Direct Pooled
EB-5 Projects
vs.
Regional Center
Projects in Today’s
Uncertain World
Pros and cons for investing in
a regional center project compared
to going the direct EB-5 program route.
By Mike Xenick and Dominick Mondesir
T
he number of direct pooled EB-5 project offerings
has been steadily growing over the last two years
and are considered by some professionals as a reliable
alternative to regional center projects, mainly due to
the permanent status of the direct EB-5 program. As
these offerings become more prevalent, it is important
to explore what structures and types of direct pooled
projects may be best suited for investors.
What are the key differences between the direct and
regional center EB-5 immigrant investment programs,
how should one structure a favorable direct pooled
E B - 5 i n ve s t m e n t , a n d w h y m a y t h e d i r e c t p o o l e d
EB-5 investment route be more beneficial for certain
prospective EB-5 investors?
REGIONAL CENTER PROGRAM
First, let’s outline the two types of EB -5 investment
programs investors can choose from when pursuing an
EB-5 investment. The direct EB-5 investment program
is a permanent U.S. government program established in
1990, while the regional center EB-5 program began in
1992 and is not yet a permanent program, and therefore
subject to renewals by Congress.
The last time the regional center program was
significantly extended was in 2012. There have been 13
clean short-term extensions of the program since 2015
as part of legislation, extending annual U.S. government
spending bills and budget resolutions. These shor t-
term extensions have continued to push the program’s
sunset date, while keeping all other program parameters
untouched.
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EB5 INVESTORS M AGAZINE
The regional center program offers attractive advantages,
such as using indirect and induced job creation, greater
involvement of third party banks and lenders and equity
investors risking capital alongside EB-5 investors, and the
ability to utilize more flexible exit strategies. However, the
prolonged uncertainty with the regional center program
has continued to affect both investors and general EB-5
industry confidence due to vague near-term prospective
investment and immigration benefits, resulting in some
develope rs and regional c e nte rs not being able to
effectively plan future projects.
The situation is causing investor concerns with regards
to increasing their minimum investment amounts after
subscribing to a regional center project and whether
investors would be grandfathered in under the old rules. It
is creating challenges for key third party industry providers
wondering whether they’ll have a business in the coming
months. Due to these reasons, there is a strong argument
that adequately structured offerings using the direct EB-5
program may offer a more stable, viable and less risky
option for prospective investors.
DIRECT EB-5:
INDIVIDUAL VS. POOLED APPROACH
Some key differences between the direct EB-5 program
and the regional center program include:
• Direct EB-5 investments do not need sponsorship
from a designated regional center.
• There is no pre-approval process for direct EB-5
projects.