What is a Regional Center?
A “regional center” is defined by the United States Citizenship & Immigration Services (USCIS) as “an entity, organization, or agency” that USCIS has approved as a designated Regional Center for the EB-5 Immigrant Investor Program. Under the federal statute authorizing the EB-5 Immigrant Investor Program, an approved Regional Center can be any public or private economic unit, the purpose of which is to seek “to promote economic growth through export sales, improved regional productivity, creation of new jobs, and increased domestic capital” as explained on the USCIS website. Each Regional Center focuses specifically on a defined geographic area of the United States, and positively affecting the general welfare and economy of that area by attracting capital investment. The regional center designation also is limited to the specific industries that the regional center proposed in its application to USCIS for the designation. The geographic scope of regional centers typically cover targeted employment areas or rural areas in order to enable EB-5 investor to qualify based on a $900,000 investment instead of based on a $1,800,000 investment, which is the minimum required investment for an economically healthy and prosperous area.
The organization that holds the Regional Center designation generally operates by forming limited partnerships to engage in specific business projects designed to accomplish at least one or more of the above-stated purposes of the EB-5 Program. Most typically, the focus is on job creation, because that was Congress’ primary purpose in creating the program. The organization that has obtained the regional center designation, or an affiliated organization, usually serves as the managing general partner for each such limited partnership, while the investors are limited partners.
When the organization that holds the regional center designation is a government body, usually a city or state agency, holds the regional center designation, private companies sign a memorandum of understanding with the government agency in order to associate with the regional center and develop projects under the government agency’s regional center designation.
Beware that some regional centers, which are associated with and operating under the regional center designation of a city or a state agency, try to make their program and project seem more secure and legitimate through association with the government agency that holds the regional center designation, as if that government agency were the guarantor of the safety of the project. This is a false sense of security because the project is still a private sector project just like every other EB-5 project, and the government agency that holds the regional center designation is not guaranteeing or in any way vouching for the quality or safety of any project developed under its regional center designation. Moreover, by the laws and regulations governing the EB-5 program, no guaranty of the EB-5 investor’s investment can be given. As a business investment, the funds must be placed at risk of partial or total loss. However, the entity in which the EB-5 investor invests can loan out the money, and require a guaranty of repayment in the form of a mortgage or other securitization arrangement. Alternatively, the entity in which the EB-5 investor invests can directly own a real estate property that is the basis for the business such as, for instance, a hotel, office building, etc.
To summarize, you can think of the regional center designation as a license issued by USCIS to a private or public entity to foster the development of private-sector projects funded by foreign investors, designed to create at least 10 jobs for U.S. workers per investor, located in the geographic region and operating in the industries for which the regional center designation was granted.