Immigrant Investor (EB-5) Program
An Additional Source of Project Funding
• EB-5 Program Overview
• Why Investors and Developers are Interested in EB-5 • Access to EB-5 Financing
• Conclusion Q/A
Investor Program, also known as “EB-5”, to encourage job creation and
foreign direct investment in the United States.
U.S. Customs and Immigration Service (USCIS) sets aside 10,000 EB-5 visas each year for immigrant investors who invest through EB-5. An EB-5 Regional Center is a private enterprise regulated to do business by the USCIS in a defined geographicFor each EB-5 immigrant investor, at least 10 full-time jobs must be created through a $500,000 USD investment in a project located in a rural area or an area of high unemployment, known as a “Targeted Employment Area” (TEA).
– Areas outside of a qualified TEA require a minimum investment of $1 million USD.
Immigrant investors are primarily motivated by
access to “Green Card” not solely by financial return. – Consequently, EB-5 investments have become
an attractive alternative source for competitive cost capital.
During the last fiscal year ending Sept. 30, more than $1.8 billion was raised through EB-5
EB-5 Overview
Two Types of EB-5 Investments Direct EB-5 Investment
Investor buys business or starts new business Investor must play active role in business Must create 10 FT direct W-2 employees Few applicationsInvestment through EB-5 Regional Center
Can be in the form of equity or loan Direct, indirect or induced jobs may be considered Regional Center tracks jobs and submits reports to USCIS 90~95% of all applicationsBasic EB-5 Deal
Structure
Borrower
(Business entity receiving capital and creating Jobs)
NEWCO
EB-5 Investors
Common Member Investment Capital Interest Management Investment of capital Interest on Financing and Principal Repayment Security Interest/MortgageRegional Center
Managing MemberPrincipal plus Interest
EB-5 Overview
United States EB-5 Program is NOT Unique
Countries with Similar Immigration Investment Programs – Canada – Australia – New Zealand – United Kingdom – Austria – Singapore – Bulgaria – CyprusEB-5 Overview
EB-5 Overview
EB-5 Visa Allocations
10,000 immigrant visas per year maximum This includes family so 4,000 investors 3,000 visas reserved for targeted employment areas 3,000 visas reserved for regional center affiliation More than 90% are regional center affiliated and in TEA Most Recent usage: 7,641 VisasEB-5 Overview
Top Countries for Issued EB-5 Visas
Country FY 2011 1. China-mainland 2,408 2. Korea, South 254 3. Taiwan 122 4. Iran 117 5. Great Britain 57 6. Mexico 53 7. Venezuela 46 8. India 37 9. Russia 30 10.Vietnam 26 11.Canada 26 12.Netherlands 26 13.Japan 20 14.Turkey 20 15.South Africa 19
EB-5 Overview
– Port – NMTC
– Historical Tax Credits
Location– Targeted Employment Area (TEA):
•
High unemployment area (150% of national average)•
Rural area (not in MSA or town of more than 20,000)Why developers are
interested in EB-5?
The Motivation
Primarily motivated by Green Card No quota wait No job offer or employer sponsorship required Spouse and children included Location flexibility Business/Investment type flexibilityWhy are Investors
Interested
EB-5 Investor’s
Concerns
EB-5 Process
for Foreign Investor
Investor makes initial deposit to escrow account: Regional Center and investor submit I-526 to USCIS
Investor’s money is returned USCIS Review (8 Months) Funds released to project; Investor granted conditional visa Investor returns to home country and possibly loses USCIS Review (6 Months) Investor is granted permanent Green Card Investor submits I-829 with
USCIS Denial Denial Approval Approval 21 Months
Regional Centers:
Are licensed and regulated by USCIS Have limited scope based on geography, industries and economic methodology Can be public, private or quasi; engaged in the promotion of economic growth Work closely with the developer/borrower; have an established broker network to find investors and manage the reporting requirements.EB-5 Regional Center
Program
Typical Regional
Center EB-5 Investor
Typical Direct
EB-5 Investor
Direct Investment Regional Center
Investor has reduced risk due to equity ownership and control of the project
RC can apply to USCIS for project designation pre-approval to reduce risk
Investor must play more active role in business or project
RC decides on new projects based on business strength and ability to market the project to overseas investors
Investments must be in the form of equity. Loans are not permitted in most cases
Although debt (loan) is typical, investment through a RC may be in the form of either a loan or equity. Direct investments usually command higher
earnings.
Investor can live anywhere. Can work anywhere, or not work
Only direct jobs created by the project or business will be counted
Direct, indirect and induced jobs created by the project or business may be considered
There is no limit on the number of EB-5 direct investors on any project as long as 10 fulltime jobs per investor are created
Investor can start business or make investment/loan
Investor must track job creation and submit detailed reports directly to USCIS
RC tracks the direct, indirect and induced job creation.
Typically offers faster visa approval for investor RC manages ongoing administration and compliance responsibilities
Direct & RC
EB-5 Investor
Bad Press
Some Noteworthy Bad EB-5 Deals:
Northern Beef Packers –South Dakota El Monte Regional Center in El Monte, California Noble Outreach –New OrleansCleveland International Fund, Ltd
1240 Huron Road E. Suite 420, Cleveland, OH 44115
CMB Summit LLC RC
7819 42 Street West, Rock Island, IL 61201
Midwest EB-5 Regional Center LLC
1021 Delta Ave., Cincinnati, OH 45208
Northeast Ohio Regional Center
542 E. Liberty St., Wooster, OH 44691
Ohio Development Regional Center
6592 Woodbriar Lane, Greenville, OH 45331
EB-5 Regional
Centers in Ohio
Can EB-5 Fit Your Project
If you have a project– Developers – Company – Community
If you know a potential investor– High net worth individuals
Contact
Keith Conroy
Emily Turner
[email protected] 21 East State Street, Suite 2200
Columbus, OH 43215 (614) 221-2800
Why Support the EB-5 Program?
Since FY2005, it has attracted over $4.7Billion in foreign direct investment, accounting for the creation of over 95,000 American jobs - all at no cost to the taxpayer.
With over 3,200 immigrant investor petitions filed in the first six months of FY2013, the Program is well on its way to another recording breaking year of economic contribution to the U.S.
There are currently almost 6,000 pending immigrant investor applications pending with the federal government - awaiting on decisions upon which almost $3 Billion waits, ready for infusion into the U.S. economy for the purposes of U.S. job
creation.
The Program is versatile, allowing diverse industry sectors to put EB-5 capital to work in projects that transform regional economies - including: assisted-living, commercial real estate, construction, education, energy, entertainment,
infrastructure, healthcare, hospitality, logistics, manufacturing, transportation, and more.
Over 95% of EB-5 investment capital is invested in "targeted employment areas" that are experiencing high unemployment or are considered rural - thereby making traditional sources of financing more expensive and difficult to come by.
The Program has become a reliable and vital source of capital for local economies
