ABOUT GUAM STRATEGIC DEVELOPMENT CENTER

 
The Guam Strategic Development Regional Center was established to identify and help manage business investment opportunities on Guam which qualify investors for obtaining EB-5 visas in the United States of America.
 
 
Q & A   MARIANAS BUSNIESS JOURNAL   
November 23, 2009-December 6, 2009

Editor’s Note:  Daniel D. Swavely is a member of Guam Strategic Development LLC, a newly formed Guam company facilitating EB-5 investor visa applications.  (see ”Guam Strategic Development to be regional center for immigrant investors,” in the Nov. 9 issue of the journal).

                Swavely has lived on Guam for 40 years and been a Property Developer and Land Use Planning Consultant.  He has also served in various public service capacities including Chairman of the Waterworks Authority, Chairman of the Guam Mass Transit Authority, and Chief Planner for both the Guam Department of Public Works and Guam Bureau of Planning.

                He was educated at Pennsylvania State University and at the University of Tennessee in Regional Planning and Economic Development.

            The following information was provided in response to questions from the Journal and is for informational purposes only.  It is not intended to be, and does not constitute a solicitation of any kind.

  
Q. Please give a brief explanation of Guam Strategic Development - what it does and who its customers are.
 
A.  Guam Strategic Development LLC Regional Center was recently approved by USCIS to help promote economic growth and job creation on Guam.  With the USCIS approval, the GSD Regional Center aims to attract foreign investors to invest in limited partnerships on Guam with investments of $1 million per investor in return for obtaining "green cards" or legal permanent resident status in the United States, including Guam.  The limited partnerships in which GSD will seek foreign investors will be geared toward commercial enterprises in the following target industry economic clusters:  retail, trade, hotels, restaurants, warehouse and distribution, office buildings, and mixed use development including service stations and residential units.
 
    In 1990, Congress amended the Immigration and Nationality Act to provide for an employment based fifth preference category--EB-5--whereby those who invested a minimum of $1 million in a business created on or after November 29, 1990, and through which 10 jobs would be created within a reasonable period of time as a result of such investment, could obtain permanent resident status.  Once an investment has been made, the investor files an EB-5 petition with the USCIS showing that the requisite invesment was from lawful funds and that the business is expected to generate 10 jobs within a reasonable amount of time, generally two years.  Following petition approval, the investor would then be able to seek an EB-5 immigrant visa from a U.S. embassy or consulate and, upon establishing eligibility, obtain the visa and seek admission at a U.S. port of entry within six months of visa issuance.  The investor, his or her spouse, and unmarried children under the age of 21, would be able to seek EB-5 immigrant visas based on the approved petition.
   
    Admission on the EB-5 visa would commence a "conditional" legal permanent resident status.  Three months prior to the second anniversary of such admission, the investor and family would need to file a petition with USCIS prior to the second anniversary to remove the conditional status and obtain "permanent" legal permanent resident status.  The document that reflects that status, conditional or permanent, is an I-551, typically referred to as a "green card."
 
Q.  What was the genesis for setting up this service?
 
A.  the reason for setting up the GSD Regional Center is to encourage investment from abroad and to help contribute to stable job creation on Guam through quality, permanent businesses.  One of the reasons the GSD Regional Center makes such good sense is because of the upcoming military buildup and expected increase in population.  People who come to Guam, either to work or as families of workers, need places to go for entertainment, for meals, and for buying goods and services.  We believe the influx of new people and capital will create investment opportunities to start viable businesses.
 
Q.        Please provide some background about the EB-5 Visa.  What are the criteria that an individual should meet to qualify for the EB-5 status?  How different is it from a resident visa?

A.         EB-5 is a type of “resident visa” that was created by Congress in 1990 to encourage investment in the U.S. by immigrant investors.  Generally, to qualify, an investor must:  1) Invest or be in the process of investing $1 million (or $500,000 if in a “targeted employment area”, which is not the case on Guam);  2) The investment will benefit the U.S. economy by creating jobs for at least 10 U.S. citizens or legal permanent residents, and 3) The investor will be involved in the management of the business either through formulating business policy (including acting as a limited partner) or through day to day management.

            In 1993, Congress amended the Immigration and Nationality Act in the EB-5 area by creating the Immigrant Investor Pilot Program, which allowed for the creation of Regional Center, such as the Guam Strategic Development Regional Center.  By investing via a Regional Center, the investor gains the benefit of being able to point to direct as well as indirect jobs created by virtue of the investment.  For example, a restaurant may have 6 full-time employees, but when you factor in the indirect labor created through growing, processing and delivering the foodstuffs; real estate, insurance and property management agents responsible for securing the physical premise; janitorial, maintenance and security personnel contracted to clean and protect the premises, marketing, advertising, and public relations vendors contracted to promote the business; and similar support services, it may be that the 10 “full-time” jobs are in place.  The indirect employment factors for any industry are assessed through an economic Input-Output Model that was created for Guam and approved by the USCIS.

