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Transcript of ©2012. All rights reserved. Premier Sponsor: GIVE ME THE EB-5 FACTS, A NO-NONSENSE NEW-YORK PANEL...
©2012. All rights reserved.
Premier Sponsor:
GIVE ME THE EB-5 FACTS, A NO-NONSENSE NEW-YORK PANEL
Kate Kalmykov
Dawn Lurie
Greenberg Traurig, LLP
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
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
Designation of a Geographic Activity
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 EB-5 $$$?
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