A Regional Center is a third party, approved and regulated by the U.S. Citizenship and Immigration Service (USCIS), whose purpose is to advance economic growth in a particular geographic area by sponsoring a job creating entity (the Project). The Regional Center is considered the sponsor of the Project, but currently has a very limited role in ensuring success of an EB-5 investment.
A New Commercial Enterprise (NCE) is the entity pools investments from multiple EB-5 investors and then invests that pooled capital into a Job Creating Entity. An NCE may be either a public or private entity, or a combination of both.
Congress, having seen the positive impact of other immigration by investment programs around the world, created the EB-5 program in 1990, and in 1992 created the Regional Center Program, originally known as the Immigrant Investor Pilot Program. In 2012, two decades after the program’s inception, Congress took out the word “pilot” from the program name and reauthorized the program for three more years. Since then, it has been reauthorized several times for various periods of time.
USCIS determines policy for the program and ensures compliance of EB-5 applicants, regional centers, new commercial enterprises, and job creating entities.
The Regional Center Program has many requirements, but the key ones involve promoting U.S. job creation and economic development. Each Green Card by Investment petitioner must invest a certain minimum amount of capital which is currently, $1,800,000 unless the Project is located in a Targeted Employment Area. If the Project is located in a high unemployment area, with an unemployment rate of at least 150% of the national average, or is located in a rural area, then the minimum investment amount drops to $900,000. TEA eligibility was previously determined by the state the Project was located in, but now USCIS is the only arbiter.
Each investor’s capital must create a minimum of 10 new full-time U.S. jobs. Full-time jobs are defined as lasting a period of at least two years. The Regional Center Program allows the following three types of jobs to qualify for the EB-5 Program.
Each investor’s EB-5 investment is required to be “at risk” for the duration of their conditional residency status, and must remain at risk until that investor files with USCIS to have their conditional residence status changed to permanent residence status. The form that is filed to change residence status is called the I-829 Form.
The EB-5 Regional Center Program enjoyed tremendous growth this last decade — with a significant contribution to the American economy. During the period of 2014 to 2015, EB-5 capital investments amounted to a staggering $11 billion, and comprised 2% of total foreign direct investment in the U.S. (need reference here)
Regional center capital has benefited many vital sectors including health care, sustainable energy sources, education, senior living facilities, transportation, affordable housing, hotels, research facilities, architectural and engineering services, wholesale trade, and others.
Regional Center vs Direct Investment
A potential immigration by investment petitioner has one of two choices in deciding what process to follow for an EB5 Greed Card. The Regional Center Program is typically viewed as the one with less hassle and higher certainty, but usually offers less of a return on capital. The other option is a direct investment.
Direct investments often involve just one EB-5 investor in the Project and the investor must function in a managerial or advisory capacity for that new commercial enterprise. This requires the investor to be directly actively involved in the decision making which is complicated by the fact that I-526 approvals for direct investments can take more than two years, which happens after the initial investment is made.
Another notable difference for a direct investment project limits permissible EB-5 job creation to be counted only from “direct” jobs, with every counted job needing a W-2 (tax form) for the employee. This compares to a Regional Center investment which can count direct, indirect and induced jobs calculated from the total investment in a Project as opposed to counting actual employees.
Lastly, processing times of direct investment applications is currently taking substantially more time than for regional center applications and the denial rate from USCIS is substantially higher. This is partly because the EB-5 program is quite complicated, and USCIS staff will need to spend a comparable amount of time evaluating a direct investment with one investor as it would evaluating a regional center investment for many investors.
When the EB-5 program was created in 1990, investors only had the choice of a direct investment. Now the Regional Center Program is the choice of most EB-5 investors, and comprises 95% of all EB-5 investment.
As of November 4, 2019, USCIS had approved 811 regional centers. See the list of USCIS-approved regional centers.
Investors should note that USCIS approval of an EB-5 regional center is NOT proof of any of the following:
Each regional center must file an annual Form I-924a to show evidence of their job creation as well as other proof of program eligibility. If a regional center fails to submit this annual form or fails to prove its requisite job creation, it can be served a Notice of Intent to Terminate (NOIT). That regional center can then lose its approved standing in the program.
Once all EB-5 requirements are satisfied, an applicant would be issued a permanent residence visa as would the applicant’s spouse and unmarried children under 21.
When it comes to regional centers, the U.S. Immigration Service (USCIS) has this advice for those seeking a Green Card by investment: Potential investors are encouraged to seek professional advice when making an investment decision.
An EB-5 investor looking to make an informed investment decision should have due diligence conducted by a professional third-party and the analysis should include a review of the strengths and risks of the investment as compared with other offerings in the market.
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By GCBI Team
By GCBI Team
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