Examples of EB-5 Project Finance
Day Care Facility
A developer in the United States wish to build and operate a day care facility in Edgewater, New Jersey. The project has a total cost of $7.5 million, which shall be applied towards land acquisition and construction. Once completed, the day-care facility aims to employ 40 full-time workers. On that basis, the project would be able to support a total of four EB-5 investors.
The developer conducts an analysis of the location of the project and finds that it qualifies as a Target Employment Area. This means the EB-5 investors can now invest based on the minimum $900,000. The total amount raised from the EB-5 investors is $3,600,000. Therefore, the developer can finance up to $3,600,000 of the $7.5 million with EB-5 capital.
The individual investors evaluate the project business plan, financials, and terms of the offering. Upon their satisfaction, they execute the project’s subscription and operating agreements, and transfer the investment amount to an escrow account set up for the investment. The investor prepares the I-526 with the attorney and submits the filing. Within 2 weeks, the USCIS issues a receipt notice acknowledging that the I-526 petition has been received. The notice is provided to the escrow agent, and the funds are released to the EB-5 project.
The I-526 is approved after a period of 18 months adjudication by USCIS. With the approval notice, the investor submits for consular processing for the family. Upon completing the consular process, the investor and the family enters the United States as conditional permanent residents.
After two years of obtaining conditional permanent residence, the investor submits the I-829 to remove the conditions. The I-829 properly documents that the project was completed according to plan and a total of 45 full-time U.S. workers were hired and are still employed. Based on that finding, the investor obtains final permanent residence. The project, due to having operated successfully, can now return the investor’s initial investment of $900,000 from its cash reserve along with any accumulated gains attributable to the investor.
The Multi-Family Development
A national development company wish to construct a mixed-use residential high-rise and retail in downtown, New York City. The total project cost is estimated at $100 million; of which, $75 million constitutes hard construction expenditures. Since this is a pure real estate development, there is little to no direct jobs after the completion of the construction. In order to secure EB-5 financing, the developer obtains a sponsorship by a local Regional Center. With the help of the Regional Center, the project can estimate an Indirect Job count through an econometric model. Based on the hard construction costs, and the period of construction, the econometric model indicates at least 750 jobs would be created in the region as a result of the new project. Furthermore, it is determined that the project is located in a Target Employment Area (as designated by the State of New York). As a result, the developer can raise up to 75 investors with $900,000 per investment.
Similar to the example above, the investor (having reviewed the project documents) invests the $900,000 into an escrow account of the project. Those funds are distributed to the project upon receiving a notice from USCIS that the I-526 has been filed. Upon approval of the I-526, the investor undergoes consular processing or adjustment of status to obtain the conditional Green Card.
Two years after obtaining the conditional Green Card, the investor applies for the I-829. At this point, instead of showing individual jobs were created and sustained the investor just needs to show that project was successfully constructed in accordance to plan and budget. Based on that finding, the investor would be able to obtain an approval of the I-829 and obtain the final Green Card. At that point, the investor would be eligible to receive a return of the initial $900,000 investment in addition to any accumulated gains attributable to the investor.