EB-5 Immigrant Investor Program. Anthony Derosby, Esq. Pierce Atwood LLP

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1 EB-5 Immigrant Investor Program Anthony Derosby, Esq. Pierce Atwood LLP

2 The EB-5 Category Section 203(b)(5) of the Immigration and Nationality Act (INA) allocates 10,000 EB-5 immigrant visas per year to qualified individuals seeking Lawful Permanent Resident (LPR) status on the basis of their capital investment in a commercial enterprise

3 Commercial Enterprise Any for-profit activity formed for the ongoing conduct of lawful business Can be a sole proprietorship, partnership, joint venture, corporation, business trust or any entity Can consist of a holding company and its wholly owned subsidiaries, provided that subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.

4 New Commercial enterprise created after November 29, 1990, or Commercial enterprise created on or before November 29, 1990, if Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or Expanded by the investment to 140% of preinvestment net worth or number of employees occurs

5 Job Creation Create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years (or under certain circumstances, within a reasonable time after the two-year period) of EB5 admission A qualifying U.S. worker is a U.S. citizen, LPR, asylee or refugee. Jobs created for nonimmigrant workers and/or members of the EB-5 investor s family do not qualify

6 Capital Investment Capital means cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the EB5 (personal and primary liability) Cannot use assets of the new commercial enterprise to secure EB5 investment indebtedness Cannot use assets acquired, directly or indirectly, by unlawful means

7 Investment Thresholds General: The minimum qualifying investment in the United States is $1 million Targeted Employment Area (TEA): The minimum qualifying investment is $500,000 A TEA is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate. 3,000/10,000 EB-5 visas set aside for TEAs.

8 Process Steps 1. EB-5 petition filed with USCIS. Focus is on investment. If approved 2. EB-5 and dependents apply for an immigrant visa. Focus is on the investor and family members. If approved 3. EB-5 and dependents granted two-year conditional permanent resident status. 4. EB-5 files petition with USCIS to remove condition at the end of the two-year period. Focus is on investment. If approved 5. Conditions are removed and EB-5 and dependents become lawful permanent residents.

9 Characteristics of LPR Status Live, work, study in the United States for EB5 and dependent family members Indefinite duration Multiple entry, but abandonment through failure to maintain residence, non-payment of taxes Eligibility for naturalization after 5 years of continuous residence

10 Regional Center Pilot Program Created by Section 610 of Public Law (Oct. 6, 1992) and has been extended through Sept. 30, EB-5 requirements for an investor under the Pilot Program are essentially the same as in the standard EB-5 investor program, except the Pilot Program provides for investments that are affiliated with an economic unit known as a Regional Center. Investments made through regional centers can take advantage of a more expansive concept of job creation including both indirect and direct jobs.

11 Regional Centers Any economic entity (public or private) designated by USCIS as a Regional Center Coordinates EB5 foreign investment in a defined, contiguous geographic area Regional Centers do not hold sole jurisdiction over their geographic region EB5s investing in RC in TEA get lower $500,000 investment threshold Currently over 240 designated Regional Centers

12 Regional Center Applications Must use economically or statistically valid forecasting tools to show how jobs will be created (directly or indirectly) through capital investments made in accordance with the regional center s business plan. Must show amount and source of capital committed to the regional center and promotional efforts for the business project. Must show regional center will have a positive impact on the regional or national economy.

13 Regional Center Designation USCIS acknowledgement that econometric models and business plans appear to be feasible and investments EB5-eligible Annual reporting: can be terminated if cease to fulfill program requirements or for fraud/misrepresentation Can be amended but only with subsequent application and approval Does not mean that capital investment projects are backed or guaranteed by the government

14 EB5 Program Statistics EB-5 visas issued nearly doubled between 2010 (1885) and 2011 (3463) and is projected by State Department to nearly double again in 2012 (over 6000) 90-95% of all EB5s in FY2010/2011 applied in Regional Centers Regional Center receipts more than doubled from FY2010 (152) to FY2011 (278)

15 EB5 Applicant Characteristics 70% of FY2011 EB5s are PRC, followed by South Korea, Taiwan, and Iran Only 5 EB5s applied in Regional Centers at the $1 million level (1 PRC/4 Dutch); over 3000 Regional Center applications were in TEAs at $500,000 threshold More stand-alone EB5s (230) applied at the $1 million level outside of TEAs than at the $500,000 level in a TEA (152)

16 Approval Rates The FY2011 EB5 approval rates: Initial EB5 petitions -- 85% Petitions to remove conditional status -- 96% In contrast, the approval rate for Regional Center applications receipted in FY2011 was under 50%: 278 Regional Center applications were receipted in FY2011 (123 approved, 58 denied)

17 Tony Derosby, Esq. Merrill s Wharf 254 Commercial Street Portland, ME PH / Next Presentation