1 Dangers and Pitfalls EB-5 program is a program of inherent conflicts □ It is important to remember: 1.The EB-5 is an economic development program that is administered by a federal agency that primarily processes immigration petitions, 2.The EB—5 program is complicated, with many nuances, and, 3.It is still evolving...with rules being written/re-written frequently! Review the law and regulations and keep up with memoranda an policy changes
2 Dangers and Pitfalls Common misconceptions in the EB-5 program: □ The EB-5 program is “fast”—I will get my money within 6 months, (the dreamer) □ I don’t need an experienced EB-5 professional team—I have read all the regulations and web pages, (the DIYer) □ I need to go for the largest geographic area I can get for my regional center, (the namedropper) □ I don’t need a Targeted Employment Area—my project is so good that it will sell at the $1.0 million level, (the uneducated)
3 Dangers and Pitfalls Common misconceptions in the EB-5 program (con’t): □ I can count jobs outside my regional center in my 10 jobs per investor math—the 12/10 Mayorkas letter says I can, □ Isn’t the regional center’s geography and a TEA the same area?, □ My TEA certification letter is “good for the whole duration of the project,” □ So what if my business plan changes—everything is nearly the same...that’s how business is done, □ I know I said I was going to use a RIM direct job multiplier but now we’re going to use RIMS based on expenditures
4 Dangers and Pitfalls Common “dangers” in the EB-5 program: □ Residential projects—in general, □ Having no market study, Relying on tenants, Relying on “visitor spending” for hotel/hotel-like projects, □ Using direct construction jobs—workers’ legal status, □ Using indirect construction jobs and the timing of the I- 829 “Removal of Conditions” filing, □ Not “meeting or exceeding” the metrics presented in your business plan, □ Not doing the right due diligence on your investors □ Not tracking the source and trace of funding from investors
5 More on counting Jobs Let’s talk about counting the workers What’s a Form I-9? How was I supposed to know they were not legal? We don’t keep copies of the I-9 identity documents and now USCIS wants them What should we be doing along the way?
6 Dangers and Pitfalls Keys to Success 1.Engage with an economist “early” on (for TEAs and other EB-5 program criteria compliance issues), 2.Design your project-RC for “commercial success” (This is the best way to prove jobs 2 - 4 years out), 3.Make sure your project-RC has a “marketable” business and deal structure (Starting over is painful), 4.Consistency between BR-Econ/Job Impact Study, 5.Have an “executable” business plan with key metrics that can be met (...be 99% sure you can), and 6.Then “execute.”
7 More Keys to Success Practical Pointers Know your audience Keep your petitions organized Track your investors