Los Angeles City Plaza, LP

A California Limited Partnership

ACTUAL BUSINESS PLAN

Pursuant to 8 CFR §204.6(j)(4)(B) and Matter of Ho

September 2015

Sponsored by:

California Investment Regional Center, LLC

(USCIS-designated Regional Center)

1598 Long Beach Blvd

Long Beach, CA 90813

Email: Thlusa@Gmail.com

Contents Private and Strictly Confidential

1.0 EXECUTIVE SUMMARY

1.1 Definition of Terms

EB-5 Investor: A prospective purchaser of a Unit in the EB-5 Limited Partnership; an EB-5 Investor may also be known simply as an Investor. If an Investor purchases a Unit, such Investor shall thereafter be referred to as an EB-5 Limited Partner.

EB-5 Limited Partner: A limited partner in the EB-5 Limited Partnership, with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act, who is admitted to the limited partnership in accordance with the EB-5 Immigrant Investment Program and USCIS policy memoranda and Administrative Appeals Office precedent decisions governing the EB-5 Program. An EB-5 Limited Partner may also be known simply as a Limited Partner or an EB-5 Investor.

EB-5 Limited Partnership: Los Angeles City Plaza, LP (“LACP”), a California Limited Partnership, is the New Commercial Enterprise, Owner and Job Creating Entity that will aggregate EB5 investor funds and invest it in the Project for job-creating purposes. LACP consists of CIRC as its General Partner and each of the foreign investors who purchase a Unit in the Limited Partnership as its EB-5 Limited Partners. The EB-5 Limited Partnership may also be known simply as the Partnership.

EBIDTA: EBIDTA is an acronym for “Earnings Before Interest, Depreciation, Taxes, and Amortization”. Interest expense is a function of leverage, not operations; Depreciation expense is an accounting convention, not an operational indicator; Taxes are considered "non-operational" in a sense because they can be affected by a variety of accounting and tax conventions; and Amortization expense is another accounting convention dealing with the amortization of intangibles. Therefore, EBIDTA is a much stronger indicator of ongoing, operational strength than Operating Cash Flow, Free Cash Flow, Net Operating Income, or Net Income.

General Partner: California Investment Regional Center, LLC (“CIRC”), a California Limited Liability Company, will manage the Partnership’s business activities on behalf of its Limited Partners.

High Unemployment Area: A geographical area which has experienced unemployment of at least 150 percent of the national average rate. See INA § 203(b)(5)(B)(ii).

Immigration Act: The Immigration Act at 8 USC 1153(b)(5)(A)(i)–(iii), (B)(i)–(iii), (C)(i)–(iii) and (D).

Job Creating Entity (“JCE”): In this Project, the Job Creating Entity, New Commercial Enterprise, EB-5 Limited Partnership and Owner is the same entity, namely LACP. The Owner is the business operation creating direct, indirect, and/or induced employment in order to meet job creation requirements. The JCE is the target organization for EB-5 invested funds, owns the Project.

New Commercial Enterprise (“NCE”): In this Project, the Job Creating Entity, New Commercial Enterprise, EB-5 Limited Partnership and Owner is the same entity, namely LACP. Referring to the EB-5 Limited Partnership, a NCE is one which was created on or after November 29, 1990. This is the enterprise that EB-5 Investors will be investing in.

Owner: Los Angeles City Plaza, LP (“LACP”), a California Limited Partnership. In this Project, the Job Creating Entity, New Commercial Enterprise, EB-5 Limited Partnership and Owner is the same entity, namely LACP. LACP is the Job Creating Entity that will own the Project and will manage and operate the resulting business activities.

Project: Long Beach Garden Homes, an undertaking to develop, construct, and thereafter operate a full-service restaurant as well as sell 36 condominium units for sale and 5,447 square feet of retail space. These will be owned and operated by the Owner.

Regional Center: California Investment Regional Center (“CIRC”), a California Limited Liability Company, will function as the Regional Center in accordance with USCIS guidelines. The Regional Center will advise the Project, the EB-5 process, and the associated entities as well as provide reporting for matters of I-526 and I-829 related requirements. In this Project, CIRC is also the General Partner of LACP.

Rural Area (“RA”): A geographical area located both outside of a Metropolitan Statistical Area and outside of a city or town having a population of 20,000 or more based on the most recent decennial census of the United States. See INA § 203(b)(5)(B)(iii) and 8 CFR §204.6(j)(6)(i).

Statistical Area: The general concept of a metropolitan area is that of a large population nucleus in the United States and Puerto Rico, together with adjacent communities having a high degree of social and economic integration with that core. Metropolitan areas may comprise a number of towns or cities, or even entire counties. A consolidated Metropolitan Statistical Area (“MSA”) has a population of one million or more and also has separate component areas meeting statistical criteria and supported by local opinion. A Combined Statistical Area (“CSA”) is a grouping of adjacent metropolitan and/or micropolitan statistical areas.

Subject Property: 1598 Long Beach Boulevard, Long Beach, California 98013; the proposed lot of land intended for development of the Project. The Subject Property may also be referred to as the Subject Property.

Targeted Employment Area (“TEA”): A TEA may be a Rural Area or a High Unemployment Area as designated by the appropriate state authority.

United States Citizenship and Immigration Service (“USCIS”): USCIS is the government agency that oversees lawful immigration to the United States.

1.2 Matter of Ho Index

Regarding Matter of Ho, 22 I&N Dec. 2006: A comprehensive business plan as contemplated by the regulations should contain, at minimum, a description of the business, its products and/or services, and its objectives. Since the following business plan is “Actual”, it was drafted after the Matter of Ho standard.

The plan should contain a market analysis, including the names of competing businesses and their relative strengths and weaknesses, a comparison of the competition’s products and pricing structures, and a description of the target market/prospective customers of the new commercial enterprise (section 7.0 Market Analysis provides a market analysis, to include competitor analysis and market position).

The plan should list the required permits and licenses obtained (section 5.0 Project Development Timeline lists those needed to develop the Project).

If applicable, it should describe the manufacturing or production process, the materials required, and the supply sources (section 5.0 Project Development Timeline discusses materials and sources for construction activities; this is not applicable for business activities as restaurant operations as well as condominium unit and retail space sales do not include manufacturing or production of goods).

The plan should detail any contracts executed for the supply of materials and/or the distribution of products (section 5.0 Project Development Timeline discusses contracts executed for construction activities; this is not applicable for restaurant operations as well as condominium unit and retail space sales, as they do not include manufacturing or production of goods).

It should discuss the marketing strategy of the business, including pricing, advertising, and servicing (see section 7.3 Marketing Strategy).

The plan should set forth the business’s organizational structure and its personnel’s experience (section 2.2 Management Team).

It should explain the business’s staffing requirements and contain a timetable for hiring, as well as job descriptions for all positions (see Section 8.2 Job Creation for a summary of job creation).

It should contain sales, cost, as well as operating expense and income projections and detail the bases therefore. Most importantly, the business plan must be credible (see section 6.0 Project Financial Performance).

