Developer
The Developer is normally responsible for executing the commercial project.
- Identify and acquire the site;
- Obtain zoning, permits and approvals;
- Prepare the development budget;
- Secure construction financing;
- Hire architects, contractors and consultants;
- Supervise construction;
- Manage cost overruns and delays;
- Arrange refinancing, operation or sale of the completed asset.
The Developer’s ability to complete the project affects both sides of the EB-5 investment. From an immigration perspective, construction spending or operations may support job creation. From an investment perspective, project completion and financial performance may affect whether the JCE can repay the NCE.
This is why Developer due diligence is essential. Investors should examine track record, completed projects, litigation, financing experience, financial strength and the amount of equity the Developer has actually placed into the project.
Regional Center
The Regional Center’s role is mainly connected to the EB-5 immigration and compliance framework.
It generally sponsors the offering, files Form I-956F, supports the economic analysis and job-creation methodology, monitors compliance and helps provide project evidence for investor petitions.
USCIS states that the designated Regional Center files Form I-956F to request approval of a specific investment offering through an NCE.
The Regional Center may be closely involved in structuring the offering, but that does not necessarily mean it owns the land, controls construction or operates the business.
Developer VS Regional Center
| Area | Developer | Regional Center |
|---|---|---|
| Main responsibility | Execute the commercial project | Sponsor and support the EB-5 structure |
| Typical expertise | Construction, real estate, operations and financing | EB-5 compliance, project filings and job creation |
| Controls construction | Usually | Not necessarily |
| Files Form I-956F | Provides project information | Generally files the application |
| Creates economic activity | Through construction or operations | Supports the job-creation methodology |
| Repays EB-5 financing | Usually through the JCE | Not necessarily responsible |
| Supports I-829 evidence | Provides project records | Coordinates and organizes EB-5 documentation |
When the Developer and Regional Center Are Related
Some EB-5 projects use a vertically integrated structure. The same business group may control the Regional Center, NCE Manager, Developer and JCE.
This structure may offer several advantages:
- Faster communication;
- Easier access to project documents;
- Greater coordination between development and immigration teams;
- More direct control over investor reporting;
- Fewer disputes between outside parties.
However, it may also create conflicts of interest.
For example, if the same group controls the Developer and the NCE Manager, who protects the NCE if the Developer breaches the loan agreement? Who decides whether to declare a default? Who evaluates whether an extension is in the investors’ interests? Who verifies that project reports are accurate?
A related-party structure is not automatically a problem, but conflicts should be clearly disclosed in the PPM and other offering documents. Investors should look for independent controls, such as a fund administrator, independent directors, third-party reporting, collateral agents or clearly defined enforcement rights.
When the Regional Center and Developer Are Independent
In other projects, the Developer hires or partners with an independent Regional Center to sponsor the EB-5 offering.
Potential advantages include:
- Greater separation between the project and EB-5 oversight;
- More independent review of the project;
- A Regional Center that may monitor multiple unrelated Developers;
- Fewer direct conflicts involving the Developer and NCE Manager.
However, independence alone does not guarantee strong oversight.
The Regional Center must have contractual access to project records and enough authority to obtain construction, expenditure and job-creation evidence. If the relationship between the Developer and Regional Center breaks down, investors may face delays in receiving reports or I-829 documentation.
Therefore, investors should ask whether the Regional Center has:
- Information and inspection rights;
- Regular reporting requirements;
- Access to construction and financial records;
- Notice rights when material problems arise;
- Remedies if the Developer fails to cooperate;
- Long-term obligations to support investor petitions.
Who Controls the NCE?
This is one of the most important questions.
In some projects, the Regional Center or an affiliated company manages the NCE. In others, the Developer or a related party controls it. Some offerings use a more independent NCE Manager.
Industry materials often explain that the NCE Manager structures the offering and deploys capital from the NCE to the JCE.
The identity of the NCE Manager matters because it may control:
- Capital deployment;
- Investor communications;
- Loan enforcement;
- Extensions;
- Amendments;
- Distributions;
- Redeployment;
- Decisions after a JCE default.
Investors should not assume the Regional Center automatically performs all these duties.