Comprehensive Immigration Reform Act of 2010

The American Immigration Lawyer’s Association has posted a section-by-section summary of the Comprehensive Immigration Reform Act of 2010 (S. 3932), introduced by Senator Menendez (D-NJ) and Senator Leahy (D-VT) on 9/29/10. This act proposes significant changes to the EB-5 program (see pages 43-45 and 52 of the PDF), which I summarize as follows:

• The “permanent partner” of an alien entrepreneur would have the same rights as a spouse.
• The fee to apply for regional center designation would be $2500.
• Investors could pay a $2500 fee to guarantee visa processing within 60 days. The creation of a premium processing program for EB-5 would be authorized.
• An adjustment application could be submitted concurrently with a visa petition (??).
• The definition of “Targeted Employment Area” would be expanded beyond high-unemployment and rural areas to cover areas of population decrease, areas designated in connection with government economic incentive programs, and State-designated TEA areas.
• Investors could extend by two years the time for filing an I-829. (This would provide a possible total 4.5 years for the investment to succeed and create jobs.)
• Investment could create full time OR “full-time equivalent” jobs (which would allow adding up hours worked by part time employees).

I must say I’m not impressed with the EB-5 portion of this legislation. It includes some attractive but probably unapprovable proposals (premium processing and broad TEA definition for example) while omitting (so far as I can find) the single most important EB-5 issue: making the regional center program permanent, or at least extending it beyond the current sunset in 2012.

2010 AAO Decisions (CARc)

USCIS has updated its website with EB-5-related decisions from the Administrative Appeals Office through February 18, 2010. The following is a summary of salient points from the newly-posted decisions:

Nov 09, 2009_01: No content of note.

Jan 06, 2010_01: This decision concerns a stand-alone EB-5 case involving an operational hotel purchased through investment by the petitioner in 2006. It was denied for the following reasons:

• The petition did not establish creation of 10 new jobs (in addition to preserved jobs) and did not provide a satisfactory business plan.
• The petition did not establish a personal investment of $1,000,000 (“an investment by a corporation cannot be considered a personal investment by its sole shareholder”). (This issue was introduced by the AAO, not a point in the original denial by the service center.)

Feb 18, 2010_01 to _07: These decisions concern I-526 petitions filed in August 2008 for an investment within Capital Area Regional Center Job Fund (for renovation of the former Watergate Hotel). The decisions are similar, and include the following reasons for denial:

• The petition was supported by agreements substantially amended from those filed with the original regional center proposal, and did not disclose that the agreements had been amended. The petitioner subsequently filed an amendment with USCIS, but this did not help matters since “amendments to agreements or business plans that postdate the filing of the petition will not be considered.” CARc’s informal and ex parte communications with a USCIS official concerning the acceptability of the amendments were also not admitted.
• The Operating Agreement included disqualifying provisions relating to reserve accounts, interim investments, membership units in exchange for services and the waiver of expense fees from the aliens.
• EB-5 Project Capital toward job creation and organizational fees were paid out of the same account, and it wasn’t demonstrated that the account included sufficient funds to pay organizational fees without the use of any of the $500,000 being invested by each alien.
• Use of EB-5 investment to back a letter of credit to secure a construction loan does not sufficiently place the investors’ funds at risk for job creation.
• The petitioner did not demonstrate that the location of the investment was considered a TEA at the time of filing or investment.
• The business plan included “material changes” from the original business plan. (“While we recognize that business plans often require some flexibility to deal with unforeseen circumstances, the business plan and the terms of the commitment letter in this matter have been amended with nearly every filing. These amendments go far beyond mere clarifications.”) The petitioner failed to demonstrate that the original business plan and projections continued to be viable.

I note that, as usual, all the decisions cite Matter of Ho on business plans.