1.3 Introduction

Purpose

LACP is the Partnership formed for the purpose of developing, constructing and operating a mixed use development Project sponsored by CIRC, a USCIS-designated EB-5 Regional Center. The Partnership will also be managed by CIRC as General Partner on behalf of the EB-5 Limited Partners.

LACP, which will own, and operate the Project. The Project is the proposed construction and operation of a 4-story, approximately 90,200 square foot mixed-use development consisting of 4,800 square feet of retail space for lease, two restaurants totally 5,256 square feet, 36 residential condominium units for sale, and 80 parking spaces to be known as the Long Beach Garden Homes.

EB-5 Program 

Section 203(b)(5) of the Immigration and Nationality Act (“INA”) allocates 10,000 “EB-5” immigrant visas per year, of which 3,000 visas are reserved for aliens who invest in TEA. The EB-5 regulations may be found at 8 CFR 204.6 and 8 CFR 216.6, respectively. An alien investor may apply for a job creation immigration visa by submitting Form I-526 (Immigration Petition by Alien Entrepreneur) to USCIS.

EB-5 Investors may be eligible for an EB-5 immigrant visa if they have invested, or are actively in the process of investing, the required amount of capital into one of the following for-profit business-types:

· A new commercial enterprise (created after 11/29/1990).

· An existing enterprise established on or before Nov. 29, 1990, that is:

o Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or

o Expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs

· A troubled business in which jobs will be preserved.

o A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to the priority date on the immigrant investor’s Form I-526. The loss for this period must be at least 20 percent of the troubled business’ net worth prior to the loss. For purposes of determining whether the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

Capital means cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. All capital shall be valued at fair-market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act. The investment capital cannot be borrowed.

In order to obtain USICS approval, each EB-5 investor must demonstrate that their capital investment will:

· Create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years (or under certain circumstances, within a reasonable time after the two-year period) of the immigrant investor’s admission to the United States as a Conditional Permanent Resident.

· Create or preserve either direct or indirect jobs:

o Direct jobs are actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB-5 investor has directly invested his or her capital.

o Indirect jobs are those jobs shown to have been created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor. A foreign investor may only use the indirect job calculation if affiliated with a regional center.

o Note: Investors may only be credited with preserving jobs in a troubled business.

A qualified employee is a U.S. citizen, permanent resident or other immigrant authorized to work in the United States. The individual may be a conditional resident, an asylee, a refugee, or a person residing in the United States under suspension of deportation. This definition does not include the immigrant investor; his or her spouse, sons, or daughters; or any foreign national in any nonimmigrant status (such as an H-1B visa holder) or who is not authorized to work in the United States.

Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. In the case of the Immigrant Investor Regional Center Program, "full-time employment" also means employment of a qualifying employee in a position that has been created indirectly from investments associated with the Regional Center Program.

There are two distinct EB-5 pathways for an alien investor to gain lawful permanent residence: the Basic Program and the Regional Center Program. Both programs require that the alien investor make a capital investment of either $500,000 or $1,000,000 (depending on whether the investment is in a TEA) in a new commercial enterprise located within the United States. The new commercial enterprise must create or preserve 10 full-time jobs for qualifying U.S. workers within two years of the alien investor’s admission to the United States as a Conditional Permanent Resident (“CPR”). When making an investment in a new commercial enterprise affiliated with a USCIS-designated regional center under the Regional Center Program, an alien investor may satisfy the job creation requirements of the program through the creation of either direct or indirect jobs.

Notably, an alien investing in a new commercial enterprise under the Basic Program may satisfy the job creation requirements only through the creation of direct jobs. If the regional center proposal bases its predictions regarding the number of direct or indirect jobs that will be created through EB-5 investments in the regional center, in whole or in part, by offering investment opportunities to EB-5 investors with the reduced $500,000 threshold, then the Targeted Employment Areas should be identified.

Disclosures

This document is not an offer or solicitation to sell or acquire securities or any other financial products and is not a prospectus, disclosure statement, or other offering document. Any offering of securities will only be by means of a confidential private offering memorandum. Many of the descriptions of the Project in this document are derived from various marketing materials and therefore contain terms used in such materials. In addition, many sections are based on current expectations and plans of the Owner but are subject to change as the plans and specification for the Project may be finalized and modified from time to time. In particular, the Owner makes no representation and warranty that the Project will include each and every product, service, feature, or amenity described herein, and concepts specifically named may be changed prior to completion.

1.4 New Commercial Enterprise

The Partnership

LACP is the new commercial enterprise in which the foreign investors will be investing for the purpose of financing the Project.

Partnership Objective

The Partnership was established to finance the construction of certain real properties located within Long Beach in the State of California. In Long Beach within Los Angeles County, the Partnership intends to finance the development, construction, and thereafter operational management of the Long Beach Garden Homes Project.

General Partner

CIRC is the General Partner of LACP, which will manage the Partnership’s day-to-day business operations and conduct due diligence regarding Investor eligibility.

Regional Center Affiliation

CIRC, a regional center designated by USCIS on May 28, 2015, is sponsoring the Project and will ensure that all EB-5 compliance matters with respect to the EB5 funds are met with all the rights and responsibilities accorded under the laws of the State of California.

Use of EB-5 Investment Proceeds

Equity investment into the Partnership will be used to fund the construction and operations of the job-creating Project.

EB-5 Preferred Equity Repayment

Each EB-5 Limited Partners will own 2% of the partnership interests in LACP which will entitle him or her to 2% of all distributions from the Partnership. In no event will any EB-5 Limited Partner receive a distribution of his or her investment prior to I-829 petition approval. Assuming the EB-5 offering of LACP is fully subscribed with 27 EB-5 investors, the EB-5 Limited Partners will own 54% of the partnership interest of LACP, and the General Partner will own 46% of the partnership interest of LACP. In the event less than 24 EB-5 investors subscribe to the offering, then the General Partner's interest will be increased by 2% for each investor less 12 that subscribes to the offering. The EB-5 investment is “at-risk” in its entirety, therefore there is not a guarantee of any payment or principal repayment.

1.5 Job-Creating Investment Target

The Project 

The Long Beach Garden Homes is a proposed mixed use development which will include construction and operation of a 4-story, approximately 90,200 square foot mixed-use development consisting of 4,800 square feet of retail space for lease, two restaurants totally 5,256 square feet, 36 residential condominium units for sale, and 80 parking spaces, resulting in job creation.

Project Location 

The Project is located within Los Angeles County at the following locations: 1570, 1580, and 1598 Long Beach Boulevard, Long Beach, California 98013, permanently address 1598 Long Beach Blvd. Long Beach CA 90813.

Project Management 

The Project will be owned and operated by LACP. The Owner will also manage daily business operations.

Use of Funds 

Total development costs are summarized as follows:

Source of Funds 

Sources of capital contributions are summarized as follows:

Development Schedule 

The development timeline will be driven by access to EB-5 investment dollars. Construction is estimated to take twenty-seven months; Long Beach Garden Homes will commence business operations upon completing construction activities.

