Is my project suitable for EB-5 Financing? - Smart Economic Development Conference May 1, 2014

Is my project suitable for EB-5
          Financing?
               Smart
  Economic Development Conference
            May 1, 2014

EB-5 Overview
• Established by the Immigration Act of 1990
• Administered by INS originally and now the USCIS
• Use foreign investment to spur job creation to stimulate the U.S. economy
• Foreign investor is required to make an investment of $1M in non-TEA
  locations or an investment of $500,000 if the project is located within a
  TEA
• Each EB-5 investment must create 10 new American jobs per investor
• There are many other restrictions, however this is the basic premise
• 10,000 green cards are reserved yearly for EB-5 investors and derivatives
            a)   10,000 Visas ÷ 2.857 Visas Per Investor = 3,500 Investors
            b)   3,500 Investors ÷ 500 Regional Centers = 7.00 Investors
                 available to each Regional Center
            c)   Annual EB-5 capital apportioned to each Regional Center:
                            7 Investors x $500,000 = $3,500,000

Association with a Regional Center
• Can provide capital for qualified construction projects.

• High Degree of Flexibility in Structuring
        • Used as alternative to municipal bond financing, construction loans, mezzanine
          financing, etc.
        • Used as private construction funding (senior or subordinated debt)
        • Structured as either tax-exempt or taxable
        • Flexibility in collateralization and security
        • Attractive cost of capital in comparison to traditional lenders or equity investors
        • As a pubic agency
        • As a private developer

• What is unique to EB-5 as compared to traditional
  financing…? Costs and issuer obligations when compared to municipal
   bonds.

How a Regional Center Operates

                                 Roles of a Regional Center
 • Sourcing Investors                            • Sourcing Projects
 • Maintaining Investor Relationships            • Structuring Projects

                               Regional Center

             Investor                                  Developer

CMB Regional Centers
           are the most diverse
 Regional Centers in Project Development

     CMB Model Focuses on
         Job Creation
CMB EB-5 funds have been used for
government-related, public-private
    as well as private projects
                                           5

Investor Requirements                  Investor Goals
1. Investor remains in                 1. Green Card
    investment                         2. Return of Capital Investment
2. Create 10 new full-time JOBS        3. Return on Investment

            CAN YOU CREATE 10 JOBS WITH
                     $500,000?
     $40,000 per employee per year + taxes ≈ $50,000
              $50,000 x 10 Jobs = $500,000
         Investment is used up in the first year!
                          YET
           USCIS requires employment to last
                 approximately 2.5 years.
                                                                   6

Investor Requirements                           Investor Goals
1. Investor remains in                          1. Green Card
    investment                                  2. Return of Capital Investment
2. Create 10 new full-time JOBS                 3. Return on Investment

             JOB CREATION SOLUTION
     UTILIZING $500,000 IN EB-5 INVESTMENT
               WITH OTHER CAPITAL
                                  - Example -

   $20 million EB-5 capital + $60 million outside capital
                              =
                $80 million for job creation

                                                                            7

CMB Regional Centers
                       Success Track
              I-526 Project Approval Success Rate: 100%
                  I-829 Approval Success Rate: 100%
                  I-924 Approval Success Rate: 100%

Over 2,250 Investors
                       Over 48,000 NEW JOBS created
Over 1,220 I-526 Petition Approvals
                              Over 150 I-829 Approvals
$1.3 Billion in EB-5 Capital Raised
                         25 Fully Subscribed Projects
                                                          8

Goals of Investor

1. Permanent Residency (Green Card)
2. Return of Original Capital Investment
3. Return on Investment

 A. How goals must be built into the investment
 B. Public agency goals (potential conflicts), TEA letters
 C. Private developer goals (potential conflicts)

TEA Calculation Change
• The State of California TEA Designating Authority, the Governor’s Office of
  Business and Economic Development, is considering a change in the method by
  which unemployment will be calculated
• Every year new data is released and updates are required
• This year the data is not only being updated, but the base information used to
  calculate this data is changing
    • In years past the 2000 census provided detail for the census tract
       unemployment rates
    • This data was updated to the current year by applying the Bureau of Labor
       Statistics Methodology
    • Rather than continuing this process, California is going to change the base
       year from 2000, to an average of the last five years
• The purpose of EB-5 is to identify and assist areas of high unemployment
    • Using an average diminishes the areas of unemployment

TEA Calculation Changes
• The State of Iowa TEA Designating Authority, is considering a change in the
  method by which unemployment will be calculated
    • Every year new county and national unemployment data are released and
       updates are required to the corresponding census tract unemployment rates
• This year several States are not only updating the data, but the base information
  used to calculate this data is being changed
    • In years past the 2000 census provided detail for the census tract
       unemployment rates
    • This data was updated to the current year by applying the Bureau of Labor
       Statistics Methodology known as census share disaggregation
    • Rather than continuing this process, many States are going to change the
       base year from 2000, to an average of the last five years

• The purpose of EB-5 is to identify and assist areas of high unemployment
   • Using an average diminishes the effects of unemployment across the county

Iowa Projects

Past and current Iowa
projects suitability for
EB-5 financing

Orascom

CJ Bio

Microsoft – Data Farm

Casinos
• Sioux City – Larchwood
• Cedar Rapids
• Davenport

                      Source: Iowa Gaming Association - www.iowagaming.org

Iowa Wind Farms

Is my project suitable for EB-5?

• Warehouse Rehabs                        • Industrial Buildings        • Horizontal Construction
• Commercial Buildings                    • Residential Developments    • Multifamily Developments
• Utility scale Solar Projets             • Environmental Remediation   • Public Infrastructure

                                IVANPAH

To give you and idea of how EB-5 funding can be utilized, the
     following list has categories of CMB EB-5 capital uses

     BERRYESSA RESIDENCES - SAN JOSE, CA                        FAIRFIELD LUXURY APARTMENT - DALLAS, TX

 Residential Developments            Industrial Buildings             Warehouse Rehabs
 Multifamily Developments            Horizontal Construction          Commercial Buildings

   GOODYEAR HEADQUARTERS                   KEN SHAW WAREHOUSE             WEBSTER DENTAL SCHOOL

STATER BROTHERS               Amazon Distribution
                                           AMAZON Warehouse              MILLION AIR
 Roadways                          Flood Control             Airport
 Environmental Remediation         Sewer                     US Customs
 Transit Oriented Developments     Water Retention Basins    Runway Improvements

        EL MONTE                     WATER RETENTION                MILITARY BASE REUSE   20

IVANPAH                 $1 MILLION PROGRAM            TEXACO, TEXAS
 Rooftop Solar               Luxury Condos            Historical Renovation
 Utility Solar Power         Mixed-Use Development    Hotel Rehabilitation
 Ethanol Bio-refinery        Student Housing          Hotel Construction

 NORTH DAKOTA BIO-REFINERY          BUCKINGHAM                GREAT WOLF LODGE 21