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EB-5 Market Updates

Posted: February 19th, 2013 | Author: | Filed under: Investor Visas | Tags: , | No Comments »

The following is a repost of a letter we recently received from CMB Regional Centers regarding the expansion of their EB-5 activities:

CMB has recently been working to expand our geographic scope to include new areas of operation such as Texas, Florida, Georgia, Pennsylvania, and Illinois. Additionally, CMB has a variety of news to report in a number of other areas including: a new State of Iowa Regional Center collaboration, continued progress in our $1 million investment, an impending $500,000 partnership release, an EB-5 industry update, and a preview of some upcoming projects. 

In January, CMB Regional Centers was appointed as the exclusive operator of the State of Iowa Regional Center, previously operated by the State of Iowa’s Economic Development Authority (IEDA). While the Iowa Regional Center has already achieved I-526 and I-829 approvals within its dairy investments, CMB and IEDA look to build upon these earlier successes and introduce EB-5 investment to other industry sectors across the State of Iowa. In a recent IEDA Board of Directors meeting, IEDA Director Debi Durham made the following remark of CMB, 

IEDA has conducted extensive due diligence on CMB because the most important part of this process is making sure we have the right partner. It was absolutely essential that the organization representing the State of Iowa has the same high standards and credibility that we expect of ourselves. I’m pleased to say we found that in CMB. 

CMB will join Iowa’s Lt. Governor, Kim Reynolds, on a high-profile Trade Mission to Vietnam and the Philippines in February. The IEDA’s announcement of the partnership with CMB and the Iowa Regional Center may be found on their website: http://www.iowaeconomicdevelopment.com/Finance/EB5 

As many of you are aware, CMB has recently opened our first $1 million investment opportunity. There are a number of aspects of this partnership that make it unique. This project offers the greatest safety in job creation of any previous CMB partnership. The investor’s capital contribution alone creates 90% of the jobs that are required for an I-829 approval. Additionally, investors need not prove that the investment is located in a qualified targeted employment area. The investment is in one of the most affluent areas of California, or for that matter the United States, thus it is not a high unemployment area and the investment level is $1 million. Further, due to the tiered interest rate schedule, the 5-year loan is structured to incentivize the borrower to repay in approximately three years. Finally, investors are projected to earn a greater rate of return (five times higher) than in other $500,000 CMB partnerships. 

CMB is enthusiastic to announce the upcoming release of our next $500,000 investment partnership. We have received the authorization to raise $80 million of EB-5 capital (160 investor units) from our target investment. Attached to this email is an Overview for the CMB Export Infrastructure Investment Group XI project and a copy of the authorization to raise capital from our target investment Cobra Energy Investments. This Group XI partnership consists of a loan to a second equity partner in the massive Crescent Dunes utility-scale solar facility that was part of CMB’s Group IX investment. CMB structured Group IX’s investment with SolarReserve in anticipation for a second EB-5 funding to a separate equity partner other than SolarReserve. The original SolarReserve project specifically addressed the job creation allocation between the two investment groups. In other words, USCIS anticipates this additional funding because the possibility was discussed in the I-526 filings of Group IX and the USCIS has been clearly informed that no jobs would be double counted. 

We are working to finalize the overall project documents such as the loan agreement and the partnership documents: Escrow, Limited Partnership Agreement, Private Placement Memorandum, and the Subscription Agreement. Once the loan agreement is finalized, we will build the various partnership agreements and they will be sent to the interested parties for review. CMB investments continue to be in high demand. As such, CMB has experienced challenges in meeting the interests of all those wishing to invest in a CMB partnership. In this project and future projects (see below), we will not accept investors or allocate any units in the projects until all documents are complete. I need to repeat that we will not hold any units for any reason, unless those units were promised in conjunction with a $1 million Group XII investor placement. However, we will keep you informed of our progress in order for you to prepare your clients for the next CMB project. We expect our lawyers will need about four weeks to finish the negotiations for the final loan document. Over the next 3 to 4 weeks please read the overview, review the authorization to raise capital letter, and ask questions of our staff in order to be ready when the loan agreement is finalized and the partnership documents are produced. If you followed CMB Group IX (SolarReserve), then you will see that this is a very similar project and one we are very proud to introduce. 

Recent events in the EB-5 industry have shed light on the value of quality due diligence. The recent SEC charges against certain Regional Center principals responsible for the Chicago Convention Center project show that it does not make sense to cut corners in this industry. CMB develops projects methodically and transparently to prevent problems of this nature. CMB has been aware of this problematic project for some time and has spoken out against it. We believe that this unfortunate instance reinforces the value of waiting for a CMB project. We know many of you have shown incredible patience in waiting for the next CMB project and we thank you. 

In the coming months we expect Congress to convene hearings concerning immigration policies in general and EB-5 in particular. These discussions will focus upon the perceived quality of the EB-5 program, the problems in the industry, challenges of the USCIS, and the future of the Regional Center Program. President Obama has recently voiced his support of reauthorizing the EB-5 Regional Center Program permanently. CMB is fully engaged in this process and believes that this is an excellent opportunity to institute reforms to reduce the potential for industry fraud, as was recently witnessed in Chicago. 

Finally, we want to announce some other upcoming projects that we have been developing. These projects are not yet ready for release, but have reached the stage where we believe commencement is imminent. As mentioned earlier, we have been expanding our geographic reach to include new states and some of these projects reflect that expansion. 

  • Texas-Construction of luxury multi-family apartments located in a historic building-approximately $87 million in total project costs-anticipated $25 million EB-5 loan (50 investor units)
  • California-Construction of two mixed-use industrial buildings -approximately $76 million in total project costs-anticipated $20 million EB-5 loan (40 investor units)
  • Nevada-Construction of a utility-scale solar facility with a 25-year executed Power Purchase Agreement in place -approximately $680 million in total project costs-anticipated $60 million EB-5 loan (120 investor units)
  • Texas-Construction and operation of multi-use hotel and convention center-approximately $577 million in total project costs-anticipated $300 million EB-5 loan (600 investor units)
  • California-Construction and operation of a destination resort hotel-approximately $300 million in total project costs-anticipated $116 million EB-5 loan (232 investor units) 

Obviously, we plan to have many high-quality partnerships available throughout the coming months. We anticipate the official release of the Group XI Cobra partnership in approximately one month. The purpose of this announcement is simply to introduce to our marketplace this upcoming opportunity and to share our excitement about the other potential projects that are coming this year. We expect 2013, the Chinese year of the snake with our first large project a Cobra, to be our most successful year to date! Happy New Year!

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Written by Chris Jaensch

Chris Jaensch

Attorney P. Christopher Jaensch received a Bachelor of Arts degree in History in 1992 and a Juris Doctor degree in 1995 from the University of Florida. While at UF, he was a member of Sigma Chi Fraternity, Phi Beta Kappa Society and Florida Blue Key, the oldest and most prestigious leadership honorary in the state of Florida.

Mr. Jaensch is a member of the Florida Bar, the American Immigration Lawyers Association (AILA) and the Sarasota Bar Association. He has served as President of the Sarasota-Manatee International Trade Club and served as Regional Vice Chair, Tampa Bay, for the Central Florida Chapter of AILA. He was a member of City of Sarasota Charter Review Committee and has been active in several local organizations, including the influential Laurel Park Neighborhood Association in downtown Sarasota.

Mr. Jaensch has over 18 years of experience in the field of immigration and nationality law and focuses his practice on four primary categories (a) investors and entrepreneurs, (b) business executives, managers and professionals, (c) amateur and professional athletes and coaches and (d) performing artists and immigrants with extraordinary ability.



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