Regional Center-Based EB-5 Project Setup Costs:
Notes regarding costs presented:
seek equity stakes in the projects themselves. This may
Regional center-based projects commonly involve additional components and service providers.
A few additional items should be considered when eval-
not be welcomed by all project developers but it does,
uating the costs presented above.
at times, incentivize the migration broker to advocate
IMMIGRATION LAWYER
LOW
HIGH
NOTES
$ 25,000
$ 50,000
Can be higher for complex cases, or larger firms
S ECURITIES LAWYER
$ 20,000
$ 100,000
CORPORATE AND LOAN
DOCUMENT COUNSEL
$ 20,000
$ 60,000
BUSINESS PLAN
$ 7,500
$ 15,000
Filing Fees May Change
Right around the time this article was going to press,
May vary considerably depending of the amount of corporate legal advices that
may be required
High cost includes project plan & regional center operations plan
$ 20,000
ESCROW SETUP*
$ 2,000
$ 5,000
are currently proposed as follows:
PROJECT MANAGEMENT*
$0
$ 25,000
FUND ADMINISTRATION
DATA TRACKING
SERVICE SETUP*
$0
FORM I-924 FILING FEES
$ 6,230
$ 6,230
TOTAL
$ 98,730
$ 333,230
$ 2,000
Commonly a function of RC manager, developer or 3rd party. some sophisticated
immigration attorneys will manage coordi nation of proffessionals as part of their
services
This refers to managing the development of the EB-5 application and team
members; comonly handled by the immigration attorney
Depending on the service, this cost can be borne by investors, while others charge
the RC $129-$495/ month
case-by-case basis.
changes have not yet been approved,
$ 8,000
$ 50,000
igence reports, which should be evaluated on a
CIS with respect to filing fees. While the
ECONOMIC IMPACT REPORT
$ 10,000
some U.S.-based broker-dealers recommend due dil-
some proposed changes were made by US-
it is worth keeping in mind that they
FEASABILITY STUDY*
more strongly on behalf of the project. Additionally,
That being said, due to the international nature of EB-5 marketing, and
separately from the pertinent and
• Form I-924 application for region-
very important securities law con-
al center designation or amend-
siderations, it is prudent for newer
ment: a fee increase has been pro-
EB-5 participants to anticipate the
posed that would raise the cost from
possible need for working with ex-
$6,230 to $17,795.
perienced migration brokers in rele-
• Form I-924A (to be titled “Annual
vant EB-5 markets such as China. This
Certification of Regional Center”): a new
$3,035 fee has been proposed.
* Denotes items that are not technically required, but are commonly used or strongly recommended for most part
Marketing Costs
does not necessarily mean, however, that
the developer would necessarily be paying the
highest cost range provided in the tables above.
Marketing costs (i.e. the cost of marketing a project to
Insurance
potential investors and/or their respective migration
Many different insurance options are available for EB-5
brokers) can easily be the highest cost in the whole
projects. While insurance, generally speaking, can add
Ongoing Costs:
EB-5 process. The costs presented above represent the
a significant benefit to projects, the EB-5 industry uses
The ongoing costs of an EB-5 capital raise are presented separately in the following table.
outside extremes for most projects. By way of exam-
these products to varying degrees. Including all possi-
ple, agents in China, the biggest EB-5 investor market,
ble insurance options in the costing table would have a
NOTES
might command anywhere from just the administra-
potentially distorting weighting effect on the high-end
tion fee on the lower end, up to the administration fee
scenario, so it was excluded from the costing model.
plus 4-5 percent annually of the funds raised on the
Insurance options include I-526 (investor) insurance,
high end. Commonly, agents that charge fees at the
errors and omissions insurance and construction in-
lower end of the range may work with only the most
surance to name a few. Insurance options should be
experienced EB-5 project teams, and thus are comfort-
evaluated on a case-by-case basis and explored with
able with lower fees because there is a trust built-in
professionals.
LOW
HIGH
REGIONAL CENTER COSTS
(if 3rd party)
0.25%
$ 15,000
per investor
This cost can be less, depending on the number of investors
RETURNS TO INVESTORS
0.5%
2.5%
Annually. This fee can vary but 0,5% is very common in the marketplace today
MARKETING COSTS
(marketing to EB-5 investors)
0
6%
Annually. Costs shown there are over and above the “administration fee”
commonly charged to investors in addition to their core investment, so it is not
shown here as a cost, because it is a pass trough cost (i.e. typically charged to
investors and paid to agents)
ESCROW ANNUAL
RENEWAL FEE
0
ESCROW FEE PER INVESTOR
0
FUND ADMINISTRATION
DATA TRACKING
SERVICES
$ 2,000
May apply in circumstances where an account remains open and unfunded
from years of interaction, or otherwise, may be smaller
agents who may not be able to fully subscribe the units
0.10%
$ 1,500
0.50%
This fee may apply with some providers in some cases where aggressive escrow
terms exists
in a deal entirely on their own, and so there may be an
Annually. There is a wide and growing range of options
(e.g. loan servicing, loan enforcement, fund accounting and 3rd party co-manager.
Costs shown range from traditional services, to EB-5 specialized services and are
annual fees, based on EB-5 funds under management)
to complete the subscription process. More recently,
added cost associated with finding other small agents
some agents are even commanding large one-time fees
upfront, in addition to the other compensation outlined
above, prior to completing their marketing obligations.
Many potential ways exist to go about marketing a project and the costs can vary considerably, depending on
the approach taken. Another trend in the market has
arisen in situations where the migration brokers even
79
EB5 INVESTORS MAGAZINE
WWW.EB5INVESTORS.COM
80