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EB-5 Regional Center Establishment
The Immigrant Investor Pilot Program, established by Congress in 1992, gave rise to the regional center name. Regional centers have been the EB-5 program’s backbone.
The USCIS designates economic units for the aim of supporting regional economic growth through EB-5 investment. Regional centers are often limited partnerships, limited liability companies, or C corporations, but other organizational forms may apply. Organizations apply for designation under the Immigrant Investor Program using Form I-924, Application for Regional Center.
The Benefits and Drawbacks of Establishing an EB-5 Regional Center
The main benefit of building a regional center is that it allows developers to accept substantial investments from EB-5 investors who do not expect huge returns. Investors’ primary aim is to get permanent residency, thus they are not concerned about huge profits. Furthermore, their investments must be at risk during the investing time.
The benefits of regional center investments for EB-5 investors make raising funds much easier. These investments do not necessitate participation in the project’s day-to-day management; they permit the inclusion of direct, indirect, and derived jobs in meeting the job-creation requirement; and they frequently involve projects in targeted employment areas (TEAs) that qualify for the lower investment threshold. This makes obtaining EB-5 capital easier.
The major drawbacks of creating a regional center are financial and time constraints. The procedure is often rather costly. In addition to the filing price of $17,795 per application, applicants must consider the expense of expert help and supporting paperwork. Immigration counsel, a business attorney, a bank escrow agent, an economist, and a business plan writer may be required by developers.
Once the paperwork is filed, the processing time might range from 12 to 24 months. The processing time is determined on the submission, the project’s complexity, and the backlog of outstanding applications.
For many developers, the benefits of constructing a regional center outweigh the drawbacks, especially in the long run. While waiting for the conclusion of a regional center application, an investor who does not want to encounter delays in establishing a feasible business can rent a regional center.
An Overview of the Application Process for EB-5 Regional Centers
Before beginning the application process, the developer must determine the scope of the regional center and assemble an appropriate team of specialists to assist with the application. The regional center’s scope covers not just its geographic reach but also the sorts of projects in which it will invest.
The developer must then assemble an EB-5 regional center application team. Although some people engage individual specialists to create various components of the application pack, collaborating with a consulting business such as Immiggreat assures uniformity across papers and facilitates application coordination.
Form I-924 is used to demonstrate that the entity will satisfy the requirements of the EB-5 program. The supporting material required varies according to the differences in the specific situations and demands of applicants.
The following documentation must be supplied together with Form I-924:
There must be at least one regional center. Business Plan Compliant with EB-5
A partnership or operating arrangement
A business strategy for a hypothetical, actual, or exemplary project
An economic study on the project’s job generation potential
A memorandum of private placement (PPM)
A questionnaire for investors and a subscription agreement
Once the supporting paperwork has been assembled into hardcopy binders and the application form has been completed, the applicant must sign the hardcopy papers in ink and send the application pack and filing fee to the USCIS California Service Center.
Plans for an EB-5 Regional Center and a Project Business Plan
The business strategies for both the regional center and the related project must fulfill specific conditions in order for the USCIS to accept the regional center application. These business strategies must specifically adhere to the principles outlined in Matter of Ho. The USCIS expects detailed business plans that provide enough independent verification of their reliability.
In the case of a real estate project, the business plan should include evidence of viability in the form of a reputable third-party feasibility assessment. This study should identify comparable properties and indicate whether the project is likely to thrive within its geographic area and market type. Furthermore, the report should contain an explanation of the assumptions used to calculate pro forma revenues and costs.
Hypothetical, Actual, and Exemplar Project Applications for EB-5 Regional Centers Form I-924 must be supported by project paperwork, which is graded from hypothetical to exemplar in terms of preparedness.
The most basic project kind, known as hypothetical, is simply that—a project that may or may not exist, but may exist. When a regional center applicant does not have any shovel-ready projects but wants regional center approval for future projects, this type of project paperwork is important. In such circumstances, the hypothetical project acts as a predictor of the types of initiatives that the regional center would undertake. The accompanying papers (e.g., offering materials, economic analysis, business strategy, etc.) are based on fundamental assumptions in the absence of particular project information.
A shovel-ready project should have a business plan and economic report that represent the project’s details—the real company paperwork, offering documents, third-party feasibility studies, capital stack data, any permits or licenses, and any other applicable documents. The creation of a real project will begin after the USCIS authorizes Form I-924 and the regional center may accept EB-5 financing from investors.
One of the most significant advantages of a real project is that subsequent filings based on the same substantial facts are given deference, which means that a positive finding for an actual project proposal is more likely to result in a favorable determination for investors’ I-526 petitions. Another advantage of filing a genuine project rather than an exemplar project is that minor adjustments to the business plan, economic report, and offering documents can still be changed before investors file their I-526 petitions.
An example project proposal is comparable to an actual project proposal, with the exception that the exemplar project includes a completed Form I-526 for an anonymous investor. The USCIS considers Exemplar projects to be preapproved, while the USCIS has the right to re-review all future submissions at its discretion. In practice, preapproval of the project, together with a sample I-526, increases the likelihood that subsequent I-526 files for the same project will be granted.
The only item not previously evaluated by the USCIS for investors in exemplar projects is their source of money verification. While exemplar projects are the least adaptable once authorized, potential investors find this preapproval especially intriguing.