Experienced Regional Centers Always the Best?

If given a choice, virtually all immigrant investors select a regional center that has a track record of successful I-526 petition approvals. It’s even better if the center has I-829 approvals and has returned investors’ principal, either in whole or in part. Indeed, such centers have very significant pluses:

  • The management team has proven itself capable of managing complex issues like job creation methodology, targeted employment area designation, “at risk” nature of investment, etc.
  • Dozens if not hundreds of previous investors and their financial advisors have already vetted the center
  • The regional center management team members have demonstrated the ability to work together in an effective team over an extended period of time

It is essential for investors to understand, however, that a regional center is nothing but an umbrella organization that provides the legal foundation for EB-5 projects.  Indeed, some projects are not even run by the regional center itself, but instead are managed by outside developers, with the outside firm and the regional center sharing the profits. In every instance it is the project that makes the actual investment and creates the U.S. jobs, and it is the project that is being scrutinized when the investor’s I-526 and I-829 petitions are being reviewed by the USCIS. A regional center may have multiple projects available for investors at a given time, or none (the situation now with most established centers, who sold out faster than expected due to high demand from investors in recent months). The projects managed by a given center may vary significantly in character as well. One project might be an equity-based project, in which the center has long experience, and another might be the first loan-based project offered by the center.

Even though regional center designation would seem to remove issues like targeted employment area status, job creation methodologies, etc. from the table during petition review, the manner in which the individual project uses the regional center’s approval in these areas may cause problems for the I-526 or I-829 petitions. We recently reviewed a project offered by one of the most experienced regional center management teams that resulted in a Request for Additional Evidence on five separate project-based issues ranging from documenting “at risk” nature of the investment, to targeted employment area status (the USCIS questioned the unemployment figures used), to adequacy of the business plan.

And we haven’t even discussed the varying financial risks a regional center might be taking from project to project, which can be even more significant.

So, the moral is, yes, start by looking for a good regional center, but do a very, very careful due diligence on the project under consideration as well.

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