Financial Projections 

According to financial projections, gross revenue at the end of the second year of business activities will total $7,467,729 with an EBITDA of $6,370,381.

TEA Designation

The locations of the Subject Properties qualify as TEAs according to the California Governor's Office of Business and Economic Development; therefore, minimum investment per foreign investor will be $500,000.

Job Creation Projections

According to the economic analysis conducted by Evans, Carroll & Associates, Inc., the Project will create 386.6 jobs that are a result of this development. To meet the EB-5 capital raise of $18.0 million, each investor will be assigned more than 10 jobs.

2.0 BUSINESS OVERVIEW

2.1 Investment Organizational Structure

LACP is a new commercial enterprise and the job creating entity. LACP was formed for the purpose of financing a job-creating new mixed use development within the geographic designation for CIRC, the sponsoring regional center. The Partnership will also be managed by CIRC as its General Partner.

LACP will receive at-risk equity investment from EB-5 investors, who will be EB-5 Limited Partners and co-owners in the Partnership. The Partnership will issue the full amount of EB-5 equity investment into the Project of LACP, the Project Owner.

The following diagram provides the investment structure of the Project:

2.2 Management Team

2.2.1 NCE Management

CIRC is the General Partner of LACP, as well as the regional center sponsoring the Partnership and its Project. CIRC is an EB-5 Regional Center designated by USCIS on May 28, 2015 under the Immigration Investor Pilot Program for the specific purpose of investing EB-5 funds into a targeted commercial enterprise located within its proposed geographic area, which includes the Counties of Los Angeles, and Orange within the State of California (see Exhibit A: Regional Center Documents).

Subject Property location

USCIS-designated geographic boundaries beyond Subject Property location

CIRC is currently approved for the following industry categories:

The Project will focus on the following target industry clusters:

With respect to extending a regional center’s scope of target industries and geographic boundaries absent a requirement for an actual I-924 amendment application submitted to USCIS, the USCIS’ comprehensive EB-5 Policy Memorandum dated May 30, 2013, on pages 22/23 states:

The Form I-924 provides a list of acceptable amendments, to include changes to organizational structure or administration, capital investment projects (including changes in the economic analysis and underlying business plan used to estimate job creation for previously-approved investment opportunities), and an affiliated commercial enterprise’s organizational structure, capital investment instruments or offering memoranda.

Such formal amendments to the regional center designation, however, are not required when a regional center changes its industries of focus, its geographic boundaries, its business plans, or its economic methodologies.

This Project will reasonably expand the Regional Center’s current USCIS target industries and geography as described above. Under current USCIS EB-5 policy, as specified in the USCIS EB5 Policy Memorandum dated May 30, 2013, a formal I-924 amendment application to the regional center’s initial designation is not required.

CIRC Management Team

Mr. Zhong (Johnson) Fang is the managing member of CIRC. From 1993 to 2013, Mr. Fang has been engaging in real estate development and project investment, management, operations. Mr. Fang has an excellent work experience specializing in marketing and construction.

Ms. Michelle Hu is the managing member of CIRC. Ms. Hu graduated from the Department of Business Administration of the Wuhan University in China. Ms. Hu also attended Pasadena City College for further education. From 2000 to 2004, Ms. Hu had experienced a large scale of sales and administration of commercial and residential projects in China. From 2004 to 2013, Ms. Hu engaged in real estate sales and development as well as an immigration consultant service in California.

2.2.2 Project Ownership

LACP is the owner and operator of the Project to be located at 1598 Long Beach Boulevard, Long Beach, California 98013. LACP will be the EB5 “target commercial enterprise” that will use EB-5 capital invested into the Partnership to develop the job-creating project.

LACP consists of CIRC as General Partner, and the EB-5 investors as Limited Partners.

.

2.3 Consultants

Economic Impact Consultant

Evans, Carroll & Associates is an economic consulting firm specializing in EB-5 immigration analysis, economic impact studies of development projects and new construction, models of state and local tax receipts, impact of current and proposed government legislation, and construction of econometric models for individual industries and companies. The economic analysis conducted by Evans, Carroll & Associates is referenced throughout this business plan.

Business Plan Consultant

Wright Johnson, LLC is a business consulting and planning firm that specializes in USCIS’s EB5 Regional Center Program with an econometrics division that has successfully prepared numerous economic studies to evaluate and summarize the job-creation and economic benefits attributed to regional center designation and individual EB-5 projects. In addition, Wright Johnson has a business plan writing division that prepares Matter of Ho compliant Business Plans for EB-5 projects.

3.0 PROJECT DESCRIPTION

3.1 Project Overview

The Long Beach Garden Homes Project is a proposed 4-story, approximately 90,200 square foot mixed-use development consisting of 4,800 square feet of retail space for lease, two restaurants totally 5,256 square feet, 36 residential condominium units for sale, and 80 parking spaces.

The Owner intends to sell the condominium units as well as the retail space, but own and operate the full service restaurant.

3.2 Project Details

The purpose of the Project in its entirety is to develop, construct, and thereafter manage a 4,553 square foot full service restaurant (7225) as well as sell 36 condominium units for sale and 5,447 square feet of retail space located at the Subject Property.

Land Area:  36,000 SF

Underground Parking:  32,000 SF

Underground Parking   80 stalls

Back Façade Ground Parking   43 stalls

Rentable Retail Space:   5,447 SF

Residential Units:   36 Units

One Bedroom Units: 1,000 SF each

Two Bedroom Units: 1,300 SF each

Restaurant:

Type:  Full Service

Size:  4,553 SF

The following table provides a breakdown of unit mix by floor:

Amenities:

· Lobby

· Fitness Area

· Indoor Pool

· Hanging garden

3.3 Subject Properties

The Project is a proposed mixed use development within Los Angeles County, California located at 1598 Long Beach Boulevard, Long Beach, California 98013. The Project site is approximately 2 miles from Interstate I710 Exit 2B and approximately 20 miles from Los Angeles International Airport.

The site of the proposed new development can be seen in the following maps:

Renderings

3.4 Subject Property Area Profile

3.4.1 City of Long Beach Overview

Home to approximately 460,000 people, the City of Long Beach is one of the most ethnically diverse communities in the United States, offering all the worldclass amenities of a large metropolitan city while maintaining a strong sense of community and neighborhood pride (City of Long Beach). The city has a land area of 50.923 square miles and a population of 462,257, as of the 2010 Census (QuickFacts).

Long Beach is home to the Queen Mary, Aquarium of the Pacific, several museums and theaters, Long Beach Airport, an award-winning school district and recreation programs, its own Health Department, miles of beaches and bike paths, five golf courses, five hospitals and two historic ranchos (City of Long Beach).

3.4.2 Los Angeles County Overview

Los Angeles County is home to more than 244,000 businesses, with more minority- and women-owned businesses than any other in the nation. It is the nation's top international trade center and manufacturing center (lacounty.gov). 

