What doesn’t work for Regional Centers

I’ve been too busy recently for much comment but want to at least link several important documents that deserve your attention.

The USCIS website recently posted three AAO Decisions affirming denial of Regional Center applications.

• The decision dated January 18, 2011 affirms that a Regional Center application should not be approved if it applies for a geographic area without demonstrating how proposed investments will affect that area, requests industry categories without giving examples of investments in those categories, and declines to demonstrate that its “hypothetical” plans are realistic. The case centers on the question of what level of detail ought to be provided at the I-924 stage. The AAO argues that USCIS is right to ask for evidence to support job creation claims, especially since the agency is under pressure to accept projections approved at the regional center stage when it is adjudicating Form I-526 petitions. The decision does not preclude basing an application on hypothetical plans, but such plans  “must be sufficiently detailed and credible pursuant to 8 C.F.R. §§ 204.6(m)(3)(iv) and (v) if USCIS is to approve the regional center proposal…. While a general proposal as contemplated by Congress may include hypothetical plans, they may not rely on investment costs and direct employment numbers that have no basis in reality.” I recommend Joe Whalen’s analysis of this decision, the issues involved, and the applicant’s mistakes.
• The decision dated November 10, 2010 dissects problems with an economic impact report and its attempts to calculate job creation through DOE estimates for number of employees per square foot. If your reports use a similar methodology, read this case and ensure that your economist isn’t making mistakes like the ones that doomed this application. If you haven’t laughed and cried enough after reading the decision itself, read Joe Whalen’s analysis of the November 10 and November 23 decisions.
• The decision dated November 23, 2010argues that USCIS does indeed have the right to hold applicants accountable to the current regulations at 8 C.F.R. § 204.6(m), which have not been overturned by Federal Court or Congress. Repeating a point that has often been made of late:
  The regulation at 8 C.F.R. § 204.6(m)(3)(ii) requires the applicant to provide “verifiable” detail as to how the jobs will be created. Nothing in the 2002 amendments to the pilot program suggests that the general proposal need not have verifiable detail at to how the jobs will be created pursuant to 8 C.F.R. § 204.6(m)(3)(ii). Rather, the Congressional language expresses that the regional center proposal may be based on a general proposal rather than a specific project. “General,” however, does not have the same meaning as “vague.” The proposal, while general in nature in that it may cover several potential industries, must still provide verifiable detail as to how the jobs will be created in each industry proposed.

Not all frustrated petitioners and applicants take their cases to the AAO; others sue in court. The most prominent recent complaint was brought by no less than Ira Kurzban on behalf of a group of investors who had I-526s denied or revoked when USCIS found fault with the investment — an American Life real estate renovation/leasing project in the time-honored American Life model. The case is a must-read for existing Regional Centers who are nervous about how much their prior approvals mean now and how to deal with emerging issues such as tenant occupancy and NAICS code requirements. You’ll find a cautionary tale and eloquent arguments that you might try in your defense. Again, I recommend that you keep an eye on http://www.slideshare.net/BigJoe5 if you are interested in the unfolding of this and other EB-5 litigation.

But don’t abandon Lucid Text altogether, as I have two major additions cooking: a page with collected guidance from recent I-924 RFEs (“the real I-924 instructions,” I’m thinking of calling it, since the official instructions don’t tell you everything you need to know to get approved), and an informational page on stand-alone/direct EB-5 (as I’ve noticed increasing interest in and misinformation about this EB-5 option).