What is the legal relationship between the regional center and the EB-5 project?

Sometimes the regional center owns the project, but more often, the regional center contracts with a project developer. The regional center has received and owns the USCIS designation. The project developer likely owns the rights to develop a certain project that might benefit from EB-5 capital. The two negotiate terms and come to an agreement about who bears certain responsibilities and what role EB-5 capital will play in the project, i.e., loan model/equity model, mezz. financing, place in capital stack, exit strategy, etc. Then the regional center often will prepare an exemplar, which contains all of the project documents, and submit it to USCIS for consideration. With an exemplar approval, USCIS will grant deference to any regional center investors in that particular project, assuming they file the same business plan, economic report, and transactional documents. "Deference" just means that USCIS will defer to its prior adjudication when it approved the exemplar and that it will not re-adjudicate those issues on every I-526 submission.

A regional center is a business entity. As a business entity, it can have many different projects. In the EB-5 arena, EB-5 projects are projects of regional centers.

Frequently, a regional center is a general partner in a limited partnership that is a new commercial enterprise lending funds to an EB-5 qualified project. Foreign EB-5 investors are limited partners in such a limited partnership. Most often an EB-5 project is not owned by a regional center. Scenarios may differ and you should inquire about a specific project and request offering documentation from a regional center to review terms.

A legal entity or company or semi-government agency, city or state, can be designated as a regional center by USCIS. A developer who wishes to construct a project under the name of a separate legal entity such as a hotel may use or rent the regional center destination to show how the required number of indirect jobs are calculated and how the investment funds may be loaned to the EB-5 project.

This varies from project to project and regional center to regional center; but basically the regional center is the entity which petitions for you to obtain permanent residency. The project may be one of many that the regional center is undertaking to use the money in a commercial enterprise and create the promised jobs. Some regional centers have only one project and some have hundreds - one gets built and then the next one starts. You can also have a "stand-alone" project that the EB-5 investor or another developer manages with no ties to a regional center.

Regional Economic Center (REC) is used in the Immigration and Nationality Act (INA) and Title 8 of the Code of Federal Regulations (CFR). Each REC established according to the INA and 8 CFR may have one or more projects that are open for foreign investors to invest capital in and gain U.S. permanent residency.

Normally, the regional center is the general partner who will gather EB-5 investors into a limited partnership as a new commercial enterprise that will lend money to an EB-5 project as a job creating enterprise that will utilize the EB-5 funds to create jobs. An EB-5 regional center project usually refers to a particular project in which the regional center is lending money at the time. However, usually the project is not owned by the regional center, but has an arms-length transaction as a lender to the project and the project developer. If the regional center is the same entity or has persons who are developing the project and own the project, then you may not want to invest in that; you do not have adequate safety built into the project or the partnership as the same entity/persons control everything and you have no recourse if something goes wrong.

The "regional center" is the government sanctioned entity that serves as the reviewer and ultimate manager of the "project" for immigration compliance purposes. In some cases, the regional center entity may also be the general partner or managing member of a corporate vehicle that facilitates the funding of the "project." You generally do not invest in a regional center. You invest in a project that is sponsored by a regional center and is under its supervision.

Sometimes, the regional center is directly affiliated with the project. Other times, there is simply a memorandum of understanding between the two entities. Sometimes, the regional center establishes the new commercial enterprise and acts as lender to the project. Other times, all they offer is their designation for the project to establish their own new commercial enterprise and loan structure. So, for the classic lawyer answer, it depends! In any case, retaining EB-5 immigration counsel will be very beneficial in establishing your legal and financial infrastructures.

It will depend upon the mission of the regional center. Some regional centers are set up for one project. An example could be a winery that needs funding. The winery applies for regional center status and the project and regional center as one. Another regional center may be just set up to handle projects brought to them by developers. In this later case then the regional center and project are two separate entities. The regional center has certain obligations under the law, among them is to perform due diligence to ensure the project would qualify under USCIS rules. The center must also monitor the project and report on job creation and other requirements of USCIS. There are also separate contractual obligations between the center and the project which may vary according to the nature of the project.

It really depends. Some regional centers are affiliated or have an ownership stake in the projects that they sponsor. Other regional centers act merely as a conduit for the project to be able to utilize the EB-5 regional center program. Only regional center projects can take advantage of indirect job creation, and the loan models that they use. Those projects typically end up paying a fee to affiliate or "rent" from the regional center, with the regional center overseeing some part of the project. Some regional centers will administer the loans to the projects, and even be involved in assisting the projects to raise the capital.