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Dangers and Pitfalls—An Economist’s View

Dangers and Pitfalls—An Economist’s View. Presentation to the Overseas Funding Conference. Jeffrey B. Carr, President Economic & Policy Resources, Inc. Dawn Lurie, Greenberg Traurig, LLP Bill Yates, Former Acting Associate Director, USCIS John Roth, Roth Immigration Law Firm.

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Dangers and Pitfalls—An Economist’s View

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  1. Dangers and Pitfalls—An Economist’s View Presentation to the Overseas Funding Conference Jeffrey B. Carr, President Economic & Policy Resources, Inc. Dawn Lurie, Greenberg Traurig, LLP Bill Yates, Former Acting Associate Director, USCIS John Roth, Roth Immigration Law Firm

  2. Dangers and Pitfalls • EB-5 program is a program of inherent conflicts • It is important to remember: • The EB-5 is an economic development program that is administered by a federal agency that primarily processes immigration petitions, • The EB—5 program is complicated, with many nuances, and, • It is still evolving...with rules being written/re-written frequently! Review the law and regulations and keep up with memoranda an policy changes

  3. Dangers and Pitfalls • Common misconceptions in the EB-5 program: • The EB-5 program is “fast”—I will get my money within 6 months, (the dreamer) • I don’t need an experienced EB-5 professional team—I have read all the regulations and web pages, (the DIYer) • I need to go for the largest geographic area I can get for my regional center, (the namedropper) • I don’t need a Targeted Employment Area—my project is so good that it will sell at the $1.0 million level, (the uneducated)

  4. Dangers and Pitfalls • Common misconceptions in the EB-5 program (con’t): • I can count jobs outside my regional center in my 10 jobs per investor math—the 12/10 Mayorkas letter says I can, • Isn’t the regional center’s geography and a TEA the same area?, • My TEA certification letter is “good for the whole duration of the project,” • So what if my business plan changes—everything is nearly the same...that’s how business is done, • I know I said I was going to use a RIM direct job multiplier but now we’re going to use RIMS based on expenditures

  5. Dangers and Pitfalls • Common “dangers” in the EB-5 program: • Residential projects—in general, • Having no market study, • Relying on tenants, • Relying on “visitor spending” for hotel/hotel-like projects, • Using direct construction jobs—workers’ legal status, • Using indirect construction jobs and the timing of the I-829 “Removal of Conditions” filing, • Not “meeting or exceeding” the metrics presented in your business plan, • Not doing the right due diligence on your investors • Not tracking the source and trace of funding from investors

  6. More on counting Jobs • Let’s talk about counting the workers • What’s a Form I-9? • How was I supposed to know they were not legal? • We don’t keep copies of the I-9 identity documents and now USCIS wants them • What should we be doing along the way?

  7. Dangers and Pitfalls • Keys to Success • Engage with an economist “early” on (for TEAs and other EB-5 program criteria compliance issues), • Design your project-RC for “commercial success” (This is the best way to prove jobs 2 - 4 years out), • Make sure your project-RC has a “marketable” business and deal structure (Starting over is painful), • Consistency between BR-Econ/Job Impact Study, • Have an “executable” business plan with key metrics that can be met (...be 99% sure you can), and • Then “execute.”

  8. More Keys to Success • Practical Pointers • Know your audience • Keep your petitions organized • Track your investors

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