Obtaining Green Cards Through The EB-5 Investor Programs: What to consider when selecting a regional center?

An EB-5 visa is an option for high net worth immigrant investors looking to obtain a U.S. green card, or permanent resident status, for themselves and their children

There are two ways to obtain an EB-5 visa. In the first, a foreign national must invest one million dollars directly into a new or existing business and create or preserve at least ten jobs for U.S. workers, not including the investor and his family members. In this instance the investor actively manages the investment. The investment can be $500,000 if made in a "Targeted Employment Area," a rural area or an area with high unemployment.

The second option for EB-5 visa investors is the regional center program. A regional center is an investment vehicle managed by a third party and approved by the USCIS (US Citizen and Immigration Services).  This program allows developers to pool foreign funds and invest the capital into qualified projects. Generally these approved projects are within the "Targeted Employment Areas" and allow for the $500,000 investment amount. Additionally, the regional center program will count indirect job creation so long as the jobs created are within the region.

In the fiscal year 2012, more than 90% of foreign investors seeking EB-5 visas did so through the regional center program. This is attributed to the lower investment amount and relaxed job creation requirements of the program

Choosing the proper regional center is critical to having an EB-5 visa approved and to recouping investment capital, hopefully with a modest rate of return. Once approved, the petitioner and his family are granted conditional permanent residence status for two years. An I-829 petition is then required to remove the "conditions" and allow the investor and his family to reside in the U.S. indefinitely

Currently, there are approximately 200 regional centers approved by the USCIS and operating in 40 plus states. But selecting a qualified regional center project for a foreign investor is not a simple task. Even choosing an EB-5 consultant can be complicated since some are affiliated with specific regional centers lending geographic expertise but at the same time, they are often not wholly independent advisors.

In evaluating a regional center project, a potential investor should consider the following:

Track Record of the Regional Center: Look at the regional centers' history. Does it have a substantial record of successful I-526 (Alien Entrepreneur form required with documents supporting EB-5 Visa petition) and I-829 approvals? The ratio of those filed to those approved is key; as is a significant number of approvals.

Pre-approval of the Project: Did the USCIS pre-approve the project? While not binding on the USCIS, it is an added level of security for an investor. Avoid projects with I-526 denials.
Experience of the Management Team: How much experience does the managing partner have with immigrant investor programs? How much experience do they have in developing projects and bringing them to fruition? With developing projects that create jobs? Familiarity with the EB-5 job creation requirements and a track record of successful compliance with the requirements is important.

How the Job Creation Requirement will be met: Consider the developer's projected estimates, how they were derived and their reasonableness. If the regional center is affiliated with a government agency, they might have additional experience in creating jobs. Look for a project with detailed job creation monitoring and reporting.

How the money will be handled: Will there be an escrow account to hold the money until approval is granted. Will the money be returned if there is a denial? Be aware that while the investment amount is generally $500,000, regional centers often have costs and fees that can range from $35,000 to $70,000. Evaluate these costs and fees and ask whether the investor's legal fees will be included in this amount.

Return on investment: What has the historical rate of return been for investors in the regional center? When will the investor be able to redeem their investment? What type of investment will the developer make with the funds? Seek a professional financial advisor to assess the related risks and exit strategy.

The capital structure: What percentage of the capital is EB-5 money? The investor may feel more secure if the developer is significantly invested as well. Also consider if there sufficient capital to ensure the completion of the project.  In other words, are there enough investors and if not, how well does the regional center market their investment opportunities to increase the likelihood of success?

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