Questions to Ask a Regional Center or Developer Before Investing

Investing in EB-5 projects - whether through a regional center or directly with a developer - requires thorough due diligence. Asking the right questions early on protects your capital and smooths the process toward obtaining a green card. This guide outlines essential inquiries for both the regional center and the project developer.

Questions for the Regional Center (RC)

A regional center acts as the intermediary and compliance overseer, so its experience and structure are critical. Consider asking:

• Experience and Track Record
  • How many projects has the regional center completed?
  • What are the approval rates for I-526 and I-829 petitions across all sponsored projects?
  • How long have the principals been involved with the EB-5 program?
• Compliance and Operations
  • Who serves as the third-party compliance monitor, and how are they compensated?
  • What is the process for monitoring job-creation reports and ensuring adherence to USCIS regulations?
  • What is the policy regarding fund repatriation timelines?
• Fees and Structure
  • Provide a detailed breakdown of all administrative, legal, and offering fees charged by the regional center.
  • Are there any potential future fees not explicitly disclosed in the Private Placement Memorandum (PPM)?

Questions for the Project Developer

The developer is responsible for executing the business plan and creating the required jobs. Their financial stability and expertise matter most. Questions to consider include:

1. Project Viability and Execution
   • What is the developer’s specific experience in this type of project (e.g., hospitality, infrastructure)?
   • Can you provide a detailed construction timeline, including contingency buffers?
   • What is the projected internal rate of return (IRR) and what assumptions support this projection?
2. Capital Stack and Risk Mitigation

   How is the project capitalized, and where does the EB-5 capital sit in the capital stack? Clarity is needed on whether EB-5 funds are senior or junior debt and what collateral secures the investment.

   • What percentage of the total project cost is covered by non-EB-5 funding, such as senior construction loans?
   • What events would trigger the developer to seek additional financing or restructuring?
3. Job Creation Methodology
   • How will the required ten full-time equivalent (FTE) jobs be created and substantiated?
   • If relying on indirect job creation, which economic model (for example, RIMS II or IMPLAN) is being used, and who prepared the initial job-impact study?

Legal and Documentation Review

Ensure that your legal counsel carefully reviews the following documents:

• The Private Placement Memorandum (PPM) for risk disclosures.
• The Subscription Agreement, with particular attention to withdrawal rights and default clauses.
• The Loan Agreement, especially the repayment schedule and any security interests granted to EB-5 investors.

Crucial Final Question

“If the I-829 petition is denied due to factors beyond my personal eligibility (such as insufficient job creation), what remedies or protections are in place for the return of my principal investment?”

A successful EB-5 investment hinges on transparency. Any reluctance from a regional center or developer to provide detailed, verifiable answers to these fundamental questions should be treated as a significant warning sign and may indicate that you should look for alternative investment opportunities.