EB-5 Regional Centers

(1)

EB-5 Regional Centers

Carolyn S. Lee (dl), Ithaca, NY Edward J. Carroll, Burlington, VT

Steven T. Anapoell, Irvine, CA Jeffrey B. Carr, Williston, VT

2012 AILA Teleconference/Web Conference

Determining if Regional Center

Designation Is an Option

• Who is the prospective RC client?

Real estate developers

Financiers

Local governments

Foreign nationals, entities

Designation vs. entity

Source

Determining if Regional Center

Designation Is an Option

• Who are the team members?

Immigration lawyer

Economist

Corporate and securities counsel

Business plan writer?

RC principal(s)

(2)

Elements of RC proposal

• What’s in there?

Statute § 610

Reauthorization

Regulations 8 CFR § 204.6(m)

Instructions to Form I-924 – what USCIS

expects

Elements of RC proposal

• Key concepts

TEAs

Jobs created “indirectly” and “reasonable

methodologies”

Economic impact analysis and EB-5

project

Key element:

Economic Impact Analysis

• What does an economist do?

Role within team

When called

Major I/O models used and accepted

RIMS II, IMPLAN, REDYN, REMI

Choice of tool--which is most accurate

Accuracy is key because it “sizes” the EB-5 capital raise

(3)

Key element:

Economic Impact Analysis

• Example:

Economic-job report says 500 job impact

500 jobs * .6 = 300 jobs (for “10 jobs per EB-5 investor” math)

300 jobs / 10 = 30 EB-5 Investors

30 EB-5 Investors * $500,000 = $15.0 million

Note: The .6 above equates to a 40% surplus job cushion typically demanded by EB-5 marketing agents.

Key element:

Economic Impact Analysis

• What does an economist need?

Detailed project business plan

Study region

Timeframes

Key element:

Economic Impact Analysis

• Challenges for the economist

Zealous clients

USCIS standards

(4)

Amendments to the Regional

Center Designation

• RC growth and change – how to?

Geography

Industry

Form I-924 Instructions

Filed with CSC + fee

Processing times

Project "Pre-approvals” –

The Exemplar I-526

• Safety net under overseas flight?

Preapproval

December 2009 Memo

Procedure and Form I-924

Effects

Project "Pre-approvals” –

The Exemplar I-526

• Work in progress ….

USCIS challenges

Director Mayorkas proposals

(5)

Recruiting Investors –

Securities Laws

•What does a securities lawyer do?

Role within team

When called

Recruiting Investors –

Securities Laws

Overview of Securities Laws

Securities Act of 1933, as amended

Securities and Exchange Act of 1934, as

amended

Investment Company Act of 1940, as

amended

Investment Advisers Act of 1940, as

amended

Securities Laws

• Securities Act of 1933

General Statement of law

Regulation S

Regulation D

Disclosure Requirements

Recommended use of PPM

(6)

Securities Laws

• Securities and Exchange Act of 1934

General Statement of Law

Definition of Broker

Issuer Exemption under Rule 3a4-1

Use of Unregistered Offshore Domestic

Finders

Securities Laws

• Securities and Exchange Act of 1934

(cont’d)

Effect of not qualifying for an exemption

from Broker-Dealer Registration

Civil and criminal penalties

Rescission rights

Securities Laws

• Investment Company Act of 1940

General Statement of Law

Is the Issuer an investment company?

(7)

Securities Laws

• Investment Advisors Act of 1940

General Statement of Law

Registration (as amended by Dodd Frank)

Federal

State

Anti-Fraud Provisions of Section 206 of the

Advisers Act

Securities Laws

• Organizational Structure of Pooled

Investment Vehicle

Limited Partnership/LLC or Corporation

Management Rights -- Uniform Limited

Partnership Act

Use of Proceeds

No Guaranteed Return of Investment (no

impermissible redemption rights)

Hot Button Issues

• What are the most pressing RC issues?

TEA state designations

Bridge financing

(8)