In recent years, developers seeking to raise capital have taken a keen interest in the EB-5 regional center investor visa program. Regional centers are entities designed to use immigrant investor capital to promote economic growth in a particular geographic area or region. Developers seeking to raise capital through this program can invite foreign investors to invest $1 million and pool that capital into a new commercial enterprise that creates employment for 10 U.S. workers for each $1 million invested. Developers with projects located in Targeted Employment Areas (TEAs) can invite foreign nationals to invest at the reduced amount of $500,000. The investor visa program is an attractive source of financing because:
- Developers enjoy relatively inexpensive borrowing costs (ranging from 3 to 5 percent); and,
- Investors are attracted by the prospect of getting a green card, which provides an important part of the return on the investment.
Green Cards for Foreign Investors
The EB-5 investor visa program gives permanent residency (a green card) to foreign nationals who invest in individual capital development projects as well as projects sponsored by regional centers. After five years of residency, the foreign investors can apply for U.S. citizenship.
The Regional Center Program
Most investors opt to invest in projects sponsored by regional centers. Regional centers are legal entities organized to use immigrant investor capital to promote economic growth in a particular geographic area in specified industry clusters.
Any entity, government, or private organization may apply for regional center designation by submitting a written economic development plan and proposal to U.S. Citizenship and Immigration Services (USCIS).
A regional center’s proposal must contain a clearly identified, contiguous geographic area typically defined by census tracts. Some regional centers cover an entire state, while others encompass several counties or several small census tracts. If the center contemplates investments of $500,000, it must identify the TEAs. Most EB-5 visas are issued through the regional center pilot program because USCIS allows regional centers and the projects they sponsor to calculate job creation through econometric models that count direct, indirect, and induced jobs. Companies seeking to raise capital through the EB-5 program can either establish their own regional center or affiliate with an existing one.
Project Types That Have Successfully Accessed EB-5 Financing
The project types most suitable to the EB-5 program are those that create many jobs. Project types are driven by the appetites of investors, particularly Chinese investors. These investors like the loan model, security, and projects with some type of local, state, or federal government backing or involvement. EB-5 capital has been used to fund such projects as:
- hotels and casinos
- mixed-use multi-family rentals
- high speed rail systems
- ski resorts
- film production
- nursing and assisted living facilities
- medical research facilities
- manufacturing facilities
- large infrastructure and construction projects and bridge construction