In 1992, the United States government created the
EB-5 Pilot Program, giving life to the EB-5 Regional
Center. These private entities are given the
responsibility of matching foreign investment with
new businesses in the United States. Though it has
been a learning process, since 2003, EB-5 Regional
Centers have invested over $3.1 billion dollars
of foreign capital in the United States economy,
creating over 65,000 jobs for U.S. workers.1
As one of the older regional centers, receiving designation in
March of 2009, Chicagoland Foreign Investment Group, LLC
(CFIG) has watched the EB-5 industry grow from infancy into
its rebellious adolescent years. This has been characterized by concerns raised over tenant occupancy methodologies, California’s
succinct definition of Targeted Economic Areas (TEAs), and
the cavalier increase of regional centers from twenty-seven in
2008 to 251 in 2013. EB-5 financing has certainly caused both
enthusiasm and headache over the past 5 years.
One noticeable aspect of the EB-5 industry has been its
glamour. With the level of investment set at either $500,000 or
$1,000,000 dollars, this program targets high net-worth foreign
nationals interested in becoming United States permanent residents. With a limited pool of potential investors and an evergrowing need for new capital in the United States, marketing is
a big piece of the EB-5 financing puzzle. To reach these foreign
investors, the question becomes: what appeals to the wealthy
elite so that they’ll invest in my project?
An answer that the EB-5 industry continues to rely on is:
glamour, allure, luxury. This is one reason why a majority of
EB-5 projects are concerned with constructing resorts, exclusive
hotels and residential communities, gold mining, and sports
arena renovation. With the price tag for these projects being in
the hundreds of millions of dollars, they simultaneously can afford significant capital investment, while superficially appealing
to the lifestyle of high net-worth individuals.
A larger project budget means that the EB-5 investment will
be a piece of the overall financing structure. Some investors feel
more protected if regional centers involve multiple sources of
equity and debt financing for their total project budget.
However, multiple financing methods can give the illusion
that a project is safe for investment. With issues of timing and
public/private partnerships, multiple sources of financing can
put substantial pressure on the project and may decrease the
profitability of the project. This would then lower the investment returns for the EB-5 investor, and possibly, the ability to
create the jobs required under the EB-5 Program.
Mr. Joseph Barnett, Esq., an experienced EB-5 attorney with
The Law Offices of Kameli and Associates, P.C., explains the
hazards of multi-tiered financing, “a large project that is only
partially funded may not be able to create the number of jobs
stated in the projects’ business plan, decreasing the chances that
the immigration application will be approved.” Mr. Barnett is
getting to the crux of this EB-5 marketing mirage: enamored
with luxury, investors are putting their permanent residency
more at risk if a project has not identified its financing partners
and does not have a clear, committed timeline for its financing
It is with all of this in mind that CFIG wishes to make a suggestion. A sophisticated investor should be looking at 4 things
when considering which EB-5 project to invest in:
1. Is this project real?
2. Will this project create jobs?
3. Will my investment be returned?
4. Will this project give my family and I green cards?
Mr. Taher Kameli, Esq., Executive Director of CFIG, believes
the answer to these questions is yes, if the project size is kept
small and the industry within which one is investing is naturally
job-creating. Naturally job-creating refers to industries that require either a large number of employees, like manufacturing
facilities, or 24/7 on-call staff, like nursing homes and assisted
Mr. Kameli considers small projects those with a total budget
under $20 million dollars. Small projects minimize the risk that
a project will have the sufficient capital needs necessary to create
enough jobs to support approvable immigration applications.
Every investment is going to be a risk, but there are ways to diminish the risk if an investor is willing to do their due diligence,
and with the number of regional centers continually i