How does a municipality establish an EB-5 regional center?
We are a municipality looking to establish an EB-5 regional center. Are municipalities allowed to establish regional centers? What are the recommended steps for a municipality to establish an EB-5 regional center?
Municipalities can set up their own regional centers. There are even some states that have gotten their state designated as a regional center. The process would be the same as any other regional center designation process.
Yes, municipalities can apply to establish a regional center that will participate in the Immigrant Investor Pilot Program, in the same manner as any private entity. Establishing a regional center requires submitting Form I-924, Application for Regional Center Under the Immigrant Investor Pilot Program, along with a business proposal, supported by valid economic or statistical forecasts showing how the regional center will promote economic growth, how and how many jobs will be created directly or indirectly according to the business plan, and the amount and source of capital dedicated or invested toward building this enterprise and creating employment. The proposal must also include forecasts of and reasons why the new regional center will promote economic growth or have a positive impact on the region.
Yes. A number of municipalities have already created regional centers. The first step would be to contact an immigration attorney experienced with the EB-5 program to learn more about the program, its benefits and its potential pitfalls. The second thing to do is to research local laws and regulations, and determine if it is best for the municipality itself to own and operate a regional center, or if it is best done through a public/private, or private entity, such as a local non-profit or economic development corporation. Before reaching out to an immigration attorney, it is helpful to think about what the intended purpose of the regional center would be for the municipality, what types of projects the municipality would like to promote, and what other development finance tools and resources the municipality might be able to combine with EB-5 to benefit the community. Our firm has seen all kinds of development funded with EB-5, and we have also seen EB-5 combined with numerous other federal, state and local financing programs, such as TIF, NMTC, Historical Tax Credits, bond issuances, and others.
For a variety of reasons, municipalities should not directly establish a regional center. The funding from a regional center project must go to a "for profit" enterprise. Typically, a municipality will have its economic development corporation (or similar entity that is charged with providing incentives for local development) form a regional center. The economic development corporation can then raise money at inexpensive rates for the benefit of local development. The first step would be to gather information from EB5 practitioners and professionals so you can educate them about your potential projects. You want to make sure your projects will be marketable overseas. You also want your EB-5 team to educate you about the process and timing involved. Once all parties are convinced a regional center is a good course of action for you, the next steps can be discussed.
A municipality may establish a regional center. Under the rules of the SEC, a typical regional center is an "issuer" and possibly "broker-dealer," which carries many responsibilities under U.S. (and possible state) securities laws. If the municipality will receive the EB-5 funding for its own use (for building libraries, etc), setting up an regional center may be a good idea and worth the SEC compliance effort. If the municipality is looking at regional center designation in order to encourage foreign investment in private projects in the local area, it may not be worth the SEC obligations. It should encourage the developer to set up its own regional center. The regional center process and requirements are the same for a municipality as any other entity. You will need the following: 1) business plan to operate the regional center, 2) sample business plan for at least one project, 3) sample offering documents for that project, 4)economic impact report showing the expected benefits of EB-5 investment on your location, 5) a marketing plan and 6) a budget of $75,000 to $150,000 for accountants, business analysts, marketing and graphic design, economists, translators, immigration lawyers, securities lawyers, trips to China, etc.
Yes, municipalities are allowed to establish regional centers - as are county and state governments and other political subdivisions. The steps for municipalities to establish an EB-5 regional center are the same as those required of private persons and businesses; the requirements imposed under the EB-5 program are no different. However, additional steps required of public entities under applicable government, administrative, or legal rules and regulations that don not apply to private persons and entities, must also be complied with. We have worked with municipalities and other political authorities successfully establishing and operating regional centers, and the primary challenge is not complying with the EB-5 program - it is ALSO complying with all the other rules governing those municipalities, such as: may a public entity under state law own a for-profit business directly or indirectly, and if not how could a structure be designed to simultaneously comply both with state law and the EB-5 program''s requirements. Having experienced EB-5 corporate counsel working in concert with municipal counsel, whether city or county counsel or private law firms, is the key to harmonizing compliance with both the program and local laws - which is eminently do-able. Key takeaway: it certainly can be (and is being) done by municipalities, counties, states and other public entities. Come on, jump in - the water''s fine!