2016 New York EB-5 & Investment Immigration Convention PLANNING - PDF document

2016 New York EB-5 & Investment Immigration Convention PLANNING for CHANGE: CURRENT ISSUES in ECONOMIC REPORTS & BUSINESS PLANS LAUREN COHEN, Esq. – e-Council, Inc. PHIL COHEN – Strategic Element ROBERT LEE – Elite Visa Plans Moderated By: NIMA KORPIVAARA, Partner – David Hirson & Partners, LLP From Idea to EB-5

ROLE of THE EB-5 QUARTERBACK 1. Optimized Project and Team Coordination to Reach Business Goals Based on unique qualifications and experience, help project owners make the “right choices” re: the structure that can best maximize results while minimizing costs matching team members to their roles in the new entity 2. Start-to-Finish Documentation to Meet All Government Requirements Coordinate documents to be incorporated into I-526 (Template or Investor Petition) Review documents for consistency to pave smooth path to approval (EIR/Business Plan/PPM) Identify missing documentation and information. 3. Ongoing Supervision of Stakeholders’ Combined Interests Work closely with stakeholders, providing initial and ongoing assessments to ensure accuracy and credibility, particularly Business Plan and offering documents 1. Helps avoid the high failure rate of EB-5 projects due to: a) overwhelming stress of managing multiple providers b) missed legal, documentation and production deadlines c) costly and time-consuming RFE's or even NOID's due to inconsistencies and unnecessary errors 2. Lets management focus on business and not the EB-5 process a) Creates aligned interests with project’s internal teams b) Vets strategic partners to ensure capability to meet work start-up and ongoing deadlines c) Holds service providers accountable for timely production and high-quality standards throughout the process 3. Assures that everything is delivered on time , on budget , and on target

Initial Step: Understand the Evolution of the EB-5 Business Plan MATTER of HO - THEN AND TODAY Prior to 2013, an EB-5 Business Plan could be approved without industry data to support assumptions. (Construction costs, revenues, expenses, etc.) Business Plans were used as a tool to put down on paper the project strategy, business decisions and projections already made by management. After 2013, industry data was required to support all relevant project costs and financial projections, especially when tied to job creation methodology. Now Business Plans are used as an objective tool to guide strategy and decisions to be made by management. Third party data should support financial and staffing projections, which in turn should drive job creation inputs. What is the Role of an EB-5 Business Plan Today? MATTER of HO - THEN AND TODAY Capital Stack Planning??? Direct vs. Indirect??? Initial Project Feasibility Tool Get the Business Plan Writer involved at the beginning to ensure the project assumptions are supportable and the financial projections are feasible. Helps to determine whether large projects (or multiple locations) should be combined in one I-526 or broken up into multiple projects or phases. Having the business plan written at the end will ensure other professionals will have to redo their work. Helps to Maximize Job Creation By collaborating with the Economic Impact Report, Business Plans must run through a few scenarios with the Economist to identify the best project structure and details. The Business Plan contains the industry data to support objective Job Creation Inputs. Provides Objective Industry Data to Support Project Details All Assumptions for Project Costs and Financial Projections must be supported by Specific Industry and/or 3 rd Party data. Construction Costs Staffing Levels Revenues & Expenses

What are the Recent RFEs and How to Avoid Them Consistency is Key The majority of RFEs have always come from inconsistency between documents in the application filing. Name, Management T eam, or Entity changes in supporting documents Location changed or not lining up with TEA analysis Numbers changed between different versions Other Common RFEs in Business Plans Construction Cost Verification Lack of Industry Data or Use of Irrelevant or Outdated Data Financial Projections are not properly supported Lack of permits and licenses or supporting evidence for capital stack. Questions regarding Staffing timelines (especially for Direct EB-5 or when dependent on Direct Staffing as inputs for Economic Modeling) Recent RFEs – Matter of Ho is more closely scrutinized Comprehensive Marketing Strategy SWOT Analysis Competitor Analysis Targeted Employment Areas Currently, there are 2 types of TEAs: � Rural = more stable and long lasting � Outside MSA and city/town with 20k+ pop � High unemployment = annual data changes � Typical certification = census tract combo � State involvement = states vary on data/flexibility = can be tricky � TEA timing is very important: letters can “expire”

Econ Study: Mechanics 101 � Study utilizes regional input/output models (RIMS II, IMPLAN, etc.) – Models allow for multiple “inputs” ($$$ and headcounts) – Industry-specific multipliers from a specific region, such as NY MSA � Job calcs for standard EB-5 project: two-phased calc: – (1) Project Development/Construction • Model Input = Expenditures (hard costs and some soft costs) – (2) Operations (typically two possible inputs) • Revenues (T op-Line) or Direct Full-Time (35+ hours/week) EEs Econ Study: Input Support � Business plan is basis for economic model inputs � Economic Study “Scores” the Business Plan (must sync) � Model inputs must be supported . USCIS will not take your word for it - for example: – Construction expenditures vetted through benchmarks, 3 rd party review, comparison to similar projects done by developer – Revenue assumptions (ADRs / Occupancy rates) vetted through project-specific market study

Econ Study: Common Issues/Topics � “24 month rule” for construction activity � Gray area on what development costs are allowed as “job - creating” model inputs � Lack of construction detail for hard costs � Job creation timing: “2.5 years of I - 526 petition approval” � Construction vs. operations jobs � Tenant occupancy � Possible legislative changes regarding job creation Disclaimer This presentation outline and the presentation itself are for general education purposes only and are not intended to provide specific guidance or legal advice about what to do or not to do in any particular case. You should not rely on this general information to make decisions about specific immigration matters. If you are not yourself a lawyer, you should seek the assistance of an immigration lawyer to help you resolve these issues. Thank you.