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[HOT] Types of EB-5 Regional Centers
After 2002, when the EB-5 Regional Center (RC) Program was revived due to various causes, regional centers started cropping up all over the USA to set up EB-5 projects that would be partially or completely funded by EB-5 investors' moneys. Starting with only a handful in 2003, the number of Regional Centers grew to approximately 30 as of January 2009. As of November 2011, there are over 160 designated regional centers, with many more pending. In our opinion, that's too many unless USCIS liberalizes EB-5 policies to spur more relatively rich people from applying for EB-5 cases.
These Regional Centers possess certain characteristics based on which they can be grouped or divided -- differentiating features.
The most dominant type of regional centers is structured for the new commercial enterprise entity to receive capital investment and lend the pooled money to a job-creating entity, as opposed to the new commercial entity directly creating jobs with the capital investments received. Although there were many types of regional centers engaged in direct equity-based projects to create jobs, this type of projects are in decline.
The differentiating feature is whether the applicable New Commercial Enterprise (the "NCE") of Regional Center Program, whether it is a Limited Partnership or LLC, engages in making investment loan, or the NCE uses the money to directly engage in a particular business, i.e. use investors' moneys to directly run a hotel by itself or in a joint venture with another company or as an equity partner. Note again Matter of Izumii specifically allows NCE to engage in making loans to a third-party business that actually creates requisite jobs. There are respective advantages and disadvantages depending on the category.
One differentiating characteristic among the investment loan Regional Centers is to what degree they work with agencies of cities or states to administer or find suitable EB-5 projects.
Among the loan-based regional centers are a group of regional centers which are affiliated with a governmental entity, usually an economic development agency, which act as an advisor to the regional centers. There are only a handful of RCs which work with affiliated with governmental or quasi-governmental entities to try to help EB-5 investors to meet the EB-5 requirements.
Another differentiating characteristic is whether the subject RC uses IMPLAN or RIMS II job-calculation methodology to estimate the number of full-time positions the specific EB-5 project will create. We believe the RIMS II job-calculation methodology is more conservative methodology mainly because the government itself developed it and is using it. RIMS II was developed by the Bureau of Economic Analysis (see www.bea.gov), which is a division within the U.S. Department of Commerce. In connection, it is important also to decide whether to use a direct jobs multiplier or expenditure model.
It should be noted that the fact that a RC is relatively new does not mean that RC is not suitable for you. Rather, it should be just one of the selection criteria that should be examined. You may really be impressed with the principals of a relative new RC, in which case, you should go for it.
In conclusion, there are many issues for a wanna-be regional centers to consider and decide, and it is crucial to structure the regional centers in compliance with the EB-5 law, to minimize future attacks by USCIS.