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

In both stand-alone and regional center investments, it must be shown that the investor will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation (as opposed to maintaining a purely passive role).

Under U.S. Citizenship and Immigration Services (USCIS) regulations, if the investor is a corporate officer or director or a limited partner in a partnership that provides the investor with rights, powers and duties normally granted to limited partners, he or she will be considered sufficiently engaged in the management of the new commercial enterprise. This limited “safe harbor” provision is also extended to similarly situated investors who are non-managing members of businesses established as limited liability companies.

Comparisons Between the Two Programs

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.

The EB-5 program requirements are complex and subject to evolving interpretation and policy changes. The information on this website is not intended to comprise a comprehensive review of all relevant laws, regulations and policy interpretations. Readers of this information are advised to obtain competent individualized advice from competent immigration counsel regarding any potential EB-5 investment matter.

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Since 1982, the California-based Law Offices of Robert P. Gaffney has assisted clients in meeting all of their business immigration needs. Call our lawyers at 415-503-9653 or contact us online to arrange a consultation.