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©2012. All rights reserved. Premier Sponsor: GIVE ME THE EB-5 FACTS, A NO-NONSENSE NEW-YORK PANEL Kate Kalmykov Dawn Lurie Greenberg Traurig, LLP.

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Presentation on theme: "©2012. All rights reserved. Premier Sponsor: GIVE ME THE EB-5 FACTS, A NO-NONSENSE NEW-YORK PANEL Kate Kalmykov Dawn Lurie Greenberg Traurig, LLP."— Presentation transcript:

1 ©2012. All rights reserved. Premier Sponsor: GIVE ME THE EB-5 FACTS, A NO-NONSENSE NEW-YORK PANEL Kate Kalmykov Dawn Lurie Greenberg Traurig, LLP

2 Overview of the EB- Program Congress created the EB-5 category in 1990 The Immigrant Investor Pilot Program was created by Section 610 of Public Law 102-395 October 6, 1992) Effective1993 RCs first applied in August of 1993 Only 300 visas were initially available for first 5 years Focused on exports

3 The EB-5 Program Had a Bleak Future… Program almost faded away Individual petitions were more interesting at that time Lax oversight by legacy INS No SOF review Schemes began to emerge including part loans, promissory notes using US funds INS became concerned with guaranteed interest payments and redemptions

4 BOOM- Government Scrutiny The memos started coming No APA review No grandfathering No stability All EB-5 cases on hold Dec 1997 The Tiger Team created-really!

5 It gets worse… Team reviewed what was no longer compliant To cover their tracks the program was then slammed with 4 precedent AAO decisions We still live with them today and now they even apply to the Regional Center context

6 It gets better… Chang vs. the United States (2003) No retro on I-829s where I-526 was approved before precedent decisions 2000 Amendment No more exports required

7 More Amendments 2002 RCs now must provide a business plan Definition of new business modified Added LP as acceptable entity structure Other specifics on pending petitions 2003 Program extended until 2008 I-526 RC priority for adjudications

8 And where we are today 10,000 green cards available to foreign nationals each FY Two options under the program: Individual Investment Regional Center (RC) Investment 90-95% of EB-5 petitions filed through RCs

9 Historical Usage Fiscal Year Total EB-5 Visas Issued FY09 4,218 FY08 1,360 FY07 806 FY06 744

10 Latest Statistics for Approved Regional Centers Fiscal Year 2007 11 Fiscal Year 2008 25 Fiscal Year 2009 72 Fiscal Year 2010 114 Fiscal Year 2011 174 Fiscal Year 2012 194 Source: California Service Center Report Date: April 23rd, 2012

11 Latest Statistics I-924 petitions (initial RCs, amendments, pre-approval/ exemplars) Fiscal Year 2010 Receipts: 152 Approvals: 78 Denials: 41 Fiscal Year 2011 Receipts: 278 Approvals: 123 Denials 58 Fiscal Year 2012 1Q Receipts: 60 Approvals: 14 Denials 22 Fiscal Year 2012 2Q Receipts: 54 Approvals: 8 Denials 9 Source: California Service Center Report Date: April 23rd, 2012

12 The Latest Stats: I-526 petitions

13 The Latest Stats: I-829 petitions

14 Sources of Law/ USCIS Policy Statute Regulations AAO Precedent Decisions Memorandums New Hybrid Process of Memos for Public Comment…waiting for Memo 3 Stakeholder Engagements

15 Choosing an EB-5 Team Immigration Lawyer Economist EB-5 Business Plan Writer Securities/Corporate Attorney Bank/Escrow Agent Marketing Firm/Commissioned Agent

16 More Choices to Make Apply for Regional Center Designation Have your project adopted Buy an existing regional center Pooled individual EB-5s

17 Business Plan Geographical area TEA Operational Plan Offering Documents Economic Report Indirect vs. Direct Job creation Marketing Plan Escrow Agreement Project preapproval, shovel ready, exemplar, hypo….

18 What is a Regional Center? USCIS has stated: A Regional Center is not merely a defined geographic area but rather is a business entity that coordinates foreign investment within that area in compliance with the EB-5 statutory, regulatory and precedent decision framework

19 Purpose of a Regional Center Promote economic growth through: increased export sales (if any) improved regional productivity job creation, and increased domestic capital investment

20 What do we need to show USCIS? operate? promoted funded? positive impact on national or regional economy verifiable detail of how indirect jobs will be created Sample offering documents Marketing plans Business Plan Economic Report Bios of operators Information of intended raise

21 Whats a TEA? TEA is defined as a rural area which is either in a high unemployment area, (calculated as an area with an unemployment rate that is at least 150% of the national average), or a Rural Area (outside a town of 20,000) and outside a metropolitan statistical area)

22 Capital Investment Requirements Not necessary at I-924 stage but rather when Investor files individual I-526 application Targeted Employment Area (TEA)= $500,000 In addition to the Regional Centers Administrative fee of $39,000 to $70,000 or more Outside TEA =$1 million

23 Does it have to be Contiguous? More than one counties or a whole state Overlapping-more than one Regional Center in the same area Yes you can establish more than one Regional Center Jurisdiction can be expanded by filing an amendment Designation of a Geographic Activity

24 Job Creation is Key Direct Actual identifiable jobs located within the new commercial enterprise Indirect Those shown to be created collaterally Or as a result of the capital invested in the NCE

25 What Else and Why? Number of indirect jobs created through an EB-5 investors capital investment is based upon a business plan and a detailed economic analysis Evaluated and approved by USCIS during the approval and designation of a regional center

26 Timing of Regional Center Process File I-924, Regional Center Designation Application, with USCIS Approximate processing time 4 to 10 months (expedite option was expected in Spring 2012 but no more…) Option to file exemplar I-526 for a specific project Regional Center may begin marketing projects once USCIS approves the I-924 Investors file EB-5 petitions (Form I-526) Approximate processing time 5 to 8 months

27 Timing- When Will I Be Able to Use the EB- 5 $$$? Investor must invest 100% (usually $500,000) before I-526 filed Money can go To project immediately To escrow Released when investors I-526 is approved Considerations for voluntary or mandatory withdrawal So How Long Did That Take? RC designation – 6-12 Months I-526 approval – 7-8 Months Total – 13 – 20 months excluding time to prepare and submit RC designation or time it takes to find investors Processing times are fluid

28 Regional Center Costs Professional fees Government filing fees Regional center recoupment of costs through charges to investors Cost of Capital In-House Counsel/ Team Overseas Team Marketing Insurance

29 Enhancements Possible Premium processing shovel ready projects Specialized Intake Teams Economist Business lawyers EIR Expert Decision Board Open communication Economist, adjudicators and supported by USCIS counsel

30 Dealing with USCIS Unpredictable Hard to Navigate Rules of the game are not always written in the book History repeats itself The more things change the more they stay the same Take this process seriously and be successful

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