a retired federal official who formerly headed the USCIS Investor and Regional Center Unit, Business and Trade Branch, Office of Program and Regulations Development.
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