1. SEPTEMBER 17, 2012 AREAA NEW JERSEY CHAPTER MEETING LAW OFFICES OF JULIA PARK, LLC Introduction to EB-5 Financing 1 www.juliaparklaw.com

2. Green Card Waiting Times Family-based petitions  Marriage: 6 months*  Child over 21: 6 to 9 years  Brother or sister: 10 years Employment-based petitions  EB-1 (extraordinary ability; multinational exec): 6 months  EB-2 (higher degree): 1 – 2 years (add 4-5 years if from China or India)  EB-3 (college degree): 7 – 9 years  EB-3 (skilled worker): 8 – 11 years  EB-4 (religious workers): 6 months * Approximate time frame. DOS releases a “visa bulletin” every month. Often front page news for ethnic newspapers. www.juliaparklaw.com 2

3. What is the EB-5 Visa? The EB-5 visa category, introduced in 1990, allows a foreign national to invest $1 million in a “new commercial enterprise” that will benefit the U.S. economy and create at least “10 full time jobs”. In 1992, the Regional Center Pilot Program allowed the required investment to be reduced to $500,000 if made in a “rural area” or a “targeted employment area (TEA)”. Misconception: Regional Center (RC) = $500,000 and Self-investment = $1 million  LOCATION of the investment determines the investment amount. 3 www.juliaparklaw.com

4. Why the recent boom? www.juliaparklaw.com 4 Quite popular in the early 90’s but legacy INS implemented stringent requirements in 1998, even retroactively changing the rules. 2003 and onward, the EB-5 slowly regained ground with the current recession highlighting the attractiveness of EB-5 capital as an alternative funding source. Canada recently doubled the investment amount for its investment visa program making EB-5s more attractive.

5. EB-5 Regional Centers (1) Regional Center Pilot Program began in 1993; extended very 3 years; just extended by Senate last week! Government designated economic entities, either public or private, that promotes economic growth. Virtually all RC projects are located in Rural Areas or TEAs. Currently more than 90% of EB-5 applications are made through RCs. 5 www.juliaparklaw.com

6. EB-5 Regional Centers (2) Currently more than 220 approved RCs; many more pending approval.  Note that not all RCs currently have projects. Lots of competition among RCs to attract investors: More options for investors. No centralized location to check current projects. www.juliaparklaw.com 6

7. Examples of RC Projects (1) Solar Power Project (California)  $2.2 billion total project cost  Government guaranteed loans: $1.6 billion  Equity partner I: $168 million  Equity partner II: $300 million  Equity partner III: $130 million (of which $90 million will be EB-5 Loans) Upgrade of regional mass transit payment system (Pennsylvania)  $207 million total cost  Equity: $32 million  EB-5 Financing: $175 million (in 3 separate tranches) www.juliaparklaw.com 7

8. Examples of RC Projects (2) Brooklyn Navy Yard industrial park (New York)  $ 141 million total cost  Government funding: $81 million  EB-5 Financing: $60 million Addition of restaurant and bar to W Hotel (Los Angeles)  $14 million EB-5 Financing  Total cost? www.juliaparklaw.com 8

9. Examples of RC Projects (3) Construction of Marriott (Los Angeles)  $118 million EB-5 Equity Financing Medical center in Flushing Hotel in Times Square Hotel in lower Manhattan Gold mine Turkey farm Dairy farm www.juliaparklaw.com 9

10. EB-5 Investment Structure (1) EB-5 investment must be “at-risk” equity investments – debt does not qualify Most Regional Center investments are structured as debt funds in which the foreign investor takes an equity position. These funds then loan the pooled funds to the borrower. www.juliaparklaw.com 10

11. EB-5 Investment Structure (2) www.juliaparklaw.com 11 Regional Center InvestorRC Fund (Lender) Developer (Borrower) AB A: Invest $500K B: Lend pooled investment (Generally 5-year collateralized term loan) C: Interest payment generally 1% D: Interest payment generally 5% (no prepayment) CD

12. Regional Center Job Creation USCIS allows Regional Center projects to count both direct and indirect jobs. Economic models such as IMPLAN and RIMS II are used to project anticipated job creation based on revenue or expenditure. The borrower must expend funds (in an expenditure model) according to the submitted business plan. Funds cannot be diverted to non-job creating activities or the investor will not get a permanent visa after 2 years. 12 www.juliaparklaw.com

13. The Visa Process (1) www.juliaparklaw.com 13 1. Prep State Choosing a Regional Center Project Preparing I-526 application package Committing the investment funds in escrow account 2. I-526 Stage USCIS reviews immigrant application (approx. 5 - 9 months) Derivative children must be under 21 years of age Reasons for Denial: Source of funds (note: gifts are ok); Path of funds 3. AOS or Consulate I-485 Adjustment of Status (AOS) stage if investor is already in the U.S. Consular processing if overseas 6+ month process Total Time Period to Conditional GC: approximately 12 months

14. The Visa Process (2) 4. Conditional 2-year GC If the I-526 is denied, the escrow funds are released back to the investor. 5. I-829 Stage Filed during the 90 days period before 2 year anniversary of green card. Must show that investment was sustained. Must show that 10 jobs were created. If denied, cannot be appealed. www.juliaparklaw.com 14

15. The $500,000 Investment: TEAs and Rural Areas Rural Area  (1) Not located within any standard metropolitan statistical area (MSA) AND (2) Not located within city/town with a population of 20,000 or more based on the most recent census.  83% of USA = MSA: Virtually the entire states or Maryland, Massachusetts, Rhode Island and New Jersey is disqualified.  Bills being introduced to eliminate MSA prong. TEAs  (1) The area (MSA or county) has experienced an average unemployment rate of 150% or more of the national average (based on Department of Labor statistics) OR (2) Letter from State authority (ex. NY EDA) certifying that the particular area has been designated a high unemployment area. 15 www.juliaparklaw.com

16. Busy Two Years for the RC If Regional Center project is not successful investors risk deportation  Failure to become fully subscribed and project never happens  Unexpected economic downturn Job Creation target not reached: 10 jobs must be created within 2.5 years of the I-526 approval (June 2009 memo), if not must be able to show that the jobs can be created within a “reasonable period of time”.  Construction jobs will count only if they last at least 2 years.  What about big scale projects that take longer than 2.5 years? (Discretion is there but too early to say.) A “material” change in the business plan: December 2009 memo states that a NEW (not AMENDED) I-526 petition is required: no remedies for aged-out children or ex-spouses.  Inconsistent with other visas; no law or Regulations requiring this; potential for litigation 16 www.juliaparklaw.com

17. RC EB-5s vs. Direct EB-5s Similar structure and rules but can only count direct jobs so size of capital raise is smaller Difficult to rely on existing migration consultant infrastructure due to small economies of scale Depending on the project, investor could have more control over ultimate job creation USCIS currently fixated on job creation methodologies which is causing delays, so direct EB- 5s seeing a slight advantage in processing times www.juliaparklaw.com 17

18. In Conclusion EB-5 is a wonderful alternative for relatively wealthy foreigners who have no other ways to obtain greencards. EB-5s are an attractive source of funding for projects that require investment in otherwise dismal economic times – but competition is fierce. The investor must clearly understand the importance of due diligence and the risks involved. The borrower must clearly understand how the funds can be used. 18 www.juliaparklaw.com

19. QUESTIONS? PLEASE CONNECT WITH ME ON LINKEDIN. (“JULIA YONG-HEE PARK”) JPARK@JULIAPARKLAW.COM 349 FIFTH AVENUE NEW YORK, NY 10016 Thank you! www.juliaparklaw.com 19