EB-5 financing is a way of obtaining funds through a program that was formed in 1990 in order to persuade foreigners to make investments in the U.S. and create jobs for Americans in exchange for a visa. The U.S. visa for immigrant investors was established by the Immigration Act of 1990.
Due to the fact that credit markets have become stricter in light of the financial crisis, an increasing number of American businesses and developers have looked to EB-5 financing in order to raise the funds needed for their projects. Among the kinds of companies that have benefited from EB-5 financing are film and media production companies.
There are some federally-approved regional centers through which EB-5 financing is distributed that concentrate on the industries of motion picture and television. One such center is the Hollywood Film Capital (HFC), which received approval to finance film and television projects in Los Angeles and the rest of Southern California. Pursuant to HFC’s job creation economic model, approximately 30% of production expenses in Southern California are funded by EB-5 financing as are 40% of Prints and Advertising expenses. According to HFC, the EB-5 program was responsible for bringing in about $3M in funds in 2013.
The former director of the Los Angeles Film Regional Center is accused of ordering that an EB-5 project denial be reversed. The project was one in which Sony Pictures was under no obligation to accept EB-5 funds from investors, and there was no proof that the funds came from an investor. Nor was there any indication that the funds would be expended in a targeted employment area (TEA), or an area of high unemployment.
One way to secure EB-5 financing is for the developer to try to obtain a designation as a regional center from USCIS. In order to acquire such a designation, you must submit an I-924 application. The application involves a long, drawn-out approval process that may require that you reply to several requests for evidence (RFE) from USCIS, possibly causing the approval process to take years.
Last Modified: 06-03-2015 10:29 AM PDTLaw Library Disclaimer
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