As of the 2010 census, the population was 9,818,605 (Population and Housing Unit Counts). With a land area of 4,058 square miles, the 2010 population density is 2,100 persons per square mile (QuickFacts).

Los Angeles County's 37 departments and $24.2 billion budget provide extensive business opportunities to the private sector, both in contracts for goods and services. Suppliers wanting to do business with the County must first register as a county vendor. The County is allowed by Proposition A, approved by voters in 1978, to contract for services when it is more economical or more efficient to do so (lacounty.gov).

3.4.3 Population

The following table shows populations from the last three U.S. Census surveys (Summary Population and Housing Characteristics):

3.4.4 Employment

Major Employment Industries

Los Angeles County has over 245,000 businesses and government entities employing over 3,600,000 people with a payroll of $180 billion. The U.S. Census Bureau reports the following top five industries for employment within Los Angeles County from its 2013 County Business Patterns report (U.S. Census Bureau):

Top Employers

The following chart lists Long Beach’s largest private employers as indicated by the Long Beach Chamber of Commerce (City of Long Beach, California; 195):

4.0 DEVELOPMENT COST AND CAPITALIZATION

4.1 Use of Funds

Total development costs are summarized as follows:

Costs are based upon the following:

Total acquisition costs refer to the expenditures required to purchase land for the business location and any professional fees associated with closing costs, acquiring a business location, assets, etc.

Land Acquisition refers to the cost required to develop the business location. The Developer assumes a total of $3 million for this cost based on the Escrow Instructions for the purchase of the land (see Exhibit B: Development Details for the Escrow Instruction).

Total construction hard costs refer to the expenditures required to conduct construction activities as needed for business operations.

Underground Parking Construction refers to all costs associated with conducting construction activities to develop the underground parking garage. The Developer assumes a total of $13,850,000 for this cost based on estimates provided by general contractor USA Realty Construction Group Inc. and validated by: (i) KOA Corporation, a planning and engineering firm in a letter dated September 13, 2015; and (ii) Simon Lee & Associates, an architecture firm in a letter dated August 24, 2015 (see Exhibit B: Development Details).

Main Building Construction refer to the costs associated with conducting construction activities to construct the main building consisting of the retail space, amenities, and condominium units. The Developer assumes a total of $13,670,000 for this cost based  on estimates provided by general contractor USA Realty Construction Group Inc. and validated by: (i) KOA Corporation, a planning and engineering firm in a letter dated September 13, 2015; and (ii) Simon Lee & Associates, an architecture firm in a letter dated August 24, 2015 (see Exhibit B: Development Details).

Hanging Garden Construction refer to the costs associated with conducting construction activities to construct the hanging garden. The Developer assumes a total of $2,770,000 for this cost based on estimates provided by general contractor USA Realty Construction Group Inc. and validated by: (i) KOA Corporation, a planning and engineering firm in a letter dated September 13, 2015; and (ii) Simon Lee & Associates, an architecture firm in a letter dated August 24, 2015 (see Exhibit B: Development Details).

Total A&E costs refer to the expenditures required for the services of design and engineering professionals.

Engineering Costs refer to the costs associated with water and electricity engineering, fire engineering, air conditioning engineering, and landscape engineering. The developer assumes a total of $660,000 based on estimates provided by general contractor USA Realty Construction Group Inc. and validated by: (i) KOA Corporation, a planning and engineering firm in a letter dated September 13, 2015; and (ii) Simon Lee & Associates, an architecture firm in a letter dated August 24, 2015 (see Exhibit B: Development Details).

Total soft costs refer to the any additional expenditures required to complete development of the business location, excluding pre-opening costs, such as construction-related soft costs, financing costs, contingency, etc.

Pre-planning and application fee refers to the costs associated with the initial pre-planning costs and the application fee for land plan and development drawings.

Reports refers to costs associated with acquiring an environmental assessment report, traffic impact report, air quality report, and noise impact report.

Drawing review fee refers to the costs incurred for the review of land plan and development drawings.

Permit application fee refers to the fees incurred for the applications of various permits.

Project management fee refers to the costs incurred from the use of project management professionals.

Total pre-opening costs refer to the expenditures required for business operation which must occur prior to commencing and during the initial period of business operations.

Real Estate Brokerage Fee refers to the costs associated with real estate brokers and their commissions for the sale of condominium units and retail space.

4.2 Sources of Funds

The Project objectives are as follows, which will be achieved through the full financing of its capitalization requirements:

1) To construct and manage operations of a full service restaurant as well as the sale of 36 condominium units for sale and 5,447 square feet of retail space.

2) To create profit for the Partnership and its investors.

3) To promote job creation.

EB-5 alien investor capital combined with private equity will be used to achieve the objectives of the Project and to fully finance its $36.95 million capitalization requirements. EB-5 equity financing in the amount of $29.88 million from the EB-5 investors in LACP will be combined with $7.07 million in other sources. The sources of funding for the Project are summarized in the following table:

Presuming that the completed value is equal to the total development cost, a conservative LoantoValue (“LTV”) of 50% would allow for senior debt lending of up to approximately $18.5 million. The Project considers a total Senior Debt of approximately $11.08 million.

The following chart illustrates the flow of EB-5 funds:

4.3 EB-5 Equity Investment Terms

The Partnership will be providing financing in connection with the development of the Project.

The Investment terms including the following:

(1) Each EB-5 Investor (Limited Partner) will own 2% of the Partnership (54% if fully-subscribed with 27 investors) which will entitle such investor to 2% of all distributions from the Partnership. The General Partner will own 46% of the Partnership. If the event less than 27 investors subscribe to the Project, then the General Partner's interest shall be increased by 2% for each investor less than 27 investors.

(2) Risk: The EB-5 investment is “at-risk” in its entirety, therefore there is not a guarantee of receiving any payment or principal repayment.

5.0 PROJECT DEVELOPMENT TIMELINE

The Developer spent total construction time for the Project (BNEW182565) to take approximately fifty-four months. The following high-level Work Breakdown Structure details the development schedule based on the Developer’s expectations, driven by access to EB-5 investment dollars (see Exhibit B: Development Details for Developer’s timeline):

The project predicted to complete construction about twenty-four months, due to Pandemic COVID-19 cross the worldwide from year of 2019.  The budget was two times labor and supplies  increased from COVID-19 impact.  Between 2019 to 2020, most employees in the City are Work-From-Home.  Starting 2021, city employees are normally back to office. Due to reasons, the project delayed construction timeline.

1. June- Dec 2014: planning on preliminary scheme.

2. Jan- Dec 2015: get planning permission from the City.

3. Jan- Dec 2016: obtain grading and apply building permit.

4. January - June 2017: Pay the fee and obtain building permit. During this period, Jan -Jun 2017: complete site works.

5. July 2017- Dec 2018: complete the construction of foundation engineering and the underground parking lot.

6. Jan 2019 - June 2020: complete the main structure construction for 1st to 4th floor.

7. July 2020 - Sep 2021: complete the interior and body decoration engineering of the main structure.

8. Sep 2021- Jan 2022: complete public works and offsite works.

9. Jan 2020 – Dec 2021: complete all supporting projects such as fire engineering, water and electricity engineering, landscape engineering and outdoor parking lot.

