EB-5 Program February 2011 P R E S E N T E D B Y : www.hackleyrobertson.com
U.S. Employment-Based Immigration 1. First Preference: Priority Workers (EB-1) 2. Second Preference: Advanced Degree and Professionals of Exceptional Ability (EB-2) 3. Third Preference: Professional Workers and Skilled and Unskilled Workers (EB-3) 4. Fourth Preference: Special Immigrant, Including Religious Workers (EB-4) 5. Fifth Preference: Investment in Job Creation Enterprises that Stimulate U.S. Economy - Commonly Known as The EB-5 Program 2
History 1. EB-5 was created by the U.S. Congress in 1990 under the Immigration and Nationality Act for the purpose of promoting economic growth and creating U.S. jobs. 2. In 2002, Congress amended the law to make the program easier to utilize and more investor friendly. 3. The EB-5 Program comes under the jurisdiction of the U.S. Department of Homeland Security and is directly administered by the United States Citizenship and Immigration Services (USCIS). 3
Mission and Objectives 1. To attract foreign capital into the U.S. to invest into USCIS approved commercial enterprise projects. 2. To create a minimum number of jobs for qualified workers (10 jobs per individual EB-5 investor). 3. Provide the immigrant investor and immediate family (spouse and children under the age of 21 years) with green cards, giving them immediate lawful temporary resident status in the U.S., and after 2 years, permanent residency. After 5 years, the investor may qualify to apply for U.S. citizenship. In essence, the immigrant investor and his family are free to come and go as they please and can live anywhere in the U.S. Also, his children are free to apply to and attend the college or university of their choice. 4
Key Business Components 1. Regional Center: A Regional Center means any economic unit, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment. The Regional Center serves as an overseer and sponsor of all EB-5 projects within its designated region. It monitors and tracks EB-5 immigrant investment into qualified EB-5 projects in keeping with the requirements, policies and regulations of USCIS. 2. EB-5 Project: Is a job creating, commercial enterprise that is duly sponsored by an approved Regional Center in accordance with the regulations and standards of USCIS. Of particular importance, the commercial enterprise must clearly establish its ability to generate and sustain the minimum requirement of 10 new, permanent jobs for each EB-5 investor. Jobs may be direct, indirect, or induced. 5
Minimum Level of Investment 1. $1,000,000 is the threshold minimum investment. 2. $500,000, if investing into EB-5 projects located in an area designated by the respective state government as a Targeted Employment Area. Targeted Employment Area (TEA) is defined by USCIS as a geographically designated area where the average unemployment rate exceeds the national unemployment rate by 150% or it is a rural area. A Rural Area is defined by USCIS as an area not located in a standard metropolitan statistical area nor is located within any city or town having a population of 20,000 or more, as based on the most recent decennial census of the United States. 6
Types of EB-5 Investments A qualifying EB-5 investment can be targeted for: 1. The creation of a new original business; 2. The purchase of an existing business and simultaneous or subsequent restructuring or reorganization such that a new commercial enterprise is created; 3. The expansion of an existing business from investment capital, so that there is a substantial change in the enterprise's net worth or number of employees. Substantial change means a 40% increase either in net worth or number of employees thus, in effect, increasing actual pre-expansion net worth or number of employees by 140%. The required investment level must be maintained for a minimum period of at least two years; 4. Investment in a troubled business provided it has been in business for a minimum period of at least two years, and has incurred a net loss for accounting purposes (according to generally accepted accounting principles) during the 12 to 24 month period before the priority date on the EB-5 investor's Form 1-526. The loss for such period must equal 20% of the troubled business's net worth. 7
Qualities of a Sound EB-5 Investment 1. The business plan and overall business concept must make sense and demonstrate that it will have good market and investor demand. 2. The project must demonstrate its ability to create a minimum of 10 full-time permanent U.S. jobs (direct, indirect, or induced) per investor within the required time period. 3. The project must demonstrate that the investment has been fully funded at the time the investor applies to have his conditional lawful permanent resident status converted to permanent resident status. 8
Qualities of a Sound EB-5 Investment (cont d) 4. The project should have a balanced capital structure. 5. The project should present a viable exit strategy that provides a reasonable means (not a guarantee) for the investor to receive the return of his investment, and offer a rate of return to the investor during the investment period. The investment must be shown to be fully at risk. 6. The Project must have an experienced and sound management & development team. 9
Steps In Making An EB-5 Investment 1. Select a USCIS approved, job creating, commercial enterprise project that meets the investor s investment criteria. 2. Complete an Investor Questionnaire. The investor must be an individual who can be deemed a Qualified Investor. The qualified investor is an individual who meets the following requirements: a. Has a net worth (either individually or with spouse) of at least $1.0 million b. Has an individual income of at least $200,000 in each of the two most recent years and expects such income in the current year, or c. Has an annual income jointly with their spouse of at least $300,000 in each of the two most recent years and expects such income to continue in the current year. 10
