CHOOSING A REGIONAL CENTER

Assuming that the above analysis leads to the conclusion that an EB-5 regional center investment may be a good or the best option for a particular foreign national, a critical decision still remains. There are presently approximately 20 regional centers that have been approved by USCIS. Some of the approved regional centers have long and well-established track records; other are newly established and relatively untested. Because of the importance of the regional center’s continued existence throughout the condition removal process, and the importance of the predicted job creation - - direct or indirect- - actually occurring in order to accomplish condition removal, the choice of regional center is an especially important one.

For this reason, we have compiled a list of questions that may be relevant in enabling an investor to choose the optimal regional center both for immigration purposes and for purposes of addressing his or her investment needs and desires. In reviewing this list with their clients, most attorneys will want to draw a clear line between providing immigration advice and providing business/tax/investment advice. Presumably, it is the immigration attorney’s role to provide some guidance on the immigration ramifications of a decision to invest in any particular regional center. Equally clearly, the immigration attorney will likely want to steer clear of providing any non-immigration advice.

The following is a suggested due diligence list:

1. When was the regional center approved by USCIS, and has it gone through recertification?
   
   Regional centers that have more recently been approved may have very little track record of successful immigrant petitions or of job creation. Some regional centers have become inactive, and some have not been recertified.
   
   
2. Has the regional center’s program been reviewed by the AAO?
   
   If so, there is an added level of security.
   
   
3. Is the regional center affiliated with any government entity?
   
   If so, an added level of credibility exists; and the government entity may have experience in job creation.
   
   
4. How many years of experience does the general partner or principal in the investment project have in working with immigrant investor programs?
   
   Some of the general partners or regional center creators have little or no experience with immigrant investor programs. Others have extensive experience both in the United States and with investor immigrant programs in other countries.
   
   
5. How many years of experience do the principals involved in the regional center have in job creation?
   
   In order for the condition removal to be successful, actual jobs will have to be created. Principals who have extensive experience in actually creating jobs should be a consideration.
   
   
6. Does the regional center investment include direct job creation, indirect job creation, or both?
   
   Although indirect job creation is acceptable for regional centers, projects with at least some significant amount of direct job creation may be safer alternatives.
   
   
7. How many I-526 petitions have been filed by investors in the regional center? How many have been approved? How many have been denied?
   
   The regional center’s track record is of critical importance. A record of a substantial number of approvals and no denials is optimal.
   
   
8. How many I-829 condition removal approvals have the regional center investors received? How many denials?
   
   This is ultimately one of the most important questions. Approval of the I-526 petition is not the ultimate goal; approval of the I-829 condition removal petition is the goal. From an immigration point of view, the safest regional center investments are those in regional centers with condition removal approvals.
   
   
9. Does the investor have to make a deposit or pay any fee for the offering materials?
   
   If so, the investor needs to evaluate the benefits of investing in a regional center that has such requirement versus one that does not.
   
   
10. What is the amount required to be paid by the investor?
    
    In virtually all regional centers, the investment amount is $500,000. Regional centers generally have additional costs and fees of $25,000 to $50,000.
    
    
11. Is payment made into an escrow account? Is the investment amount refunded if the I-526 is not approved?
    
    The provision of an escrow account with the money remaining in escrow until the I-526 petition is approved is a critical security feature for the investor. This is perfectly appropriate on EB-5 cases.
    
    
12. Can the investor redeem his or her investment following condition removal?
    
    The investor will certainly want to have an understanding of the likelihood of being able to redeem his or her investment after a specified period of time following condition removal. With some regional centers, this is fairly certain; with others it is not.
    
    
13. What provisions are made regarding the security of the investment?
    
    Needless to say, the investor wants to perform due diligence regarding the likely security of his or her investment.
    
    
14. What use is made of the investor’s funds? What is the type or types of projects?
    
    Regional center investments may involve commercial building projects, condominiums, hotels, films, studios or other projects.
    
    
15. What is the form of the investment—limited partnership, LLC or other?
    
    Limited partnerships are most common; however, other forms of investment exist in different regional centers.
    
    
16. What has been the rate of return to investors historically?
    
    As with other investments, investors may need to balance the importance of immigration track record, security of the investment and rate of return on the investment.
    
    
17. Does the regional center provide regular reporting of the status of the investment to the investors, and at what intervals?
    
    Optimally, the investor should receive a regular report with an update on the investment project, job creation and new investment opportunities.
    
    
18. What precautions are taken to monitor job creation? What steps are taken if the requisite job creation has not occurred?
    
    The investor should look for a project with detailed job reporting on a regular basis and with a provision that failure to create the required jobs establishes a basis for reinvestment of the proceeds in another project, so as to keep the investor’s immigration and investment process on schedule.
    
    
19. Who are the attorneys who regularly represent the regional center?
    
    Some regional centers require the investor to use the regional center’s attorney to file the investor petition, and others do not. The regional center’s immigration attorney may provide review and counseling to an investor’s attorney.
    
    
20. Does the regional center’s attorney contact the foreign national directly, or can the referring attorney maintain all contact with the foreign national?
    
    With some regional centers, the attorney deals with the investor directly. With others, even if the regional center’s attorney is handling the investor petition, the attorney may deal only with the referring attorney at the referring attorney’s request.
    
    
21. Does a referring attorney get any fee from the regional center?
    
    Most regional centers provide a fee to a referring attorney. Each individual attorney needs to determine any ethical considerations involved in accepting such referral fee under the rules of professional responsibility of the state in which the attorney practices.