10. Jan- Mar 2022: compliance city inspections.

11. April 2022- issued permanent Occupancy Permit.

12. Sep 2022 – Dec 2023: planning and submit plans to city includes of two restaurants that developer self-operated.

13. Jan- Jun 2024: Apply for restaurant building permit.

14. Jun- Oct 2024: Complete restaurant interior and decoration.

            15.       Nov 2024: Restaurants open for business.

ADMIN & PLANNING

The Administrative phase covers land entitlements, design, civil engineering, permits, and applicable fees in addition to Project due diligence activities. The Project received its Site Plan Approval (conditionally) from the City of Long Beach on June 29, 2015 (see Exhibit B: Development Details).

SITE WORK PHASE (6 MONTHS)

After all action items/issues are resolved, permits are received, contractors selected, and fees paid, the pre-construction and site work periods begin. Pre-construction and site work includes securing soil engineer and land surveyor, construction fencing, rough grading, soil excavation/import/compaction, and underground wet and dry utilities, as well as the demolition of the existing building. Other tasks in these phases include trash enclosure, curb, gutter, hardscape, back fill (if needed) and finish grade, landscaping, grade base and pave, and monument and signage.

GRADING AND UNDERGROUD (18 MONTHS)

Concrete underground is vital component of every underground construction project. It is significantly impacts both the durability and cost of the project, owner, designer. Tasks may include excavation and foundation (to the extent not completed in site work), and underground steel concrete construction.

BUILDING CONSTRUCTION (24 MONTHS)

The construction time for both phases one and two will be fifteen months in length. Building construction (including exterior and interior construction) begins when Admin and Planning is completed. Tasks may include underground and ground rough plumbing and electricity, pour and form slab/curb, framing, rough electrical, rough plumbing, fire sprinkler, internal framing and walls, roofing, glass and glazing, exterior siding, set HVAC units, painting, fire alarm installation, system start-ups, and the clean and punch list.

INSPECTIONS

City will involve the inspection from the beginning of construction starts. Inspections involved department of planning, building, fire, water, and public works. Occupancy permit is issued when all inspects are pass and approved.

OPERATIONS (ONGOING)

This business plan utilizes EB-5 funds to finance a planning and operating costs (see 4.1 Use of Funds for details). This business plan takes into consideration the resulting business activities within its market analyses (see section 7.0 Market Analysis). Operational jobs are considered for job creation (see section 8.0 Employment).

6.0 FINANCIAL PERFOMANCE

6.1 Revenue Assumptions

Restaurant Operations

Revenue Assumptions

First year (2017) Food and beverage revenue is assumed at a base total equivalent to the 5-year average rate as calculated from the Full-Service Restaurants (NAICS 722511) Industry Financial Report within the Los Angeles-Long Beach-Glendale, CA MSA from 2010 to 2014 which is $1,001,169. Since restaurant operations only occur for 7 months out of the year, the owner broke this total into a monthly revenue of $83,430.75 per month and multiplied that by 7 to determine food and beverage revenue for the 7 month period to be $584,015.

Second year (2018) Food and beverage revenue is assumed at the 5-year average rate of $1,001,169.

Revenue for future years are calculated with a conservative 2.0% annual growth rate from the previous year.

Validation of Condominium Assumptions:

The first year and second years of food and beverage revenue are based on the calculated 5 year average of operational revenue as identified by the Full-Service Restaurants (NAICS 722511) Industry Financial Report within the Los Angeles-Long Beach-Glendale, CA MSA from 2010 to 2014 (see Exhibit C: Financial Projection Details) as shown in the following table (BIZMINER):

Future food and beverage revenue from 2019 to 2021 is calculated from an annual growth rate of 2.0% as discussed further later in this business plan (see Section 7.2.1 U.S. Full-Service Restaurant Industry Overview).

Condominium Sales

Condominium Size and Price Assumptions

The following table summarizes the proposed selling prices for each type of condominium:

The Developer assumes that all condominium units will be sold by the end of 5 year period, with the following sale schedule for the Condominium units’ sales:

Retail Unit Sales

Retail Unit Size and Price Assumptions

The following table summarizes the proposed selling prices for each unit of Retail space:

The Developer assumes that all retail units will be sold by the end of year 2018, with the following sale schedule for the Condominium units’ sales:

6.2 Financial Assumptions

The following Pro Forma is a summary of revenue and expense projections for the first five years of all business operations, which includes condominium and retail space sales as well as restaurant operations:

Each of these business activities are discussed in detail within the sections which follow.

6.2.1 Restaurant Operations

The following Pro Forma provides restaurant operations financial projections for the first five years of business operations, which are expected to commence upon completion of construction activities: 

Revenue is derived from the sale of food and beverages (discussed previously in section 6.1 Revenue Assumptions). All percentages in this Pro Forma are ratios-to-total revenue. Food and Beverage revenue for 2017 includes only 7 months of operations from June 2017- December 2017, since operations being only after the completion of construction activities.

The first year of revenue is calculated from the total of the 5-year average business revenue (previously discussed in section 6.1 Revenue Assumptions). The total annual revenue is broken down into a monthly detail add totaled based on the 7 months of operations that occur within 2017.

The second year of operations is the total from the 5-year average business revenue (previously discussed in section 6.1 Revenue Assumptions), as this is the first full year of operations.

Expenses were derived using the following average ratio-to-sales for Full-Service Restaurants (NAICS 722511) within the Los Angeles-Long Beach-Glendale, CA MSA from 2010 to 2014, which are utilized in projecting expenses (see Exhibit B: Financial Projection Details) (BIZMINER):

6.2.2 Condominium Sales

The following Pro Forma projects revenue and expenses pertaining to condominium sales:

Note: Since Condominium units are only being sold no expenses are being considered for Condominium units sales.

Revenue is derived from the sale of 1 bedroom and 2 bedroom condominium units (discussed previously in section 6.1 Revenue Assumptions). All percentages in this Pro Forma are ratios-to-total revenue. Condominium Sales for 2017 include 5 months of presales occurring from January 2017-May 2017 and 7 months of sales activities occurring from June 2017-Dec 2017.

Expenses consist of closing costs for units sold that year and payment of property taxes for unsold units that remained at the beginning of each year.

Closing Costs: The following summarize typical closing costs for the State of California (Barry and Debra Kessler):

· Commissions: 5%

· Broker Processing Fee: $350

· Escrow Fees: $1,600

· Title Insurance: $1,420

· Transfer Taxes: $550

· Retrofit: $100

· Termite Inspection: $100

· Home Warranty: $450

· NHD Report: $95

6.2.3 Retail Sales

The following Pro Forma projects revenue and expenses pertaining to retail space sales:

Note: Since Retail space is only being sold no expenses are being considered for Retail space sales.