Steps In Making An EB-5 Investment (cont d) 3. The investor will then receive the Offering Memorandum, other investment documentation, and disclosures for review and acceptance. 4. The investor then signs the Subscription Documents and other required forms, and returns the documents to the EB-5 project developer. Note: At this point the investor must send the full amount of his investment (e.g. $1,000,000) plus an additional payment (e.g. $50,000) for the administration fee. 5. The full amount of the investment is placed into escrow, controlled by a third party. 11
Steps In Making An EB-5 Investment (cont d) 6. The investor and his immigration attorney then prepare and file the Form I-526 Immigrant Investor Petition and government filing fee with the USCIS for adjudication. 7. An important part of the Form I-526 package is demonstrating the lawful source of funds. 8. If the petition is approved, USCIS sends the case to the U.S. Embassy in the Investor s home country for the immigrant visa interview. 9. If the petition is denied by USCIS, the investment funds (excluding the administration fee) are promptly returned to the investor from the third party escrow account. Note: the investment funds are immediately released to the developer upon approval by USCIS. 12
Steps In Making An EB-5 Investment (cont d) 10. After the Embassy interview, the Embassy should issue the investor and his qualifying family members Conditional Permanent Resident Status for a period of two years. 11. After 21 months, immigration counsel files the Form I- 829 Petition to Remove Conditional Status with the USCIS and thus seeks to remove the condition so that the investor becomes a lawful permanent resident of the U.S. 13
Steps In Making An EB-5 Investment (cont d) 12. To successfully obtain permanent status, USCIS verifies that the job creation requirement has been met and the investment capital was fully allocated. If these criteria are not met, the investor s Form I- 829 to become a permanent resident is denied and the investor must seek an alternative visa option to remain in the U.S. After the investor has been a permanent green card holder for five years, the investor and his family may be eligible to file application for U.S. Citizenship. 14
Forms & Filing Fees Form I-526 I-485 Description Represents the foreign national s request to the USCIS to be classified as a foreign investor under the statute. Formal application for the conditional green card. Current Filing Fee* $ 1,500 $ 1,070 I-829 Document filed by the foreign investor to have his or her condition removed. $ 3,750 * As of February 2011 15
Estimated Approval Times EB-5 Case Processing Form Type Target Processing Time Current Processing Time I-526 Five Months Five Months I-829 RC Initial Designation Proposal Five Months (Following 24 Month Waiting Period) Four Months Six Months Five Months EB-5 Project Four Months Five Months Note: Responses to requests for evidence (RFEs) for individual petitions, and for new or amended RC Proposals are matched with the case file upon receipt of the response. CSC strives to finalize EB-5 cases within 30 days after the responses to the RFEs are received. Source: US Citizenship and Immigration Services 16
Statistics EB-5 Individual Petition Filing Receipts FY05 FY10 Fiscal Year Form I-526 Petition FY10 1955 768 FY09 1028 437 FY08 1257 390 FY07 776 194 FY06 486 89 FY05 332 37 Form I-829 Petition Source: US Citizenship and Immigration Services 17
Statistics (cont d) Form I-526 Petition Final Actions and Final Action Percentages for FY05-FY10 Fiscal Year Form I- 526 Approvals Final Action % Form I- 526 Denials FY10 1369 89% 165 11% FY09 1262 86% 207 14% FY08 640 84% 120 16% FY07 473 76% 148 24% FY06 336 73% 124 27% FY05 179 53% 156 47% Final Action % Source: US Citizenship and Immigration Services 18
Statistics (cont d) Form I-829 Petition Final Actions and Final Action Percentages for FY05-FY10 Fiscal Year Form I-829 Approvals Final Action % Form I-829 Denials FY10 274 83% 56 17% FY09 347 86% 56 14% FY08 159 70% 68 30% FY07 111 69% 49 31% FY06 106 64% 59 36% FY05 184 62% 112 38% Final Action % Source: US Citizenship and Immigration Services 19
Statistics (cont d) FY10 EB-5 Visa Usage by Country of Chargeability Country of Chargeability Total EB-5 Visas Issued China Mainland Born 772 41% South Korea 295 16% Great Britain & N. Ireland 135 7% China Taiwan Born 94 5% India 62 3% All Other Countries 527 28% % of Visas Issued Source: US Citizenship and Immigration Services 20
Summary & Conclusion In summary, the EB-5 program is a "win-win" program for many as described by the following benefits: The fastest way to obtain a U.S. green card and U.S. citizenship Permanent Residency in the U.S. for investor, spouse and any children under 21 years of age No sponsor needed No waiting list No quota backlogs like those found in many other employment and sponsorship visa programs; there is a quota of 10,000 immigrant visas allowed with 3,000 reserved for EB-5 investment Regional Centers Current usage is comfortably below the quota limits No language, related business experience, or minimum education requirements Foreign investors utilizing a designated regional center are given priority by USCIS Job creation requirement is satisfied by direct and indirect job creation Investors freed from managing investment on a daily basis Free to work and live anywhere in the U.S. By obtaining a green card an investor and family are given benefits similar to U.S. Citizenship Green card allows the investor and family easier travel to and from their homeland Education at colleges and universities for students at U.S. resident costs Investor and family may be eligible to apply for citizenship after 5 years 21
Informative U.S. Government Links www.uscis.gov Website for the USCIS www.uscis.gov/eb-5centers Current listing of all approved Regional Centers www.travel.state.gov Website for the U.S. Department of State s Visa Office 22
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