Continued from page 51 agency officials. It took several months, but eventually Mr. Berez advised that USCIS concluded that it was charged with determining if an applicant earned his or her capital legally and that it was not the agency’ s job to enforce China’ s restrictive currency policy. That green light is why we pursued the China market.
More recent examples of challenges pertain to the timing of being able to release investor funds. Initially, it took three to five months for an I-526 application to be adjudicated. At the time, our escrow agreement provided for the unconditional release of an investors’ capital contribution to a specific project only after his / her I-526 petition was approved; it was fully returned if the petition was denied. When adjudication timeframes steadily increased toward 14 or 15 months, not only were investors distressed, but also the unanticipated delay became a very serious problem for the project developers.
For instance, construction workers at our University of Hawaii West Oahu campus development project were not being paid because our investors’ escrowed funds could not be released until their individual petitions were approved. The story made the papers and the University of Hawaii Board of Regents called me in to explain. I did my best to explain the industry-wide delays and expressed my confidence that the project met the highest standards of the EB-5 program. The University Regents voted to allocate sufficient short-term interim funding to ensure the construction workers were paid. After the EB-5 investors were approved, this interim funding was fully reimbursed.
Staff: When you do projects, is it a loan model where you’ re the lender, or do you actually own the project as well?
Rosenfeld: One thing that we’ re really clear about is that we are in the job creating immigration business. The idea that you can find a project that’ s going to achieve the substantial job requirements of the EB-5 program, protect your principal and also provide you with a good return, is more than we can accomplish. That’ s not our model. Our model is very conservative.
Staff: So your model is a loan model?
Rosenfeld: Exactly. Ours is a loan model. We’ re interested in providing below-market-rate loans, on an interest-only basis, to companies who find that additional incentive significant enough to undertake a job-creating project that they may not otherwise pursue. In consideration for this attractive loan, we need to be relatively confident that the project will create the requisite number of qualifying jobs and is very likely to repay the EB-5 partnership loan in a timely manner.
We advise potential investors that if they want to earn a high return, or have an equity interest— that’ s not us. That’ s not to say that it’ s right or wrong, it’ s just not our business model.
Staff: When people are contacting you, are they mostly governmental agencies or project developers? Do people ask you to look at their project and tell them if it’ s EB-5 friendly?
Rosenfeld: We receive inquires from both sources, however, most of the projects we have promoted originate from our governmental agency partners. States and cities aggressively compete for job creating businesses and these businesses are not shy about seeking economic incentives. Our main source of projects is economic development agencies that are approached by businesses promising jobs and looking for something in return. Because of the substantial cutbacks to traditional economic incentive programs, EB-5 financing has become a very important incentive tool for our governmental agency partners.
Staff: If a big developer were to call you and ask you to do the raise for them, do you say“ That’ s not my business model,” or do you say,“ Let’ s talk?”
Rosenfeld: We are always willing to talk and we have worked with a select group of developers. For CanAm, the recent interest of large U. S. developers seeking to use the EB-5 program as a cheap source of financing for their traditional office or residential development projects raises new considerations. The EB-5 program is a national asset with a limited number of visas. The idea that a sizable percentage of these visas will be monopolized by a select group of multi-billion dollar developers for office or residential projects that would likely be completed, with or without EB-5 funds, doesn’ t pass“ the smell test.”
During our over 25-year history with immigrant investor programs, we have repeatedly been sensitized to the fact that these programs will continue to evolve and change in response to media attention and political concerns. Senator Leahy, who chairs the Senate Judiciary Committee with USCIS oversight, became the program’ s most important proponent, in large part, because of the importance of the EB-5 program to the Vermont business community. If that community expresses its concerns about the monopolization of the program by large New York or Los Angeles developers, or a few negative articles are written about this development, it is my opinion that these traditional office or residential development projects will receive greater USCIS scrutiny.
“… we are very interested in promoting socially responsible projects that clearly have a public benefit.”
The bottom line is that, in the current EB-5 environment, we are very interested in promoting socially responsible projects that clearly have a public benefit. It doesn’ t matter whether these projects originate from our economic development partners or large developers.
52 EB5 Investors Magazine