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What are Pilot Programs/ Regional Centers?

In 1993 the INS (now called the "USCIS") offered the aforementioned "Regional Center Pilot Program". In the this variant, the investor invests not directly in his own business, but rather in a fund, previously approved by the U.S. government, that manages businesses creating jobs in rural or high unemployment areas (defined as 150% or more above U.S. average).

The program was reorganized in 2003 so that all regional centers would be reviewed, approved or denied, and monitored by the newly created "Investor and Regional Center Unit" within the USCIS. The newly reformed and reinvigorated "Regional Center" EB-5 Pilot Program is now an exciting new possibility for investors interested in obtaining permanent residence for themselves and their immediate families. By investing $500,000 in a U.S. government approved business fund that will create jobs in higher-than-average unemployment or rural areas in the U.S., individuals can obtain a "green card" within two years. Investors may live anywhere in the U.S. If the visa is not approved, the investor's money is returned. If the visa is approved, most centers offer a 5 year exit strategy.

A Regional Center is an area designated by the USCIS as eligible to receive immigrant investor capital. They are especially attractive because investors may rely on indirect job creation rather than directly hiring ten employees.

In this program, an individual promoter makes a proposal to the CIS. If the CIS finds it will benefit a regional economy and shows potential for providing significant indirect employment, the project will be designated a Regional Center. With CIS approval, the promoter forms a limited partnership or corporation. Investors may apply for green cards upon making the investment.

Investors in a Regional Center do not have to have day-to-day management responsibility or prove the business employs 10 people. Instead, they may rely on industry job multiplier statistics. A Regional Center means that the CIS is satisfied with the job creation potential.

Regional Center Investments include:

Real estate limited partnership program that offers an investment in industrial properties in a specified major city. This program, which was granted CIS designation as a Regional Center in 1996, generally involves purchasing low-yielding warehouse properties with invested funds and converting them into higher-value mixed used properties, including office space, retail shops and storage space. Investors participate as limited partners of a limited partnership, and can earn regular monthly income from tenant rentals, as well as a percentage share of future appreciation from the project, when sold. Investment periods vary, but cannot end before receipt of the permanent Green Card by the investor.

Limited partnership programs make low interest loans to businesses in a specified major city. Business investment and development in this type of program targets industry sectors that demonstrate strong indications of expansion, growing employment needs, and returns on investments. The Regional Center directs its efforts at financing projects and developing enterprises within targeted sectors, including hospitality and tourism, trade, technology, higher education, and transportation. The investment period of this program is 5 years.

Government Designated. Some Regional Centers encourage the perception that, because they are Government designated, the investment has the Government's stamp of approval. They do not. Please be aware that all Regional Centers are Government designated for purposes of immigration. This does not guarantee the quality of the investment.

At Risk. The law states that a Regional Center investment must be 'at risk'. That means it cannot be guaranteed.

Basically, there are three types of Regional Center investments:

1. Loan Based Investments

A few Regional Centers now offer 'loan' based schemes, where your funds are lent to another organization for local infrastructure projects. A municipality or associated development agency usually becomes responsible for repaying your capital. Should the municipality or agency default or restructure its debt, it could be a long time before your capital is repaid.

2. Equity Investments - active trading businesses

Equity investments are asset based and can be either property or actively trading businesses. Active trading businesses are managed directly by the company operating the Regional Center. The active trading businesses are small and are not on any recognized stock exchange. They are vulnerable to market forces such as demand and competition, so their value and prospects are hard to assess.

3. Equity Investments - property

As any fund manager will testify, most investments carry risks, and that includes property. However, a property without any debt − and zero debt is the key − carries almost no risk of loss.

Requirements:

• Invest US $500,000 in a USCIS approved "Designated Regional Center"
• The investor must have a minimal policy-making role (the limited partnership role offered by most Regional Centers will qualify)
• The investment must directly or indirectly create 10 U.S. jobs
  

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