Capital Stack Why is developer equity important? What should be - PDF document

2016 New York EB-5 & Investment Immigration Convention Understanding and Evaluating Investor Protections and How U.S. Securities Laws Can Affect Overseas Agents Migration ion Agent Workshop Clem Turner / Homeier & Law, P.C. David Hirson / David Hirson & Partners, LLP Nicolai Hinrichsen / Miller Mayer LLP Moderated By: H. Ronald Klasko / Klasko Immigration Law Partners, LLP Capital Stack • Why is developer equity important? • What should be included? – Value of land – Condo deposits – Friends and family

Capital Stack (cont’d) • Senior lender – good or bad? – Committed yet? – Reliance on due diligence by senior lender • EB-5 money – Importance of percentage of capital stack? – Importance of total amount Escrow • First: What is legal? • Second: What is realistic? • 3 options: – Escrow until approval of I-526 – Holdback escrow – Escrow release on I-526 filing • With developer guarantee?

Job Creation Key issue for I-526 and I-829 • Evaluating numbers and % cushion not enough • Construction vs. operations • Construction timeline – 2-year rule – 2 ½ year rule – When start counting? When finish counting? Job Creation Key issue for I-526 and I-829 (cont’d) • Evaluating reasonableness of inputs • When is it too late to count jobs? – Replacing bridge financing

Securities Considerations • Regulation D – Accredited investor – What if gift to minor? • Regulation S – No directed sales efforts in U.S. – What if F-1 student? Securities Considerations (cont’d) • Avoiding U.S. presence – Seminars in U.S. – Advising on deal terms in the U.S. – Signing agreements in U.S. – Other U.S. activities

Guarantees • Completion guarantee • Guarantee against I-526 denial • Guarantee of repayment of loan • Issues: – Who is giving the guarantee? • Analyze balance sheet – What does the guarantee state? • Role of insurance Post-filing Due Diligence Key issue for I-829 and fraud/project failure protection • Ongoing tracking of money – Escrow/NCE/JCE/use of funds • Ongoing tracking of jobs – Regular review of construction expenditures – Regular review of construction timeline

Post-filing Due Diligence Key issue for I-829 and fraud/project failure protection (cont’d) • Key – Does regional center/project developer have someone performing this service – Reputation and competence of service provider Redeployment Newest Issue • Immigration law issues • Securities law issues • Impact on length of loan • What is the best way to protect investors?

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.