EB5 regional center - 1300+ centers data driven statistics

What is a regional center?

United States Citizenship and Immigration Services (USCIS) designates certain businesses as regional centers through which foreign investors can invest money to obtain legal permanent residency(LPR) commonly referred to as green card. These green cards or visas are granted through the employment based 5th category EB-5 investor visa.

Table Of Contents

EB-5 visa program and regional centers

In the early 90s, the EB-5 visa program was amended to create the EB-5 regional center program. An EB-5 Regional Center is a commercial enterprise which can pool money from the foreign immigrants and make capital investment projects. Regional Centers are designated as such by USCIS to promote economic growth and job creation.

Regional center investment is not a mandatory for the EB-5 visa, investors can also make direct investments. However, the primary advantage of the regional center is that the foreign immigrant can meet the visa requirements by counting the indirect jobs projected to be created through the center. In contrast, the direct investment EB-5 applicants can meet the requirements only through the jobs directly created. Regional centers helps the foreign investors who are more interested in obtaining LPR than directly investing or operating a business in the United States (U.S).

The EB-5 Regional Center (RC) is a for profit enterprise which connects the foreign investor to the developers of projects in need of capital. The regional centers typically create an investment fund pooled from foreign investors and sponsors one or more commercial businesses. Real estate is the most common investment avenue of the regional centers. Regional centers sponsors projects like construction of luxury hotels, office spaces, apartment complexes, warehouses etc. While most regional centers are private enterprises, there are a few of govt created public entities too. The primary motive behind the regional center program is to increase economic growth, productivity, job creation.

EB-5 regional center program extension

Congress initially created the regional center program for a period of 5 years. Since then it has been extended to subsequent 5 year periods for the last 25 years. Current approval of the regional center program runs until September 2017.

EB-5 investor visa requirement

The EB-5 visa program in essence has 2 requirements, investments and job creation. The foreign investor has to invest $1 million dollars in a regional center. The amount is reduced to half a million dollars if the regional center is located in areas of high unemployment and not within urban centers.

Such investments have to generate at least 10 direct or indirect full time jobs through the regional center.

The foreign investor can get a green card (LPR) for themselves and their immediate family members (spouse and minor children).

USCIS conditionally approves the green card for about 2 years

After 2 years, USCIS permanently approves the green card upon the investment meeting the job requirement and other EB5 program rules

EB-5 investor can live, study or work anywhere in the U.S. None of the activity needs to be associated to the geographical location of the regional center.

Eb-5 applicants need not have to be actively managing the projects through which they are seeking a green card. However, applicants seeking green card through direct investments typically actively are involved in the operations of the enterprise.

EB-5 Regional center application and designation

Developers makes an application to USCIS through form I-924 to designate a project as an EB-5 regional center. The application includes information about the geographical area and the types of businesses the regional center plans to invest. The application can include actual projects or hypothetical projects. Hypothetical project application should include supporting documents to demonstrate the job creation of the proposed regional center. The application for an actual project requires a description of the nature of the business, it’s detailed business plan and details of employment generated.

EB-5 regional centers statistics

Following are the interesting statistics from the regional centers,

Types of common commercial activity undertaken by the regional center projects

  • Various types of Wholesale trading business
  • Nonresidential Building Construction
  • Traveler Accommodation
  • Architectural, Engineering, and Related Service

EB-5 recipients by regional origin,

EB-5 investors

Highlights from the recently released analysis of the program by the U.S. Department of Commerce. Data were used from FY2012-2013.

Data pulled from the report

  • $5.6 billion invested through the EB-5 investor program in a year.
  • 35% of investments for the regional center project funding were contributed by foreign investors
  • Around 170,000 estimated jobs were created through regional centers in a year
  • California is the top destination for US investor visa program
  • New York, Florida, Texas and Alabama are the top attractive destinations

Spread of regional center projects as of now,

No. of regional centers State/Territory
13 Alabama
1 Alaska
10 Arizona
6 Arkansas
223 California
18 Colorado
5 Commonwealth of Northern Marianas Islands
44 Connecticut
11 Delaware
23 District of Columbia
84 Florida
35 Georgia
3 Guam
15 Hawaii
4 Idaho
30 Illinois
24 Indiana
3 Iowa
1 Island of Guam
7 Kansas
10 Kentucky
17 Louisiana
3 Maine
31 Maryland
21 Massachusetts
11 Michigan
7 Minnesota
17 Mississippi
10 Missouri
2 Montana
5 Nebraska
24 Nevada
10 New Hampshire
85 New Jersey
9 New Mexico
107 New York
21 North Carolina
3 North Dakota
18 Ohio
12 Oklahoma
21 Oregon
68 Pennsylvania
7 Puerto Rico
10 Rhode Island
15 South Carolina
1 South Dakota
14 Tennessee
73 Texas
3 U.S. Virgin Islands (USVI)
7 Utah
1 Vermont
27 Virginia
59 Washington
11 West Virginia
20 Wisconsin
1 Wyoming

USCIS, EB5 approved projects can be found on their website

Number of terminated regional centers

  • 98 regional centers have been terminated by USCIS so far.