            As mentioned above, for the first two years following admission on an EB-5 Visa, the investor and his or her family are in “conditional” legal permanent resident status.  With the conditional status is the added requirement that the investor and family file a petition between the 21st and 24th month following admission in conditional status, seeking removal of the conditions.  At that time, USCIS will review the fact that the requisite investment had been made and sustained and that the requisite 10 jobs had been created or will be created within a reasonable amount of time.  If successful, the conditions are removed and legal permanent resident status is granted.  Other categories of “resident” visas (employment based and some family based) do not have conditional status at the start.

Q.        What are the restrictions on an EB-5 Visa holders’ investments in the United States?

A.         The requirement for an EB-5 Visa holder’s investment are that the required amount is actually invested and “at risk”, the investment funds come from lawful sources, the investment is sustained throughout the period of conditional status, and the investment leads to the creation of 10 jobs.

            With respect to EB-5 investments in projects under the GSD Regional Center, the areas of investment will be within the target industry economic clusters discussed above, and the job creation must equal 10 jobs, comprised of both direct and indirect employees.  With respect to any non-GSD investment in the EB-5 Visa program, the investor can choose to invest in any lawful enterprise, but the job creation must equal at least 10 full-time direct jobs within the enterprise itself.

Q.        How much interest is there in the program from potential investors?  From where do most applicants come?  In what type of investment are they most interested?

A.         We received USCIS approval of the GSD Regional Center in August of 2009, so we are still organizing and getting our business underway.  We (are) located in the Pan Am Building across from Skinner Plaza in Hagatna.  Apparently the news of our approval must have been announced somewhere, because we‘ve already received inquiries from Korea, Taiwan, and China.  Those are the most likely home countries of prospective investors for the GSD Regional Center.  We are prohibited from soliciting EB-5 investors in the U.S or its territories.

*The Nationality Act and the Immigrant Investor Pilot Program within that Act apply to Guam as they do to the mainland U.S.

Q.        Does your firm provide additional advisory services?

A.         No.  We only engage in managing the business activities authorized as an EB-5 regional center and  in seeking qualified foreign investors for GSD Regional Center projects.

Q.        Does either the military buildup on Guam or the global economic crisis make the EB—5 programs particularly attractive at this time?  Please explain.

A.         We think the coincidence of both the military buildup on Guam and the effects of the U.S. recession will benefit from projects that will be managed by the GSD Regional Center.  Investments from foreign investors will contribute to the creation of non-military businesses that will benefit everyone on Guam and create more employment as well as (boost) the economic development created by such investment.  We have been working on creating the GSD Regional Center since mid-2006, before either the military buildup or the U.S. recession were realities.  It took more than three years to complete the application process and gain approval.
 

Q.        What kinds of costs are involved for the applicants?    

A.         Any investor in the GSD Regional Center project must be able to make the requisite $1 million investment to qualify for legal permanent resident status, and must understand that the money will be used in the project, from which he or she will take a limited partnership interest.  The investor needs to understand that the money invested must be considered to be “at risk” and that no guarantees can be made for any future return of the funds invested.  In addition, the investor will be required to pay a $30,000 subscription fee to become a limited partner of the project in which he or she invests, for operation of the limited partnership.

Q.        Is there a difference between the way in which the program is implemented in Guam and in the mainland U.S.?

A.         No.  The U.S. Citizenship and Immigration Services, EB-5 Immigrant Investor Program is basically the same in both places. The only difference would be the amount required for investment, as in the TEA program whereby an economically depressed area, comparatively speaking, would only be required to invest $500,000.  Being that Guam’s employment rate is above the national average, our minimum investment amount stands at $1M.

Q.        If someone has a sound business investment idea, how can they contact the Guam Strategic Development Regional Center and what can they expect from you?

A.         We can be contacted via e-mail at office@guameb5.com.  We have certain general investment opportunities already approved for the GSD Regional Center, and we are now investigating projects that fit in those approved categories.  Our geographic area is the entire island.  The options for involvement by others who suggest businesses for the GSD Regional Center are dependent on the value of the business opportunity, and the potential job creation that will occur as a result of that opportunity, depending on how much investment is needed.  We will evaluate each business opportunity carefully and independently.-MBJ