Understanding the Management Role of Investors for Regional Centers and Basic Program/Stand-Alone Investments

Designated Regional Center Projects

Basic Program/Stand-Alone Investments

To encourage immigration through the immigrant investor category, Congress created the Regional Center Program in 1993. The Regional Center Program makes EB-5 visas available to immigrants who have invested the required amount of capital in a project established by or operating under the auspices of a designated regional center. A regional center is an entity, organization or agency that has been approved as such by USCIS, which:

• Focuses on a specific geographic area within the United States
• Seeks to promote economic growth through increased export sales, improved regional productivity, creation of new jobs or increased domestic capital investment

Amongst other requirements, a prospective investor seeking an immigrant visa under the Regional Center Program must show:

• The job-creating project is doing business within the approved area and under the auspices of a designated regional center; and
• The investment will directly or indirectly create the required number of jobs for U.S. workers.

Under the basic EB-5 program, which predates the Regional Center Program, an EB-5 investor may choose to invest in an enterprise that is not doing business as or operating under the auspices of a designated regional center.

This involves the investment of capital with or without other investors into a “standalone” business that meets the EB-5 requirements. The principal distinguishing feature, compared to a Regional Center project, is the manner of satisfying the “job creation” requirement.

Employment Creation

An investor in a designated regional center project may use reasonable economic methodologies to demonstrate job creation, counting the jobs of any people directly employed by the EB-5 enterprise as well as jobs that have been indirectly created due to the business activities of the EB-5 enterprise. A regional center investor’s I-526 petition will be accompanied by a job impacts report prepared by a professional economist. The job impacts report, market analyses and other documentation filed with the I-526 petition will seek to demonstrate that capital invested by EB-5 investors will result in the creation of the required number of direct and/or indirect jobs for all EB-5 investors in the specific regional center project.

Employment Creation

An investment in a stand-alone project must create at least 10 full-time positions for directly employed U.S. workers within two years of the investor’s immigration to the United States. For stand-alone investors, indirect jobs, including the jobs of independent contractors, may not be counted. If the 10 employees have not been hired at the time of filing the I-526 petition, the petition must be accompanied by a comprehensive business plan showing that 10 qualified employees will be hired within two years.

The job creation requirement may also be satisfied through an investment in a “troubled business” that results in saving or creating at least 10 full-time jobs for U.S. workers and the retention of jobs for at least two years at a level no less than the number of employees prior to the investment. A “troubled business” is one that has been in existence for at least two years and has had a net loss of at least 20 percent of the business’s net worth.

Investment Amount

As in the case of nonregional center investments, the minimum qualifying amount required for investments in a designated regional center project doing business and creating jobs in a “targeted employment area” (TEA) is $500,000. A TEA is an area that, at the time of investment, is a qualified rural area or an area with unemployment at a rate of at least 150 percent of the national average.

Investment Amount

The minimum investment qualifying capital amount for a stand-alone project is determined in the same manner as for an investment in a regional center project — $500,000 where the job creating enterprise is primarily doing business in a “targeted employment area” (TEA) and $1 million for non-TEA investments.