Regional center terminations

USCIS terminates the EB-5 regional center designation to the projects for any of the following reasons,

  • If the regional center does not provide sufficient information to USCIS
  • Regional center is not able to generate required employment and economic growth.

USCIS gives the regional center 30 days to furnish sufficient information and avoid termination. However, USCIS termination only disqualifies the project from the immigrant investor program. Those projects can continue to operate otherwise. If the investors already have a conditional green card approved through the terminated regional center, they can still demonstrate the EB-5 requirement compliance and go on to have an approved permanent residency.

USCIS also provides avenues for the terminated regional centers to appeal and get re approved for a EB-5 regional center designation.

Regional center risks

It’s important to note that even though USCIS designates a regional center, it does not guarantee or endorse the activities of the center. It’s also important to note that USCIS or any other government agency does not evaluate the quality of the projects. The responsibility for due diligence of the regional center lies with the immigrant investor. Securities Exchange Commission (SEC) has in recent times expanded the monitoring the EB-5 program and they issued an active fraud alert warning to the investors.

In one example, SEC alleged that a regional center falsely promised certain return on investment for investors investing in the regional center. The developers of the regional center started collecting money for the EB-5 program before the center was designated as a regional center by USCIS. SEC also claimed that the promoters used the money raised for the program for their own personal use. According to SEC, the foreign immigrant investors who invested money on the regional center did not get the Eb-5 green card.

In another similar case, the SEC alleged that another regional center falsely claimed that the necessary approvals were obtained for construction in addition to falsely claiming several non existing backers for the project. In this case too, the promoters used the money for some personal use according to SEC.

In another case, SEC sued lawyers for taking a transaction based fee for promoting certain regional centers.

Any investment has risks and EB-5 is no different. In EB-5 program it’s more complicated because the investors are primarily looking to obtain U.S green card in addition to a return on investment. Also, most times the investors are located in a foreign country and have to depend on agents that makes them vulnerable to scams.

Create your regional center rankings

With recent explosion of regional centers, investors should be cautious about getting involved in bad regional centers. Investors can follow the SEC guidelines and create their own risk based regional center project rankings. Incorporate the following guidelines while evaluating the regional centers. rank and pick the best among them.

  • Verify that the regional center is not listed by USCIS in the terminated list.
  • Verify that the regional center is in the USCIS eb-5 regional center list. Even if the regional center is listed remember that USCIS doesn’t guarantee the quality of investments
  • A regional center files various documents to USCIS to seek and maintain approvals. This includes the form I-924 for initial approval and yearly form I-924A filings to furnish additional information. Obtain these copies from the regional center

  • Evaluate the business plans and scrutinize the project details etc reported in those documents. Seek in writing any clarifications you need.
  • Check the track record of previous EB-5 approvals of the regional center if it exists.
  • Ask if the consultants, attorneys and other service agencies get paid for promoting or recommending certain regional center. Ask them in writing. Individuals and entities who get paid for selling an investment may have to be registered with SEC. Ask for SEC registration details.

  • Cross verify the information that you gather from the developers, consultants and lawyers and make sure they are consistent. Verify any claims made by any of these parties. For example, cross verify building permits, property tax assessments in the area the project is located. Compare similar projects in the area to make sure nothing that is being offered in out of the line.

  • Examine the balance sheet of the regional center, the budget of the projects, assets, the amount of debt, due dates etc.

  • Make sure the developers of the regional center’s incentives are aligned to the success of the project.

  • Watch out for overtly out of the line promises/promotions like risk free returns, guaranteed permanent status, high return on investments etc.

If the EB-5 investment entity end up being fraudulent, you risk of not only failing to obtain LPR, but you might also loose the money. Hence, be extremely cautious and careful about your investment. If you suspect anything after the investment was made report to USCIS and SEC.

comments powered by Disqus