Can I Purchase a Regional Center or a Regional Center License ?
Can I purchase a Regional Center ?
At this time there are 397 USCIS-approved Regional Centers ( RC ), though not all of these are active . Buying and selling USCIS-approved RCs , some with exorbitant price tags , is a hot topic in the EB-5 arena .
While such a contract for sale may be legally binding among the interested parties , it is important to note that designation issued to the original Mona Shah applicant is non-transferable , which should be interpreted narrowly . This includes both RC ownership transfer and equity transfer . An amendment filed with USCIS is required in both scenarios .
Furthermore the Final EB-5 Adjudication Policy Memo issued on May 30 , 2013 maintained the need to file an amendment petition for a change of RC management . The policy memo stated that the following changes within a regional center no longer required an amendment petition : ( 1 ) industries of focus , ( 2 ) geographic boundaries , ( 3 ) business plan , or ( 4 ) economic methodologies . Change of RC management is noticeably absent among these .
In a recently issued EB-5 regional center designation letter , USCIS confirmed that “ The regional center designation is non-transferable , as any change in management of the regional center will require the approval of an amendment to the approved regional center designation .”
What does this mean to the prospective regional center purchaser ? The purchase and sale of a regional center is not prohibited , but before the regional center is qualified to submit EB-5 petitions , an amendment must be filed and approved . The authors believe that even if the RC owner simply transfers a portion of equity to the new purchaser and the original RC owner maintains operational control , an amendment still needs to be filed and approved by the USCIS . Project owners who are considering purchasing an existing regional center may wish to reconsider the feasibility of such a venture as a regional center amendment petition has historically taken longer to adjudicate than a regional center petition .
Rent or License a Regional Center
In addition to the sale and purchase of a regional center , recent attempts in several I-924 petitions to control exclusivity and legal ownership of a regional center license have been swiftly rebuked by USCIS , who have indicated that they strongly discourage this practice .
Does the Final Policy Memorandum Shed Any Light ?
by Mona Shah , Esq . and Yi Song , Esq .
In a recently issued decision , USCIS confirmed that they have no authority to grant a license right . In this case , a regional center petitioner submitted a licensing agreement intended to grant a license of the regional center designation to another entity for the purpose of having the licensee ’ s project qualify for the EB-5 program . USCIS requested legal citations or arguments supporting the regional center licensing agreement , legal authority for the regional center to grant such licensing rights , and legal citations to support the delegation of the regional center ’ s responsibility to directly oversee the project company . Statutes , regulations , or precedent decisions do not authorize the regional center to grant license to unrelated project companies .
In actuality , “ third party ” regional center operation is a common practice . Such regional centers charge the project developers a percentage of the capital raised , acting in the capacity of a third party lender . These “ third party ” RCs are not the owners or developers of the projects that need funding . USCIS has not explicitly prohibited such practice .
Based on the authors ’ observation and experience , overseas marketing agents and individual investors have been increasingly paying attention to whether the regional center is a third party fundraiser or a direct project owner . The overseas agents and investors seem to prefer dealing with the latter . This is an interesting development , as many regional centers rely on their past successes to promote future projects . The more sophisticated EB-5 investor appears to scrutinize each project on its own merit , regardless of how many past projects the regional center has undertaken .
EB-5 policies have developed and evolved over the past few years . Providing clear and practical guidelines on the EB-5 program is an on-going process . The authors welcome efficient and effective communication between the USCIS and the practitioners . It is the goal of the stakeholders in the industry to make the EB-5 program in the Unites States one of the most competitive immigrant investors programs in the world .
★
Mona Shah has over 17 years of experience in immigration law , with extensive hands on proficiency of EB-5 law and practice . She was one of the original founders of major RC ’ s and has assisted many RC ’ s and Investors in navigating this complex , nuanced and constantly changing area . Mona ’ s substantial litigation background includes her representation of clients in courts nationwide . Mona has authored numerous publications and has spoken extensively on EB-5 both in the US and overseas .
Yi Song , Esq . is an attorney at Mona Shah & Associates focusing on EB-5 and securities law . She is also admitted to practice law in New York and the People ’ s Republic of China . She has authored many published articles on EB-5 financing and securities law . She practiced tax law in China and has experience in class action securities litigation cases . Yi is a graduate of Georgetown University Law Center in Washington , DC .
www . EB5Investors . com 23