If you don’t know what an EB-5 regional center is, the official government definition probably won’t help much.
“The United States Citizenship and Immigration Services administers the Immigrant Investor Program, also known as EB-5, created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth.”
Got that?
In an oversimplified nutshell, an EB-5 center is a federal government-approved way for well-heeled foreign investors to bankroll projects in the U.S. that will create jobs and stimulate the economy. In return, the investor gets temporary visas for his or her family with a potential fast track — four to five years — to permanent U.S. residency.
Of course, it’s not as easy as it sounds. As with any government program, there are multiple levels of qualification and vetting, both to become a regional center and to be an investor.
Since 2006, the number of approved EB-5 centers has grown from a mere 25 to some 400 in 40 states and two territories. In fiscal 2012 alone, more than 7,400 EB-5 visas were issued.
In the Savannah area, one already approved center is reportedly close to announcing a major project, while the World Trade Center Savannah is in the process of finalizing its application to be a regional center.
The Southern Film Regional Center LLC is an EB-5 Center in Atlanta that recently was approved to establish another EB-5 in the three-county Savannah Metro area of Chatham, Effingham and Bryan.
The group already has acquired a major project in Atlanta, according to C. Wendell Baines, an EB-5 strategist with SFRC in Savannah.
Expected to announce any day, the Atlanta project is a $50 million investment involving a successful animation company already established in the Atlanta area, Baines said.
Under the terms of its regional center agreement, Baines said, his company is not limited to projects involving the film industry.
“In fact, we are in talks with several interested parties in the Savannah area regarding projects that are not film-related,” he said, citing a student housing development and a medical facility on the drawing board.
The SFRC project closest to fruition in Savannah is a major, non-manufacturing venture that could bring up to 500 jobs to the three-county area, Baines said.
“We are operating under non-disclosure agreements that prevent us from revealing the name of the company until they are ready to announce,” he said.
“But we are close to finalizing the deal.”
‘A perfect match’
World Trade Center Savannah is a relative newcomer to the EB-5 arena, having decided to take the plunge after careful consideration.
“Members of the boards of both the WTC Savannah and SEDA have spent nearly a year studying the EB-5 program and decided the job creation and investment attraction tool perfectly matches the expressed mission and goals of both organizations,” said Eric Johnson, WTC Savannah chairman and SEDA board member.
“We have done our due diligence on this, much like we did when establishing a World Trade Center here.”
In November, the SEDA board approved and funded the first phase of an EB-5 Regional Center for the WTC Savannah, including the hiring of World Trade Center Montana and the Northern Rockies Regional Center as consultants on the project.
At Tuesday’s meeting, the SEDA board passed a resolution establishing the Savannah World Trade Center for Investment as an entity of WTC Savannah designed for the singular purpose of establishing an EB-5 regional center.
“These centers create jobs, attract investment and generate revenue, which aligns perfectly with World Trade Center Savannah’s mission,” said Brynn Grant, SEDA chief operations officer.
“We have proven consultants on board and are ready get started.”
Taking the lead on WTC’s EB-5 venture is Arnold E. Sherman, managing director of the Northern Rockies Regional Center in Montana and an internationally recognized expert in EB-5 centers.
“An EB-5 is usually set up one of two ways,” he said. “The most common is an EB-5 created specifically for a particular project. That was the case with such mega projects as the Barclays Center in Brooklyn and the Comcast Center in Philadelphia, both of which used EB-5 investors to partially fund construction.”
Once that purpose is accomplished, the EB-5 center usually goes dark, although some that started that way have transitioned into other projects, Sherman said.
“Then there are organizations like the World Trade Center Savannah that would create a center to support its mission of economic development and jobs for the community and would be open to any project that fit that bill,” he said.
Room for more
But can a community the size of Savannah support two EB-5 regional centers?
Both WTC Savannah and Sherman say yes.
Unlike the Southern Regional Film Center, SWTCI is not a commercial enterprise; its goals will be compatible with SEDA and WTC Savannah, said Scott Center, SEDA and World Trade Center Savannah board member who has served as the point person on the project since he brought the idea to his respective boards more than a year ago.
“Projects chosen for investment will be screened differently than for a private commercial investment,” he said. “Emphasis will be on economic development and job creation impact and the financing structure and recruitment of investors will be based on similar values.”
Center said SEDA and the WTC don’t see two local EB-5 Regional Centers as a conflict at all.
“There is room in the Savannah market for a variety of foreign investment approaches and regional center entities,” he said. “In places like Los Angeles and New York City, there are dozens of Regional Centers, some project specific, some special focus, some open to any viable project.”
In fact, the timing couldn’t be better, Center said, as Canada recently shut down a similar program, leaving some 35,000 applicants in the pipeline.
“There is clearly enough interest for two centers,” he said.
Sherman agreed.
“Savannah is one of the best potential locations for EB-5 investment that I’ve seen,” he said. “In fact, this community could support a number of centers.
“A center really can’t handle more than one major project at a time and Savannah has the potential for a number of simultaneous projects.”
Grant said she looks forward to working with the Southern Film Regional Center.
“In fact, we expect that, once our center is approved, we will refer projects to each other regularly,” she said. “In fact, we have already referred one local business interested in EB-5 to the Southern Film Regional Center because we weren’t ready to help them.”
On the flip side, SEDA president Trip Tollison said he hopes SFRC will reach out to SEDA as it works with its 500-job project.
“There is a host of ways that we can help outside of the realm of EB-5,” he said.
As for partnering on future EB-5 programs, Tollison said WTC Savannah’s major concern is getting its application through all the proper channels expeditiously — hopefully by the end of the year.
“Once we do that, we will certainly be open to partnerships that fit our mission to create jobs and attract investment,” he said.
ABOUT EB-5 INVESTORS
EB-5 investors are individuals from foreign countries who wish to invest money in U.S. projects in return for a path to U.S. residency for themselves and immediate family members.
They are subject to full background due diligence via Homeland Security and the U.S. Citizenship and Immigration Service to ensure they are legitimate investors and they received their funds legally.
Because their money is 100 percent at risk, investors are equally cautious about the projects they fund. In order to complete the process for permanent visas, the project must create and sustain a certain number of jobs for a certain amount of time.
The majority of EB-5 investors come from China although they can come from almost any foreign country.