Revenue is derived from the sale of retail space (discussed previously in section 6.1 Revenue Assumptions). All percentages in this Pro Forma are ratios-to-total revenue. Retail Sales for 2017 include only 7 months of sales activities occurring from June 2017-Dec 2017, due to sales activities commencing upon the completion of construction activities.

7.0 MARKET ANALYSIS

7.1 Industry Activities

The Owner will engage in the following industry activities as sponsored by California Investment Regional Center, which are considered for job creation analysis for the EB-5 investment:

Residential Building Construction (NAICS 2361)

This industry group comprises establishments primarily engaged in the construction or remodeling and renovation of single-family and multi-family residential buildings. Included in this industry are residential housing general contractors, operative builders and remodelers of residential structures, residential project construction management firms, and residential design-build firms.

The Owner/Operator may also conduct sales of individual condominium units as part of its business operations, which is not included within the following market analysis sections due to being included in this industry as a result of building construction activities.

Nonresidential Building Construction (NAICS 2362)

This industry group comprises establishments primarily responsible for the construction (including new work, additions, alterations, maintenance, and repairs) of nonresidential buildings. This industry group includes nonresidential general contractors, nonresidential for-sale builders, nonresidential design-build firms, and nonresidential project construction management firms.

The Owner/Operator may also conduct sales of retail space as part of its business operations, which is not included within the following market analysis sections due to being included in this industry as a result of building construction activities.

Architectural, Engineering and Related Services (NAICS 5413)

This industry group comprises establishments primarily engaged in providing architectural, engineering and related services, such as structure design, drafting, building inspection, landscape design, surveying and mapping, laboratory and on-site testing, and interior, industrial, graphic and other specialized design services.

Restaurants and Other Eating Places (NAICS 7225)

This industry is divided into segments:

· Full-Service Restaurants (NAICS 722511)

· Limited-Service Restaurants (NAICS 722513)

· Cafeterias, Grill Buffets, and Buffets (NAICS 722514)

· Snack and Nonalcoholic Beverage Bars (NAICS 722515)

The Owner/Operator will be focusing on the Full-Service Restaurants subsectors for business operations, which is described as follows:

FULL-SERVICE RESTAURANTS (NAICS 722511)

This U.S. industry comprises establishments primarily engaged in providing food services to patrons who order and are served while seated (i.e., waiter/waitress service) and pay after eating. These establishments may provide this type of food service to patrons in combination with selling alcoholic beverages, providing carryout services, or presenting live nontheatrical entertainment.

The Owner/Operator will be focusing on the Full-Service Restaurants (NAICS 722510) subsector for business operations. Section 7.2 Restaurants presents a detailed market analysis of this industry as it pertains to the Project.

7.2 Full-Service Restaurants

Operators in the single location Full-Service Restaurants industry include single-location, independent or family-operated restaurants that provide food services to patrons who order and are served while seated (i.e. waiter and waitress service), and pay after eating. These establishments may sell alcoholic and other beverages, in addition to providing food services to guests.

The Single Location Full-Service Restaurants industry has experienced robust growth over the past five years. Since 2010, the improving economy and rising consumer spending have led to consistent growth in restaurant spending. The fine dining segment has done particularly well over the past five years due to quick recovery in the income levels of affluent consumers and the corporate sector. On the other hand, restaurants at the lower end of the market have struggled with low growth, as consumers have traded down to the innovative products served by a growing number of new fast-casual chains.

The industry’s steady rebound is expected to continue over the next five years as the economy improves and consumer spending grows. Consumer spending is expected to increase 2.9% per year on average over the five years, benefiting the industry. Despite the optimistic operating conditions, industry restaurants will need to monitor and adjust to shifting consumer preferences. Rising health consciousness and ethical consumerism will present industry operators with ongoing opportunities to reach niche markets with premium products in order to increase profitability and revenue. The industry will also likely benefit from population and immigration growth, as well as a greater number of people living in urban areas, where restaurants are highly concentrated (IBISWorld).

7.2.1 U.S. Full-Service Restaurant Industry Overview

The Single Location Full-Service Restaurant industry has experienced robust growth over the past five years, as consumers have regained their appetite for spending. Over the period, per capita disposable income has experienced steady growth, especially for households with incomes over $100,000, which are more likely to spend money at restaurants. As a result, many consumers that typically opt for cheaper meals have opted for pricier menu items instead. While the industry remains highly competitive, price competition has eased somewhat as consumers have increased spending, leading to a higher average industry profit margin. The industry will continue growing, as the economy continues its steady return to health (IBISWorld).

The U.S. Census Bureau reports the following for 2011 (U.S. Census Bureau):

The IBISWorld June 2015 Industry Report 72211b Single Location Full-Service Restaurants in the U.S. reports the following performance and outlook statistics:

The Single Location Full-Service Restaurants industry is segmented based on the main type of food served. The diverse and fragmented nature of the industry means many restaurants do not fit neatly into one category. For example, many Asian restaurants and steakhouses have a large component of seafood on their menus. Also, fusion cuisine, which combines elements of different culinary traditions, have become increasingly popular (IBISWorld).

Given these considerations, restaurants have been segmented based on their core offering:

Traditional and new American restaurants offer a menu with a wide variety of cuisine such as burgers, steaks, sandwiches, salads, fries and deserts. This type of food is heavily immersed into American culture and has therefore been a major driver of the industry’s growth over the past half-century. Over the past few decades American restaurants have increased their hold of the entire food-service market due to the growth of chains such as Applebee’s, Chili’s and T.G.I. Friday’s. However, within the Single Location Full-Service Restaurants, traditional and new American cuisine has been overtaken by ethnic foods due to the evolution of the American pallet and the gastronomy movement.

Asian food is a diverse category that can be broken down into a number of regional styles based on the peoples and cultures of those regions. The main broad types include: East Asian (including Chinese, Japanese, and Korean restaurants); Southeast Asian (including Vietnamese, Thai and Malaysian restaurants); and South Asian (including Indian, Sri Lankan and Bangladeshi restaurants). Asian food remains popular in states with high Asian populations, such as California and New York, but is also popular in a variety of geographic locations due to its diversity. Society’s adoption and acceptance of ethnic foods in general has increased over the past half-century as tastes have developed and people become more adventurous in trying other cuisines. Higher rates of global travel and increased exposure to new cultures have also driven growth in the popularity of ethnic cuisine (IBISWorld).

Staples of Mexican cuisine include corn, beans, and chili peppers. Mexican restaurants are known for their intense and varied flavors and variety of spices. Mexican cuisine has had a large influence on the Southwest of the United States. In states such as Texas, where variations such as Tex-Mex have been adopted, Mexican style restaurants can account for well over 20.0% of all establishments. Growing immigration has contributed to a rise in Mexican food consumption over the past five years, driven in part by a rise in the Hispanic population.

