Info from 1/23 Stakeholder Engagement

Thepresentation from the 1/23 Stakeholder Engagement did not, this time, contain the written Q&A, so I’ve written up my notes on note-worthy points that emerged at this meeting. In case you’d like to review the entire conversation, I’ve also embedded my recording at the base of this post.

TEA Issues

• Kevin of the Office of Policy and Strategy announced that, as indicated in the draft EB-5 guidance memo, “we are going to defer to the state agencies in regards to the geographic area of TEA designation.” However, USCIS is not yet saying whether it will allow a single census tract to qualify as a geographic area. Kevin specifically declined to state a position, saying that it “is a question that we’ll cover in the written questions/issues.”
• Sasha Haskell said that they have consulted with the Bureau of Labor Statistics and determined that yes, it is appropriate to use newly-available five-year American Community Survey data from the U.S. Census Bureau as a base for estimates for TEA designation. (As an alternative to Census 2010 data.)
• Question: When determining 150% of the national average for unemployment rate, which national unemployment rate should we use? Just the most current one? Sasha Haskell: In general the recommendations that we have received from the Bureau of Labor Statistics involve the analysis of 12-month or an annualized set of data. So I think in general that’s what we are looking for.

“Hold at headquarters” Issue for I-924 Regional Center applications

• Sasha Haskell: “If I understood the question correctly, there is a concern raised about an issue that’s being examined across a number of applications and the question focuses on when there will be resolution, is that correct?… Okay, well, actually this is an issue that we’re dealing with regarding the economic analysis. We’ve had our contract economists online with us for several months now and we’ll be talking more about that in the staffing section of these presentation. They’ve been invaluable in terms of presenting their expertise in approaching these cases. This is all a growing period for us, incorporating their expertise into our adjudications. We want to make sure that we proceed very carefully. This is being discussed at the highest level in the agency. We expect to have some better clarity within the next couple of weeks on this issue. We appreciate all the patience that the applicants have displayed on this issue, but we’re really trying to proceed carefully.”
• The leadership reiterated the hope (but not certainty) that a resolution on questions regarding the econ analysis would be reached in the next couple weeks, and that applicants would have the opportunity to provide supplemental information if needed.

Issues with I-924 applications generally

• Common reasons for denial will be discussed at the next stakeholder meeting
• A new I-924 Form is currently being prepared that will describe more fully what USCIS is looking for at the Regional Center application stage, and will that lay out standards for “shovel ready projects.” According to Sasha Haskell, generally “what we have found is the greater the specificity the better prepared the package is.”

Customer Service Issues

• Email Communication: Sasha Haskell conceded that USCIS has had some growing pains with its EB-5 email-box, but assured stakeholders that the EB-5 mailbox is now administered full time by an EB-5 administrator and has a goal to respond to inquiries within 2-3 days.
• CSC Staffing: It was reported that the CSC now has four teams of adjudicators working on EB-5 cases (versus one team in Summer 2010) and that the most recent training was conducted 12/2011.  The agency is working to incorporate economists into the review process. Each team has a supervisor and there is one supervisor in charge of work flow issues. They are trying to bundle filings for single Regional Centers for the sake of consistency while still adhering to the “first in first out” principle.
• Processing Times: The leadership was not able to provide any current estimate on I-924 processing times, but said that time estimates will be available soon on the EB-5 page of the USCIS website.

Regional Center program sunset question

• A stakeholder asked what procedures might be employed in the event that Congress does not extend the EB-5 Regional Center program past its current sunset date of 09/30/2012. Rachel Ellis quickly responded that this as a question that will just have to be addressed when and if it occurs, and that the Service does not have a response at this time.

Questions regarding amendments

• Sasha Haskell and Kevin discussed at length the requirements for various types of Regional Center amendments (e.g. to industry code, geographic area, or economic impact modeling). To summarize, the applicant needs to follow I-924 relevant instructions and submit evidence that the change is warranted and appropriate, which usually involves submission of a business plan and economic analysis. Concurrent filing of an amendment and I-526 petitions dependent on approval of the amendment is not okay.

Questions regarding investment in real estate

• See my post below.

Recording:

Insights from Conversation with Director Mayorkas

And now a guest post from Joseph McCarthy, an immigration attorney and EB-5 expert who was one of the select few in-person participants at both “Conversations with the Director” in Washington DC on 1/12/2012 and 9/14/2011. I’m one of the hundreds who struggled to follow by phone what exactly was going on in the lively discussion with USCIS Director Alejandro Mayorkas, so I prevailed on Mr. McCarthy to share his first-hand experience and highlight key topics and notifications from the session. I don’t know how he found time to write this, but thank you Joe for this generous and useful report from the front. We look forward to hearing more from you.

For the second time in sixth months, USCIS Director Ali Mayorkas offered a small-audience EB-5 “conversation” as part of his ongoing outreach efforts to EB-5 stakeholders.  Much like the first event last fall, the meeting took place in an intimate conference room located within USCIS headquarters in Washington DC.  This time, however, the audience was noticeably smaller and primarily composed of veteran immigration attorneys and senior USCIS staff (accompanied by 350 passive participants who listened-in via teleconference).  The events also differed in tone and format.  The first event introduced the beginning of a new EB-5 policy memo, but the meeting as a whole might fairly be characterized as a “listening session” in which Director Mayorkas invited audience topics and concerns.  This most recent event largely focused on the content of the revised memo wherein USCIS more vocally espoused positions on policy topics.

