Congress created the EB-5 category in 1990 to attract foreign entrepreneurs to invest in US businesses in exchange for immigrant visas. By investing $1,000,000 or $500,000 in new or troubled businesses and by creating 10 jobs for US workers, an alien investor may obtain a green card for himself and his immediate family. The annual 10,000 immigrant visas allocated to the EB-5 category have been highly underutilized in the past. However, the category is growing in popularity with a recent surge of 4,218 visas obtained in 2009 compared to just 1,443 visas in 2008. Most of the EB-5 visas in the past year were issued through Regional Center Pilot Programs.

There are two ways for an alien investor to obtain lawful permanent resident status under the EB-5 category: through the Basic Program or the Regional Center Pilot Program. Whereas the Basic Program requires investment in a commercial enterprise located anywhere within the US, the Regional Center Program requires investment in a regional-center-affiliated new commercial enterprise or a troubled business within a designated regional center. (Regional Centers are USCIS-designated geographical locations defined as economic units, public or private, involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment.) Also, the Basic Program requires that the alien’s investment directly create 10 new full time jobs, whereas this requirement for a Regional Center Program may be satisfied by indirectly created job opportunities for the local job market due to the investment.

In both the Basic and Regional Center Programs, the alien must make a minimum investment of $1,000,000, unless the investment is made in a Targeted Employment Area (TEA). TEAs are defined as either: (1) rural areas (areas with populations of less than 20,000), or (2) areas with unemployment rates 150% or more of the national rate. If the investment is made in a TEA, a reduced $500,000 investment is allowed. In the past, TEAs have been focused on the development of rural locations. With the economic downturn in recent years, typically prosperous metropolitan neighborhoods may now qualify for the reduced threshold investment based on increased unemployment rates.

For example, in October of 2008, USCIS approved the New York City Regional Center as a designated regional center. Although New York City has been called the “financial capital of the world” in the past, rising unemployment rates have allowed the designation of regional centers in the metropolis. NYC Regional Center’s first project is the redevelopment of the Brooklyn Navy Yard. The center’s managing principal, George Olson, stated that he purposely targeted an area of high unemployment.

The number of EB-5 Regional Centers in the US has more than doubled, rising from 45 to 95 regional centers between the years 2009 and 2010. Those individuals or entities interested in creating a designated regional center must submit a proposal to USCIS’s California Service Center. The Regional Center Proposal should resemble a business plan, demonstrating the following:

1. A clearly identified contiguous geographical area for the regional center
2. A detailed description of how EB-5 capital investment within the geographical area of the regional center will create qualifying EB-5 jobs, either directly or indirectly. (This should be supported by data, studies, analyses, etc…)
3. A detailed prediction of the proposed regional center’s predicted impact regionally or nationally on household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and outside of the geographic area of the proposed Regional Center
4. A description of the plans to administer, oversee, and manage the proposed Regional Center, including how the center will:
a. Be promoted to attract EB-5 alien investors, including a budget for promotional activity;
b. Identify, assess, and evaluate proposed immigrant investment projects and enterprises;
c. Structure its investment capital;
d. Oversee investment activities affiliated with, through, or under the sponsorship of the proposed Regional Center
(As of December 2009, USCIS has stated that there is currently no form or filing fee required for the submission of a Regional Center Proposal.)

If the proposal is based on the reduced $500,000 investment threshold, it must clearly identify the TEA. In order to prove that the proposed regional center is located in an area of high unemployment, the proposal must either submit unemployment rate data or obtain a letter from an authorized State agent certifying that the area has been designated as having a high rate of unemployment. Unemployment statistics can be obtained from the U.S. Census Bureau (http://quickfacts.census.gov/qfd/index.html) and the Bureau of Labor Statistics (www.bls.gov/lau/). States, the District of Columbia, and U.S. territories may also publish local area unemployment statistics on their government websites. Certification letters can be obtained from State governors, unless the governor has chosen another governmental entity for this purpose. (For example, the Texas Workforce Commission has been designated to certify TEAs in the State of Texas.)

In a “Question and Answer” session in December of 2009, USCIS stated that purposely drawing regional center areas where high rates of unemployment do not exist, but are instead created by selecting sections of cities or city blocks, frustrates the intent behind the EB-5 designation. Such regional center proposals would be looked upon less favorably than integrated locations that clearly demonstrate high rates of unemployment unless they are accompanied by letters of designation from an authorized governmental authority. However, USCIS refused to confirm whether this practice was acceptable for state officials to make these kinds of TEA designations.

Simply because USCIS approves a Regional Center proposal does not mean investors in the center will automatically have their EB-5 immigrant visa petitions approved. An alien investor who wishes to participate in the Regional Center Pilot Program must establish his independent EB-5 eligibility by filing Form I-526 and submitting the necessary documents. Once the I-526 petition is approved, the alien must then file an I-485, Application for Adjustment of Status. Lastly, the alien must file an I-829 petition within the 90 day period immediately preceding the two-year anniversary of his or her admission to the United States or adjustment of status as a Conditional Permanent Resident.