Clem G. Turner/ member of Chiesa Shahinian & Giantomasi PC/ Photo by Steve Hockstein/ HarvardStudio.com Clem G. Turner, member at Chiesa,Shahinian & Giantomasi/Photo by Steve Hockstein/HarvardStudio.com

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NEW YORK CITY—Clem G. Turner has been representing clientsinvolved in EB-5 visas for a decade. His representations includeraising $400 million with an EB-5 investment in the $1 billion SLSHotel and Casino in Las Vegas. The member of the law firm ChiesaShahinian & Giantomasi has also handled several hundred EB-5raises at the $1 million level with franchises such as Burger King,iHop and Dunkin Donuts.

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Now, clients are also asking him whether Opportunity Zones couldwork with EB-5 fundraising.

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With Opportunity Zones, investments in designated low incomeareas can provide investors deferrals, reductions and exclusions ofcapital gains taxes. The EB-5 program allows foreign investors toobtain green cards by investing $1 million in a business thatemploys at least 10 US workers. The investment requirement drops to$500,000 if the business is in a rural or economically depressedarea.

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“You'd set up an opportunity zone offering and market to USinvestors of capital gain. You'd set up an EB-5 offering and marketit offshore to people interested in getting a visa. They could bein the same project, existing peacefully in the same capital stack.Not that they are not going to be tied or related to each other anymore than any other senior loan in the project,” Turnerexplains.

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However, he also says some similarities between the programs areworth considering.

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EB-5 visa projects can be tied to distressed areas, similar tothe Opportunity Zone requirement. Secondly, he notes investors inboth programs are involved in longer durations with money locked upfor specific time periods. With EB-5 programs, the investor muststay with his or her investment until the green card process iscompleted. With Opportunity Zones, permanent exclusion of thecapital gains tax requires holding onto the investment for at least10 years.

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As a third point, Turner notes real estate is a good businessfor both Opportunity Zone and EB-5 programs. EB-5 employmentrequirements can be met with Opportunity Zone ground-upconstruction or major renovations that demand a minimum and oftensizable workforce.

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Finally, both the EB-5 programs and Opportunity Zones requireinvestors hold equity in the projects requiring some structuring.He says with EB-5, the equity is often held in special purposevehicles. In Opportunity Zones, the equity is often held in theproject or by a parent company. Thus, an expert familiar withstructuring investment vehicles for one program could applyexperience from one regime to the other.

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Even with the similarities, Turner points out a fundamentaldifference that initially distinguishes the two ways of raisingcapital. He opines that Opportunity Zones need a more viable andreliable way to get their projects in front of people with capitalgains to invest.

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“EB-5s usually grow a system of agents who pop up, who aretypically service providers to high net worth individuals. Peoplewith projects in EB-5 can pitch their projects. There isn't anyonelike that yet in Opportunity Zones,” says Turner.

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Developers need to make sure they have a network to assist inthe fundraising. He adds, “Raising capital in the Opportunity Zonespace requires talking to a lot of accountants. People who mayrepresent people with capital gains isn't the most efficient orspeedy process.”


➤➤Join the GlobeSt.com ADAPT: Opportunity Zonesconference September 16-17 in Baltimore, MD. The new nationalconference series is aimed at identifying Opportunity Zones acrossall property types and geographic regions. This first-of-its-kindevent will educate, connect and celebrate the investors, developersand owners with the people behind the planning and decision-making,such as architects, consultants, academics and, most importantly,municipal officials. Also, be sure to take a look at our currentadaptive reuse and opportunity zone nomination form and submit yourproject! Deadline is fast approaching June7th.

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Clickhere to registerand view the agenda.


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Betsy Kim

Betsy Kim was the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.