While one could devote many pages to analyzing the new memo, perhaps the biggest conceptual change added to the most recent draft is related to what many EB-5 practitioners refer to as the “venture capital model.”  USCIS inserted several paragraphs discussing how an immigrant investor may diversify their total EB-5 investment across a portfolio of wholly-owned businesses, so long as the minimum required investment and number of jobs occur within a new commercial enterprise.  The language chosen by USCIS clearly contemplates a traditional, or non-Regional Center, investment, which quickly led to a discussion as to how the model might apply to Regional Center projects, how job creation could be verified (the ongoing debate between tracing an individual’s investment to job creation versus the creation of jobs by the commercial enterprise (8 CFR §204.6(j))), and the effect of multiple projects with varying TEA status.  While discussion was provocative, as one might anticipate, no resolution resulted.  Nonetheless, Director Mayorkas acknowledged that USCIS would further drill down into the topic and the Agency on the whole appeared receptive.

In subsequent topics, there appeared to be less agreement between the Agency and stakeholders.  In truth, not all debate may have been over closely held policy positions, but rather informed discussion of how certain hypothetical fact patterns play out given proposed ideas.  The topics varied and reached beyond the content of the memo, including:

• Timing of job creation with respect to the two-year provisional residency period:  What is considered to be a “reasonable” period of time following the two year timeframe if the full number of jobs hasn’t been created?  USCIS appeared committed to the idea that idea of a reasonable timeframe only contemplated a “short tail” following the initial two years.
• The extent to which USCIS should scrutinize the legitimacy of petitioner’s funds:  Again, USCIS appeared unapologetic about hyper-technical examination of source of funds, perhaps even addressing compliance with foreign laws.
• The source and necessity of the delay in adjudications pending the resolution of unknown policy issues at USCIS headquarters:  Frustratingly, USCIS appeared unwilling to identify either the source of the delay, or the expected timeline when adjudications would renew.

At times the debate appeared to get fairly contentious; the Agency seemed highly resistant to particular stakeholder positions or interpretations of law, at times even conveying their own frustrations.  Yet overall, Director Mayorkas maintained a professional meeting posture in the spirit of fostering dialogue.  An amateur poll of attendees indicated that most participants felt encouraged and appreciative of the increased dialogue with the Agency, but reserved their final impressions until after the January 23^rd quarterly stakeholder call.

Two small, yet highly important notifications were made at the meeting.  Director Mayorkas stated that three contract economists and/or business analysts (the distinction was blurred, so it was unclear) have already been hired by USCIS, and the Agency is interviewing for three more contract positions and one full time federal economist.  The Director implied that the Agency may be vetting for a corporate or securities attorney, which seemed curious, given that this is within the purview and available expertise of other federal agencies.  And certainly the question that is on every client’s mind: there currently is no available timeline for the advent of premium processing, but Director Mayorkas renewed his commitment to the idea.  Many EB-5 practitioners continue to wonder if premium processing will manifest as originally proposed – strictly for the I-924 Regional Center petitions – or if some other alternative can be explored that will result in getting money to projects faster.  My guess is that will be the topic of conversations with Mayorkas to come…

11/9 call with Director Mayorkas

In today’s conference call Director Mayorkas introduced  the document “A Work in Progress: Towards A New Draft Policy Memorandum Guiding EB-5 Adjudications” and fielded stakeholder questions. Many of the questions asked were irrelevant to the topic at hand so I won’t bore you with my recording, but there are a few tidbits of interest:

• Premium Processing for EB-5: Director Mayorkas reported that the goal is to have premium processing available for initial I-924 applications only by Spring of next year. He also reiterated that the service is working hard to speed up processing times across the board for all petitions, independent of premium processing.
• TEA Issues: Director Mayorkas said that the statement on TEA designation in the draft memo represents guidance that is effective immediately. See page 6-7 of the memo. (“….Consistent with the regulation, USCIS is to give deference to the state’s designation of the boundaries of the geographic or political subdivision that will be the targeted employment area. However, USCIS must ensure compliance with the statutory requirement that the proposed area has an unemployment rate of at least 150 percent of the national average rate.” To me this statement looks consistent with recent guidance and as if it still gives USCIS leeway to reject gerrymandering.)
• Oversight: Director Mayorkas said that the agency is concerned about fraud and misrepresentation in EB-5 marketing and practices, and that examples should be brought to the agency’s attention.

I recommend those active and knowledgeable in the EB-5 field to review and comment on the draft memo between now and Nov 25, when the comment period closes. Those looking for practical guidance now can skip this document because the content is incomplete and will change. People also shouldn’t look to this memo for new policy. The purpose of the memo is apparently just to collect all existing EB-5 guidance in one handy location with headings — unexciting but useful and appropriate.