United States: Funding The Development Of New Senior Living Facilities – The Immigration Connection

Last Updated: August 25 2016
Article by Michael Clark and Angelo Paparelli, Partner

Seyfarth Synopsis:  An attractive source of lower cost financing, the EB-5 Immigrant Investor program can help fill the capital stack for many senior living projects.  Investors and their families receive green card status in two stages in return for at least a $500,000 investment and the creation of at least 10 direct or indirect jobs per investor.  Two EB-5 programs — the direct and the regional center investment — offer alternative business and investment structures through debt or equity deals.  Although the regional center program is up for reauthorization by September, revival of the program with added integrity measures is probable.

Senior housing construction and development are booming, mostly due to an aging baby boomer generation and increasing life-spans.  Senior housing developers seeking to fund their new projects are increasingly turning to a less-costly alternative to traditional loans — EB-5 financing.  The EB-5 program — administered by U.S. Citizenship and Immigration Services, a component of Department of Homeland Security, allows  for the grant of green cards to foreign citizens who invest at least $500,000 in a qualifying project that is likely to create 10 or more jobs in the United States. Green cards are also issued to the investor's spouse and unmarried children under age 21.  Permanent residency is granted in two stages — a conditional residency period and, two years later, the grant of unconditional green card status as long as the investment has been sustained and treated as "at-risk," and the required jobs have been created.

EB-5 capital can serve as part of the initial capital stack for a new venture (often as mezzanine financing) or be used to take out and repay higher-interest bridge or construction loans.

The Nuts and Bolts of the EB-5 Program:

There are two main methods of EB-5 investment – direct investing into the new commercial enterprise or investment through a regional center (i.e., an entity approved by the federal government to be involved in the EB-5 Program and the promotion of economic growth and job creation in a geographic area).  Under the direct investment program, immigrant investors may only count direct jobs created for employees issued IRS Form W-2 by the "new commercial enterprise."  However, under the regional center investment model, investors are allowed to count direct, indirect and induced jobs.  Although the regional center program is set to sunset on September 30, 2016, there is wide consensus that Congress will continue to extend the program because it provides jobs for U.S. workers and generates federal, state and local tax revenues.  Also likely will be the inclusion in future EB-5 legislation of additional "integrity measures," which would enhance investor protection and promote national security, while clarifying eligibility criteria.  The direct EB-5 program, however, is not subject to reauthorization and thus will not sunset.

The EB-5 program requires that the immigrant investor invest at least $1,000,000 of capital in a new commercial enterprise that creates or, in some circumstances, saves no fewer than ten (10) jobs.  However, there is a widely-used exception to the $1,000,000 investment requirement.  If the immigrant investor invests capital in a new commercial enterprise that is principally doing business in, and creates jobs in, a "targeted employment area" (TEA), the investment amount is lowered to a minimum of $500,000 in capital.  A qualifying TEA investment is one made in a specially defined "rural area" or an area that has experienced unemployment of at least 150 percent of the national average rate.  Many TEAs involve the measurement of several census tracts (some with high and others with low unemployment) to achieve an average of 150 percent  or greater.  Most senior living facilities are constructed in a TEA for that very reason.

Direct, Indirect and Induced Jobs:

A direct job is an identifiable and actual position in the new EB-5 commercial enterprise for qualified U.S. employees.  Each position must be full-time and provide at least 35 work hours each week to an employee at the business in which the investment was made. An alternative to a full-time position is a job-sharing option (which may not consist of multiple part-time positions).  Senior living facilities are likely to create numerous direct jobs.

Indirect jobs are those created in businesses that are associated or affiliated with an EB-5 Regional Center.  These jobs are still shown to have been created due to the capital invested by the immigrant investor. Indirect jobs are typically created within businesses that supply services or goods to the EB-5 project in question. Jobs associated with a construction project are a great example of indirect jobs. Actual construction jobs resulting from the project will only be counted as indirect jobs if the construction can be shown to require two years or more to be completed. Even for projects of shorter duration, however, the purchase of building and construction supplies, and other construction-related expenditures are treated as economic "inputs" leading to the calculation of indirectly created jobs.

Induced jobs are those that are created in the community in which the regional center is located. The increase in spending by workers involved in EB-5 projects in the community results in the creation of induced jobs (e.g., construction workers at the project site purchasing lunch at local eateries).  Not only do projects create new jobs within the geographic scope of the project, but those new jobs create a "ripple effect" throughout the economy of the United States. For example, seniors who move into an assisted living facility pay monthly sums for lodging and care, which provide salaries for the facility's workers and suppliers. These individuals use their compensation to purchase goods and services, which creates the ripple effect.

Developers generally rely on outside experts to assist in calculating indirect and induced jobs and to make sure that TEA classification is available. This work is done through detailed economic analysis, review of census tracts and unemployment data, and preparation of a business plan.

Cost of EB-5 Financing and Percentage of Capital Stack:

Compared to other sources of capital available to senior housing developers, the EB-5 Program provides a low-cost capital alternative for new projects when compared to traditional loans.  EB-5 investors do not invest capital primarily for a return on their investment. The goal for such investors is permanent residence in the United States. As a result, immigrant investors are often willing to accept modest returns on their investment.

Generally, the EB-5 capital component represents less than 30% of the total project costs and it is often less than 15%.  But even when the percentage of total cost of a project is small, all of the jobs created by the project are credited to the EB-5 investors (not just the pro-rata portion represented by the EB-5 capital). In other words, all of the jobs created by the project, including those resulting from other capital sources, are allocated to the EB-5 investors.

Senior living is a growth industry which shows no immediate signs of letting up. EB-5 continues to serve an important role in fueling the growth of development and related job creation for the industry. EB-5 compliance and satisfaction of the program's eligibility criteria, however, are quite technical. Thus, representation by competent counsel and other professionals is essential.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Michael Clark
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.