EB-5 Regional Center Basics
In 1992, Congress established the Immigrant Investor Pilot Program, which created the regional center designation. Regional centers have come to form the backbone of the EB-5 Program.
Regional centers are economic units designated by USCIS for the purpose of encouraging regional economic development through EB-5 investment. Typically, regional centers are limited partnerships, limited liability companies, or C-corporations, but other organizational structures can apply for regional center designation. Organizations apply for designation through Form I-924, Application for Regional Center under the Immigrant Investor Pilot Program.
EB-5 Regional Center Application Process
Documentation that must be submitted along with Form I-924 include the following:
- At least one regional center EB-5 compliant business plan
- An operating or partnership agreement
- A hypothetical, actual, or exemplar project business plan
- An economic report regarding the project’s employment creation
- A private placement memorandum (PPM)
- An investor questionnaire and subscription agreement
- Any related corporate, transactional, loan, or securities documents prepared by appropriate counsel
EB-5 Regional Center and Project Business Plans
In order for USCIS to approve the regional center application, the business plans for both the regional center itself and the accompanying project must meet certain requirements. Specifically, these business plans must be compliant with Matter of Ho. USCIS requires comprehensive business plans that provide ample, independent evidence of their credibility.
For a real estate project in particular, the business plan should provide evidence of viability through a credible third-party feasibility report. This report should indicate whether the project is likely succeed within its geographic area and market type, highlighting comparable properties. Additionally, the report should include an explanation of its assumptions regarding the calculation of pro forma revenues and expenses.
Hypothetical, Actual, and Exemplar Project Applications for EB-5 Regional Centers
Form I-924 must be accompanied by project documentation, which is classified in terms of readiness ranging from hypothetical to exemplar.
The simplest project type, referred to as hypothetical, is just that—a project that may or may not actually exist but that could exist. This form of project documentation is useful when the regional center applicant has no shovel-ready projects but desires regional center approval for future projects. In such cases, the hypothetical project serves as an indicator of the type of projects the regional center expects to pursue. Without specific project details, however, the related documents (e.g., offering documents, economic report, business plan, etc.) are based upon basic assumptions.
An actual project is shovel-ready and therefore should include a business plan and economic report that reflect the project’s details—the actual corporate documents, offering documents, third-party feasibility studies, details about the capital stack, any permits or licenses, and any other relevant documents. For an actual project, the development is set to commence once USCIS approves Form I-924 and the regional center can accept EB-5 capital from investors. One of the major benefits of an actual project is that future filings based on the same material facts receive deference, which means a favorable determination for an actual project proposal is more likely to result in a favorable determination for investors’ I-526 Petitions. Another benefit of filing an actual project, as opposed to an exemplar project, is that small changes can still be made to the business plan, economic report, and offering documents before investors file their I-526 Petitions.
An exemplar project proposal is similar to that of an actual project except the exemplar project includes a completed Form I-526 for an unnamed investor. Exemplar projects are considered pre-approved by USCIS, though USCIS maintains the authority to re-review all future filings at its discretion. In practice, though, the pre-approval of the project along with a sample I-526 provides greater certainty that future I-526 filings for the same project will be approved. For investors in exemplar projects, the only material not previously reviewed by USCIS is their source of funds documentation. While exemplar projects are the least flexible once approved, this pre-approval is particularly appealing to potential investors.
Processing Time for EB-5 Regional Center Applications
Once the EB-5 regional center application and all necessary documentation is prepared—a process that could take weeks or even months—the regional center application form is submitted to USCIS. Processing time for Form I-924 varies based on the quality of the submission, the complexity of the project, and the backlog of pending applications, but most applications are adjudicated within six to nine months.