In 1992, Congress launched the Regional Center Program, just two years after the establishment of the original EB-5 Program.
This new Regional Center Program helped make it possible for developers to undertake larger projects because the RC Program allowed EB-5 projects to count indirect and induced job creation as well as direct job creation.
Job creation is essential to the EB-5 Program.
- Each EB-5 applicant’s investment must lead to the creation of 10 jobs for qualified workers. Through the original EB-5 Program, EB-5 investors are required to create 10 full-time direct jobs, but through the Regional Center Program, these 10 jobs can be direct, indirect or induced, making the requirement easier to accomplish.
Regional Centers play a huge role in the EB-5 Program nowadays.
- Of the 10,000 EB-5 visas allotted for foreign investors, about 3,000 are reserved for Regional Center projects, however, the majority of EB-5 investors work with Regional Centers.
EB-5 investors have two choices when looking into the types of Regional Centers.
- Some project developers establish their own Regional Centers, but this is more of a rarity due to the costs of establishing a Regional Center as well as the slow processing time. It can take several months to compile the necessary paperwork and then more than a year to receive designation.
For that reason, many project developers look to get their projects sponsored by already established and USCIS approved Regional Centers.
EB-5 project developers must look at two factors when considering a sponsorship with a specific Regional Center.
First, they must look at location.
- Many developers already have a specific project location in their minds, so they must conduct due diligence to find out the physical territories of the Regional Center. If the proposed EB-5 project is outside a specific Regional Center’s territory, then they cannot sponsor that project. Older and longer established Regional Center’s tend to have larger scopes of territory (sometimes an entire state), while newer Regional Centers are being approved for smaller and smaller areas (as little as one county).
Second they must look at the industry sector of their proposed EB-5 project.
- USCIS utilizes a system called North American Industry Classification System or “NAICS Codes” to classify businesses. Regional Centers are approved for specific NAICS Code-specific industry sectors and cannot sponsor EB-5 projects outside of those sectors. In other words, a Regional Center approved for resorts and casinos cannot necessarily sponsor a medical or healthcare project.
These are the two major factors when considering and researching a Regional Center sponsor. There are of course a multitude of other factors to consider when deciding on a specific Regional Center. To read more about those factors, click here.