The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.
There have always been a number of advantages to forming a regional center. A developer who forms a regional center can sponsor as many projects as it wishes. Only a regional center project can count direct and indirect jobs. The regional center format allows for the use of the “loan model” in which the NCE loans money to the developer.
Over the last 12 to 18 months, and especially since May 30, 2013, the value of a regional center – and the benefits of a regional center designation – have increased very significantly. There are many reasons for this conclusion.
Prior to May 30, a regional center was limited to sponsoring projects in the specific industry code for which it received authorization. This required pursuing the lengthy amendment process every time a project delved into a non-approved industry code. The amendment process frequently took more than a year before the project could be marketed to investors.
The May 30 USCIS EB-5 Policy Memorandum eliminated this disadvantage completely. Regional centers are no longer limited to designated industry codes. They are free to move forward with projects in any industry code. This is a huge benefit.
The change in the USCIS policy regarding geographical limitations of a regional center is noteworthy, although somewhat less significant. Regional centers are still limited to designated geographical areas even after the May 30 Policy Memorandum. However, the geographical areas can be expanded as part of the I-526 process without the necessity of waiting a very long period for a regional center amendment to be approved. It remains to be seen whether investors will be interested in investing in a project that requires USCIS approval of a geographical expansion of the regional center in order for the investor’s I-526 petition to be approved.
On the positive side, there are some recent indications that USCIS has a more expansive view of the appropriate geographical expanse of a regional center. While entire state or multiple state regional centers were virtually unheard of in I-924 adjudications for two or three years, more recent adjudications in this area have been less restrictive.
In the category of “for every cloud there is a silver lining”, another increasingly significant advantage of a regional center designation is the ability to sponsor third party projects. This is nothing new, so why is it worth mentioning it in an article about how regional centers have become more valuable in recent times? The reason is the “cloud” – processing times for new regional centers, which have often exceeded 18 months. Project developers faced with a choice of waiting 18 months for approval of a regional center before commencing marketing of a project have increasingly made the rational decision to pay often substantial sums to an existing regional center to sponsor the project. The end result is that the marketing to investors can commence virtually immediately, and the money can get into the project ten or more months sooner. The silver lining is that many regional centers have profited and are profiting from this overhanging cloud.
Finally, it is important to note that the burden required to get a regional center approved has diminished since May 30. USCIS appears to be serious regarding the lesser standards and lesser documentation required for the use of a hypothetical project as the basis for the creation of a regional center. Although there may be important marketing advantages to having the regional center approved with an exemplar project, those advantages may be offset by the lower standards required for a regional center approval based on a hypothetical project. Rather than delaying the filing of the regional center application until everything necessary for an exemplar approval has been executed and compiled, in many cases it is more prudent to get the regional center approved based on a hypothetical project while compiling the necessary documentation to meet exemplar standards and having that documentation ready for the investors’ I-526 petitions.
Being an approved regional center constitutes a very serious responsibility both to the U.S. government and to investors investing in projects sponsored by the regional center. The good news is that it is a responsibility that carries with it great rewards. These rewards are greater today than ever before.