European restaurants include Italian, French, Mediterranean, and Spanish restaurants. Most restaurants have evolved their recipes to suit American tastes. For example, the modern Italian- American menu is heavily focused on pasta-based dishes and pizza and tends to include greater amounts of meat and garlic than traditional Italian dishes. Italian-American dishes also tend to be characterized by large amounts of tomato sauce. Like many other ethnic cuisines, European restaurants are more popular in regions with high European immigration, such as in New York City, where European restaurants account for about 20.0% of establishments.

Pizza restaurants serve a menu of house and custom pizzas alongside pasta, salad and other Italian-influenced cuisine. Due to the wide influence of Italian immigrants in American culture over the past century, many regional forms of pizza have developed. Revenue from this segment has declined over the past five years as pizza has become increasingly defined as a carryout or delivery food. Pizza franchises such as Dominos, Pizza Hut and Papa John’s, which now largely focus on carryout or delivery services, have contributed to this trend as they have been able to access higher profit margins through this business model. Still, sit-down pizza restaurants remain popular in much of the north-east and in urban locations where consumers prefer and can afford gourmet offerings.

Demand for this industry is influenced by a combination of the following external drivers (IBISWorld):

· Consumer spending: 

o Factors that influence the growth of consumer spending, such as taxes, consumer sentiment and oil prices, also affect demand for this industry. During a recession, any spike in unemployment generally leads to a decline in spending. Conversely, when economic conditions are good, consumers will be more likely to spend money on eating at restaurants.

o Consumer spending is expected to increase, providing a potential opportunity for the industry.

· Healthy eating index: 

o Consumers are becoming increasingly aware of issues related to weight and obesity, fatty-food intake and food-safety issues. Consumers are now more aware of the health issues associated with fatty foods and are increasingly going out of their way to avoid them.

o The healthy eating index is expected to increase, however this factor remains a threat to the non-health-conscious restaurants in the industry.

· Households earning more than $100,000: 

o Full-service restaurants tend to draw their customers from higher income households. Given this factor, growth in the number of households earning over $100,000 will benefit the industry.

o The number of households earning more than $100,000 is expected to increase.

· Consumer Confidence Index:

o Changes in consumer confidence have a significant effect on household expenditure on discretionary items, including restaurant dining. During a recession, demand for lower-priced value products from restaurants increases, driving revenue down.

o Consumer confidence is expected to increase.

The Single Location Full-Service Restaurants industry’s growth is expected to continue over the next five years as consumers allocate a greater proportion of their budgets to meals outside the home. Restaurants will benefit as the economy improves and unemployment rates decline, leading to more consumer indulgences, such as dining out. Over the next five year, consumer spending is expected to increase at an average annual rate of 2.9%, representing a slightly faster rate of growth than the previous five years. Consumer confidence, a leading indicator for spending patterns, is also expected to enjoy a healthy uptick over the next five years (IBISWorld).

7.2.2 Local Full-Service Restaurant Market Analysis

Between March 2014 and March 2015, state employment in Accommodation-Food Services, the parent sector of Full-Service Restaurants in the Bureau of Labor Statistics taxonomy, increased by 7.9%. The sector represents 11.3% of total state employment, including the public sector. On a national scale, the Full-Service Restaurants industry holds a $329,136,285,300 market.

The specific market area is contiguous with the Los Angeles-Long Beach-Glendale, CA metropolitan area. As of 2014, the area supported a business base of 416,600 locally operated firms and 43,162 business branch operations. Local business operations are distributed among economic sectors as shown in the following table (Competitive Market Analysis):

The market area includes 4,301,350 personal income reporting units with total gross income of $293,260,588,770 (average income: $68,179), 19.1% above the US average of $57,227. (Each personal income reporting unit represents a single IRS tax return and is used to approximate a consumer decision-making unit). The percentage of earning units within each income reporting bracket is noted in the table (Competitive Market Analysis):

The average income of the 422,300 personal income units reporting $100,000-$200,000 gross income is $136,011; Average income of the 173,250 units reporting more than $200,000 gross income is $669,129 (Competitive Market Analysis).

Supply

The following tables show the economic impact of Full-Service Restaurants within the entire State of California as well as Los Angeles County during 2011 (U.S. Census Bureau):

The following map shows the competing restaurants near the Subject Property from Google Search:

Demand

The industry is sensitive to factors that affect the growth in household disposable income, which gives consumers the ability to spend money on out-of-home dining. In turn, this factor is sensitive to changes in labor market growth (i.e. the unemployment rate) and movements in tax and interest rates. High gas prices also affect disposable incomes. Consumer sentiment affects it as well, particularly in light of the recent recession (IBISWorld):

Demographic trends

The changing age structure of the population is influencing change within the industry. Baby boomers are a major group that influences industry revenue growth. Not only are they a significant percentage of the population, they have the high disposable income to spend on restaurant meals. US Census Bureau consumer expenditure data indicates that consumers with incomes in the top two income quintiles (consisting of those consumers that earn over about $60,000 per year) account for about 64.2% of the total personal expenditure on food eaten outside of the home. Of this group, households in the highest income quintile provide about 40.0% of the total away-from-home food expenditure. The most important factor driving the highest household income group to spend in restaurants is the pressure of work and lack of time.

Health consciousness

Rising health consciousness has a direct effect on industry operators as American consumers become increasingly concerned about fat content, fried foods and salt content, especially when dining out. As such, rising concerns over the nutritional value of restaurant meals are likely to influence demand for certain foods on menus, thus encouraging industry players to alter their product mix. It is also expected to affect overall performance for industry players by rewarding operators who expand their menu choices to include a range of healthy meal options among other more indulgent food items.

Convenience

Convenience, value for money and time are other important demand determinants. Recent social trends such as busier lifestyles, heavier workloads and longer working hours, have helped boost demand for restaurant services and convenience food, as time-poor consumers look to cut down cooking time and make better use of their spare time. Moreover, restaurants have become more of a place for family get-togethers, special occasions, and social meetings for cash-rich and time-poor consumers (IBISWorld).

The major markets for the Single Location Full-Service Restaurants industry can be segmented based on a number of factors including income, age, geographic location and family structure.

An estimated 40.0% of industry demand comes from consumers in the nation’s highest income quintile. In 2012 (the latest available data), the average consumer in the highest income bracket spent $5,366 on food and beverages consumed outside the home, according to the US Census Bureau.

Those in the lowest income quintiles often need to make significant sacrifices in order to afford meals away from home. The average consumer in the lowest income quintile spent $1,086 on outof-home food consumption in 2012.

The three middle-income quintiles represent more than 50.0% of industry demand, showing how important the middle-class consumer is to the industry’s performance. While these consumers do not typically spend big on luxury food items, they contribute to steady demand for middle-of-the-range chain restaurants.

According to IBISWorld research the following success factors represent the most important for industry operators to optimize profitability during the continued growth (IBISWorld):

· Access to multi-skilled and flexible workforce: Access to suitably skilled and trained staff on hourly rates is required to meet peak customer demand periods.

· Ability to quickly adopt new technology: Owners need to adopt new employee training and kitchen and customer-related technology to increase productivity and lower labor costs.

