The Immigrant Investor Pilot Program, hereinafter referred to as the Pilot Program, was created under Section 610 of Public Law 102-395 (Oct. 6, 1992) and was subsequently extended through 2015.
Under the Pilot Program, the requirements related to EB-5 investment are essentially the same with the distinction that the Pilot Programs permits investments affiliated with an economic unit that is known as a Regional center. The investments that are made through regional centers will enjoy the benefit of an expanded definition of job creation that includes direct job creation or maintenance as well as indirect job creation or maintenance.
Definition of Regional Center
A Regional Center is any private or public economic entity that is involved with the following:
- Promotion of economic growth.
b. Improvement of regional productivity.
c. Creation of jobs.
d. Increasing domestic capital investment in the economy.
- Individuals seeking to organize a Regional Center and seeking the necessary designation from USCIS are, as organizers of the Regional Center, required to submit a proposal. The proposal must show:
- How the Regional Center plans to
- Focus on a specific geographical region within the USA, and
- Promote economic growth in the above-mentioned region.
- How capital investments made in compliance with the business plan of the Regional Center will directly or indirectly create jobs in the region. The data regarding creation of jobs must be provided in verifiable detail and must use economic models where necessary and appropriate.
- The amounts and sources of capital that have been committed to the Regional Center.
- The promotional efforts that have been made and planned for the business projects to be executed by the Regional Center.
- How the operations of the Regional Center will have a positive impact on the economy of the region or the nation.
The proposal described above must be supported by forecasting tools that are economically or statistically valid.
Regional Center Forms
Application for Regional Center Under the Immigrant Investor Pilot Program
This form must be submitted by those applying for approval of the creation of a Regional Center.
$6,230 for all regional center proposals including new designation requests or amended designation requests.
Supplement to Form I-924
This form must be submitted in order to demonstrate the continued eligibility of an approved regional center for designation as a Regional Center.
Approval of Regional Center
Approval of an economic entity as a Regional Center results in USCIS recognition of the economic entity as falling under the definition of a Designated Participant in the EB-5 Pilot Program.
The approval serves as acknowledgment by USCIS that the econometric models and business plans submitted by the economic entity seem to be feasible and that jobs should be created directly or indirectly through investment in the approved industry categories.
USCIS approval of an EB-5 Regional Center application does not in any way:
- Constitute an endorsement of the activities of that Regional Center by the USCIS, or
b. Guarantee that the Regional Center complies with U.S. securities laws, or
c. Minimize or completely eliminate the risk faced by the investor.
USCIS advises potential investors to seek professional advice before making any investment decision.
Termination of a Regional Center
USCIS reserves the right to terminate the Regional Center designation awarded to the economic entity. Termination takes place when the Regional Center that has been designated for participation in the EB-5 Pilot Program ceases to fulfill the following:
- Promotion of economic growth
- Improvement of regional productivity
- Creation of jobs, and
- Increase in domestic capital investment.
An appeal against rejection of Form I-924 or termination of designated regional center can be made by filling out Form I-290B, Notice of Appeal or Motion in a timely manner. The filing needs to be done to the office that issued the adverse decision. Filing fee is $630.
Designation of an economic entity as a Regional Center does not result in the capital investment of the Regional Center being guaranteed or backed by the Government.
There is no guarantee that the investor will be granted unconditional permanent resident status as a result of his or her EB-5 investment.
If USCIS determines that the investor’s money was not truly at risk or that the creation of jobs through investment was insufficient, then the investor’s petition seeking unconditional permanent resident status may be rejected.
It is the investor’s responsibility to exercise due diligence when making the EB-5 investment.
Reporting EB-5 Fraud & Misrepresentation to USCIS
Allegations related to EB-5 program malfeasance are taken very seriously by USCIS. When an EB-5 case appears to involve fraud or contain material misrepresentations, the USCIS shall follow established procedures to refer the case to the Fraud Detection and National Security Directorate (FDNS)
Instances of EB-5 fraud or misrepresentation can be reported by members of the public through the mailbox at [email protected] The submission of specific information relating to allegations of fraud or misrepresentation along with relevant supporting documentation, if possible, will be very helpful.
Such information received through the EB-5 mailbox will be reviewed by an EB-5 program staff member. If it appears to be credible, the information will be provided to the affected party in an EB-5 case in compliance with 8 CFR 103 and 205 as part of an adverse case action. USCIS may also provide such information to FDNS through established procedures.
As of June 2, 2014, USCIS has approved approximately 532 regional centers. Regional centers can operate in multiple states.
The following are clarifications to two primary questions raised in the public engagement held on June 22, 2012 hosted by two economists working on the EB-5 Immigrant Investor Program.
EB-5 Projects Involving Hotel or Resort Development
In an EB-5 project involving the development of a hotel or a resort, when is it economically reasonable and logical to include projected funds concerning the money visitors will hypothetically spend into the economic models created for projecting the indirect and direct job creation that will result from said visitor spending?
When can projected spending on rental cars, restaurant dining etc be included in an economic model projecting the creation of indirect or induced jobs?
Generally speaking, credit creation of jobs based on visitor spending will be appropriate only in cases where the applicant can show that there is a preponderance of evidence that the development of the EB-5 project or resort will result in an increased arrival of visitors or increased spending in the area.
Applicants must submit reasonable estimates of how spending by new visitors and increase in tourism demand is being driven by the specific project that is the subject of the EB-5 application. If it is reasonably proven that the increase in spending by visitors and demand for tourism is new, then it may be reasonable to conclude that the project has contributed to this increase and that the employment that results from this projected increase is the result of the investment.
If this requirement is met and the application can otherwise be considered as reasonable, then the spending by new visitors can be considered as an input.
Irrespective of whether the spending by visitors can be reasonably shown to be caused by, or to be attributable to, a particular project, the jobs that have been created from construction lasting in excess of two years, management, and operation of the hotel or resort can be considered as eligible inputs provided the application is reasonable in all other aspects.
Is a Regional Center permitted to use funds from EB-5 investors to acquire real estate?
In general, yes.
This is subject to the requirements laid down in the Matter of Izummi, 22 I & N Dec. 169 (Comm’r 1998).
The requirement specifies that the “full amount of money must be made available to the business(es) most closely responsible for creating the employment upon which the petition is based.”
That is to say, a job-creating enterprise may allocate a part of the EB-5 funds towards purchase of land and can allocate remaining funds towards the development and operation of a business on the purchased land. The jobs created by such an enterprise can be apportioned among all the EB-5 investors.
Real estate acquisition is not generally recognized as a job-creating activity in and of itself.
It is not considered reasonable to treat the funds spent on purchase of real estate acquisition as an input when using the employment impact model. The apportionment of EB-5 funds for real estate purchase must be detailed in the business plan.
The USCIS recognizes that certain soft costs that are directly related to real estate transactions may be reasonably counted as expenditures that create jobs and as inputs to regional input-output models.
Further, soft costs that are related to development and construction of EB-5-supported projects on designated land parcels may be considered by the USCIS on a case-by-case basis.
Such costs should not be bundled under general construction expenditures if the input-output model that is utilized for analyzing the economic impact provides for specific categories for such soft costs. In such cases, the multiplier categories specific to these costs should be used.
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