©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.

©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

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

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

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!

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

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

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

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

Historical Usage

Fiscal Year Total EB-5 Visas Issued

FY09 4,218

FY08 1,360

FY07 806

FY06 744

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

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

The Latest Stats:I-526 petitions

The Latest Stats: I-829 petitions

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

Choosing an EB-5 Team

Immigration Lawyer

Economist

EB-5 Business Plan Writer

Securities/Corporate Attorney

Bank/Escrow Agent

Marketing Firm/Commissioned Agent

More Choices to Make

Apply for Regional Center Designation

Have your project adopted

Buy an existing regional center

Pooled individual EB-5s

Dictionary.com

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….

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”

Purpose of a Regional Center

Promote economic growth through:

increased export sales (if any)

improved regional productivity

job creation, and

increased domestic capital investment

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

What’s 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)

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 Center’s Administrative fee of $39,000 to $70,000 or more

Outside TEA =$1 million

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

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

What Else and Why?

Number of indirect jobs created through an EB-5 investor’s 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

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

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 investor’s 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

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

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

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