· Attractive product presentation: Restaurant atmosphere and ambiance are important to attract and retain guests.

· Proximity to key markets: It is important to be in a good, easily accessible location that is close to target markets.

· Ability to control stock on hand: Controlling orders, stock and food waste, which are major cost areas, can reduce unnecessary expenses.

· Ensuring pricing policy is appropriate: To maintain costs and profit margins on meals, owners must ensure that menu pricing/portion control process is undertaken thoroughly.

7.3 Marketing Strategy

Product

Product marketing will focus on the sale of food and beverage for restaurant operations as well as the sales of condominium units and the sale retail space.

Price

As independent operations, pricing will be based on a combination of cost-plus and the local real estate market and the demand for condominiums. Once determined during the first year of operation, pricing will not be expected to change significantly other than with inflation and industry growth.

Promotion

Promotion, or advertising, will occur through specific media in order to reach a specialized range of consumers:

· Network marketing to local businesses

o Newspapers and Magazines Campaign

o Posters/Flyers/Signage

o Effective Customer Support

o Promotional Products/Souvenirs

· Online marketing

o Company website with active SEO program

o Advertising (Google Ads, etc.)

o Online directories and magazines

o Social Media (Facebook, Twitter, etc.)

· Store front, curbside, and roadway signage

· Joint promotions with local organizations

Distribution (Placement)

Business activities within the proposed Project are intended to cater to residents and shoppers. Thus, marketing will focus on local shopping and housing.

8.0 EMPLOYMENT

8.1 Targeted Employment Area

Under the EB-5 immigrant investor program, an alien can become eligible to obtain U.S. permanent resident status by investing either US $1 million or US $500,000 in a new commercial enterprise in the U.S. To participate in the immigrant investor program through investing the lower US $500,000 amount, the alien must invest his/her capital funds into a geographic area that qualifies as a TEA.

Section 203(b)(5)(B) of the Immigration and Nationality Act defines a TEA as an area that, at the time of investment, is a rural area or an area that has experienced an unemployment rate that is at least 150 percent of the national average unemployment rate. Based upon the 2014 national average unemployment rate of 6.2%, a high unemployment area is an area in which its 2014 average annual unemployment rate was at least 9.3%.

According to the California Governor's Office of Business and Economic Development, the Subject Property is within a census tract with a calculated unemployment rate of 10.61%. Therefore, the location currently qualifies as a TEA based upon being within a high unemployment area (see Exhibit D: TEA Designation). Evidence that the proposed Project is in a TEA within the regional center boundary will be provided with the individual I-526 Petitions of EB-5 investor(s).

8.2 Job Creation

The economic impact analysis conducted by Evans, Carroll & Associates, Inc. finds that the Project will generate significant and positive economic benefits for the local, regional and U.S. economy. The total investment will be $19.8 million and the EB-5 investment into the project will be $6.0 million from 12 foreign investors. The remaining capital will come from a combination of private equity and Senior Debt. Of the total capital expenditure, EB-5 eligible costs include $12,680,000 to be spent on hard construction, and $1,460,000 on A&E costs.

The proposed Project includes two years of construction. Therefore, direct construction jobs are included in the total job creation estimates in accordance with USCIS requirements. Also, the number of construction jobs must be based upon the capital expended on the “hard costs” of construction only. Certain soft costs, such as interest reserves and permitting are not included. These jobs are calculated as indirect effects within the RIMS II model and to use these costs would be double counting.

The 30-month EB-5 timeline includes six (6) months of operation. Revenues for this EB-5 period are summarized as follows:

Of foreign investment, a portion will be used to finance a portion of these construction costs and a portion will be used to finance a portion of pre-opening costs:

Foreign investment will require evidence of creating at least 120 jobs. According to the economic analysis, the Project will create 283.2 permanent new jobs comprising of direct, indirect, and induced jobs. Therefore, each investor will be assigned 23.6 jobs to meet the EB-5 capital raise of up to $6,000,000.

The following table demonstrates the breakdown of jobs utilizing the RIMS II input/output model (Michael Evans):

Verification at the I-829 state of the EB-5 process would be receipts, tax documents, and other expense records. Construction employment was derived through expenditure modeling based upon detailed construction cost figures supplied by the Developer.

REFERENCES

Alvarez, Andrew. (2015). IBISWorld Industry Report 72211b Single Location Full-Service Restaurants in the U.S. June 2015. Retrieved August 12, 2015 from IBISWorld database.

Barry and Debra Kessler. (2015). Sellers Closing Costs-How Much Does It Cost to Sell A Home In California. Accessed August 13, 2015 from http://www.trooprealtors.com/.

Bizminer. (2015). 722511 Full-Service Restaurants Industry Financial Report June 2015. Accessed August 13, 2015 from http://www.bizminer.com/.

Bizminer. (2015). 722511 Full-Service Restaurants Competitive Market Analysis June 2015. Accessed August 13, 2015 from http://www.bizminer.com/.

City of Long Beach. (2015). Facts At A Glance. Accessed August 13, 2015 from http://www.longbeach.gov/.

City of Long Beach, California. (2014). City of Long Beach, California Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2014. Accessed August 13, 2015 from http://www.longbeach.gov/.

Evens, Michael K. (2014). Economic Impact of Developing an Apartment Building in Long Beach, Los Angeles County, CA as Part of an EB-5 Regional Center in Southern California October 6,2014.

lacounty.gov. (2015). Business. Accessed August 13, 2015 from https://www.lacounty.gov.

United States Census Bureau. (2010). State & County QuickFacts: City of Long Beach, California. Accessed August 12, 2015 from http://quickfacts.census.gov.

United States Census Bureau. (2010). State & County QuickFacts: Los Angeles County, California. Accessed August 12, 2015 from http://quickfacts.census.gov.

United States Census Bureau. (2015). 2013 County business patterns: Los Angeles County, CA. Accessed August 12, 2015 from http://factfinder2.census.gov.

United States Census Bureau. (2015). 2013 County business patterns: California. Accessed August 12, 2015 from http://factfinder2.census.gov.

United States Census Bureau. (2015). 2013 County business patterns: United States. Accessed August 12, 2015 from http://factfinder2.census.gov.

United States Census Bureau. (2012) California: 2010 – Summary Population and Housing Characteristics; 2010 Census of Population and Housing. Accessed August 12, 2015 from http://www.census.gov/.

United States Census Bureau. (2012) California: 2010 – Population and Housing Unit Counts; 2010 Census of Population and Housing. Accessed August 12, 2015 from http://www.census.gov/.

EXHIBITS

Exhibit A: Regional Center Documents

Regional Center Approval Letter:

Exhibit B: Development Details

Land Grant Deed:

Escrow Instructions showing Purchase Price of Land:

Development Budget and Timeline Validation Letters

Site Plan Approval:

Exhibit C: Financial Projection Details

Historical Ratio-to-Sales; NAICS 722511; Los Angeles-Long Beach-Glendale Metropolitan Area (Industry Financial Report):

Exhibit D: TEA Designation