EB-5 Regional Center
For Passive Investors
EB-5 Regional Center Definition & Its History
An EB-5 regional center or RC is an organization that promotes U.S. economic growth in a certain area through job creation and foreign investment. These business or public economic units are approved and regulated by the USCIS (U.S. Citizenship and Immigration Services). These centers work as a third-party between EB-5 visa projects and investors. $800,000 is the minimum qualifying investment amount to form a new commercial enterprise, located in TEA (Targeted Employment Area). The new commercial enterprise must create 10 qualified full-time jobs for US citizens.
A regional center enables the NCE (New Commercial Enterprise) to combine the capital from multiple investors into a single project. The NCE can be a private or public entity or both. By obtaining the EB-5 investor visa, an international investor along with their life partner and children under 21 can receive permanent resident status via investment.
These centers were developed by the U.S. Congress in 1992 to stimulate the U.S. economy via foreign investments. Hence, accepting funds from immigrant investors is completely eligible. Originally, the EB-5 RC program was called the Immigrant Investor Pilot Program (created by Congress in 1990). After its creation, the RC has been constantly reauthorized for different durations. The EB-5 Reform and Integrity Act of 2022 is a sweeping, holistic reform of the EB-5 immigrant investor program. With revised investment amounts, streamlined adjudication processes, and enhanced security measures, the new legislation aims to improve the program’s effectiveness, integrity, and economic impact.
Job Creation Benefits of Regional Center Investments
Compared to direct investments, regional centers have higher job creation flexibility enabling induced, direct, or indirect employment, making job fulfillment much easier. Jobs created during the EB-5 project’s operational phase are classified as direct jobs. For example, hotel operations and construction jobs. The construction jobs would be counted only when the construction period is longer than 2 years.
Induced jobs are created by people with direct and indirect jobs associated with an EB-5 project from their additional spending in the local economy. For example, a clerk employed in a local supermarket to get more business they’re dealing due to an EB-5 project. Jobs created by industries supplying essential products and services for construction and/or operation purpose are known as indirect jobs. For example, jobs related to construction-supply firms.
When invested through a regional center, the investors are not engaged in the daily operation of the new commercial enterprise because they’re a limited partner in a Limited Liability Company established by the NCE.
Other Benefits of a Regional Center
Regional Center investment benefits people who need an EB-5 green card or permanent residency in the United States for themselves and their families and can’t engage in any sort of business activities during that period. Another advantage is that it allows investors to freely live, travel, or work in the U.S. without any restrictions by the business they invested in.
EB-5 Regional Center Contribution to the U.S. Economy
Each fiscal year, the EB-5 program’s activities contribute billions of dollars to the U.S. economy. Its impact has enhanced by a great margin in the last 15 years. $321 billion earned in investments in 2008. The projects generated $11.2 billion in investment between the 2014 and 2015 fiscal year. Between 2014 and 2015, the capital infusion shows 2% of the whole foreign direct investment (FDI) in America. In the same fiscal year, the capital investment of EB-5 regional center program’s capital investment and associated investment contributed $33.6 billion. The earned tax profits for the state, federal, and local governments were $4.2 billion between 2014 and 2015.
The $2.7 billion in federal tax income is equal to 634% of the whole amount of appropriations done by the federal government for economic development programs via EDA (economic development administration) in the U.S. between fiscal years 2014 and 2015 at no cost to U.S. taxpayers.
The impact made by the regional center program touches several vital sectors like education, hotels, architecture and engineering, healthcare, senior living facilities, affordable housing, renewable energy sources, research facilities, and more.
EB-5 Regional Center Securities Compliance
All EB-5 regional centers as well as projects must follow the U.S. securities laws to protect investors’ interests from unethical securities sales practices. The U.S. SEC (Securities and Exchange Commission) controls securities. It must be registered with SEC.
Here are 4 common compliance of regional centers with securities laws.
- Registering securities is a time-consuming, expensive, and challenging process as it needs issuers to submit disclosures to respective investors. Due to compulsory time commitment, USCIS applies a timeline for EB-5 projects. EB-5 investments may be liable to federal and state-level securities regulations.
- RCs and sponsored initiatives find EB-5 investors can’t solicit investments or promote exemptions under regulation D. Advertisements are allowed if they don’t refer to particular investment detail.
- Regulation D exempts offerings of EB-5 securities via EB-5 regional centers from SEC registration. Hence, they may not need any registration. The centers offer a private placement offering. Each investor gets a PPM (private placement memorandum) having the disclosure of offerings.
A single investor with over $200,000 income and a married investor with over $300,000 income for the last 2 years will get the eligibility. Each investor will have to sign a Accredited Investor Questionnaire attesting that they fulfill all the requirements to become an accredited investor.
- In the 1934 Securities and Exchange Act, broker-dealers are considered the companies, people, or any organization that trades securities. SEC requires broker-dealers to be accredited by the SEC and the pertinent government securities regulators. When EB-5 projects are connected with investors or third parties, the SEC may consider the entities involved as broker-dealers.
The EB-5 regional center program renewal, the EB-5 Reform and Integrity Act of 2022, changes different aspects of the program like a 5-year reauthorization period; a regulatory definition for TEA; investment threshold amount adjustment; essential investor protections; and supplemental security & integrity measures.
A person who gets approval for the I-526 form will get permanent residency with certain conditions. To get the updated details on the approval and rejection rates for I-526 and I-829 petitions, visit the official USCIS website.
EB-5 Regional Center Investment Can Lead to a Green Card!
If you are making an investment through a Regional Center, then instead of you, the developer and the Regional Center have to create ten jobs. However, you will have to prove that those jobs were created through your EB-5 visa investment amount of $1.05M or $800,000. The Regional Centers and developers will give all essential documentation while filing the application of I-829 Removal of Conditions. So, to get a permanent Green Card, carefully consider the investment options. We at EB-5 Investor Portal have assisted many families by guiding them to citizenship via investment.