Understanding “material change”

April 15, 2011 7 Comments

***2015 UPDATE***
This blog post is now old news. See instead my post What is material change?

—- OLD POST —-

The recently released USCIS EB-5 training materials include a couple pages (207-208 of pdf #1) addressing the question of what constitutes material change. The training material (which appears to predate the 2009 Neufeld memo and concept of “material change” at the I-829 stage) focuses on changes in the RFE context. The training emphasizes that the I-526 petition should present the business plan and investment terms clearly and completely, and that RFE responses are not supposed to contradict the I-526 info in any “material” way.

A petitioner must establish eligibility at the time of filing. The petition may not be approved at a future date after the petitioner becomes eligible under a new set of facts. See Matter of Katigbak, 14 I&N Dec. 45,49 (Comm. 1971). Therefore, a petitioner may not make a material change to a petition that has already been filed in an effort to make an apparently deficient petition conform to Service requirements.
– Note that the facts in place at the time of filing are important. In other words, the financial arrangements and other related factors which make a petition approvable need to be in effect when the petition is filed. It is common for the alien to be alerted to deficiencies in the petition through an RFE and to attempt to correct them. If such changes are material, the petition may need to be denied. The judgment of whether the change is material is up to the adjudicating officer. However, a material change is usually one which reflects a substantial alteration in circumstances on which the Service is relying in making its decision.
– EXAMPLES:
An alien files a Form I-526 on June 1,2008, based on a$400,000 investment. In response to an RFE, the alien provides proof of the remaining required amount being invested on July 15, 2008. Is this a material change? – Yes, this is a material change.
-An alien files a Form 1-526 with an arrangement for half of the capital to be paid back to him as a guaranteed return. In response to an RFE, he declares the arrangement null and void. Is this a material change? – Yes, this is a material change.
– An alien files a Form 1-526 and invests $1,000,000 in a business that is planning to operate a Chinese restaurant. In the RFE, it is revealed that the business has decided to operate a Peruvian restaurant instead. Is this a material change? – No, this is not a material change.

Here are a few additional examples that I culled from the AAO decisions on cases last year involving Capital Area Regional Center Job Fund (“CARc”) and Philadelphia Industrial Development Corporation (“PIDC”) and changes between the I-526 and I-829 filings. In each case, the change was judged to be “material.”

Change to project specifications and location
-PIDC changed from investing in the expansion of a home improvement seller to investing in the development of a new restaurant
Change in use of EB-5 funds
-CARc changed from letter of credit to be released after completion of construction to cash released to the project’s capital account
– CARc changed from using funds for development costs only to development costs plus purchase of property
– PIDC stated funds would be used for expansion costs such as equipment, inventory buildup, working capital and in fact used funds to refinance an existing mortgage

The theorists and policy-makers among you will want to review an in-depth article related to material change posted at ilw.com by Joseph Whalen, a former adjudicator. See: The Concepts of “Reasonable Reliance” vs. “Deference to Prior Decisions” in EB-5.

Filed under EB-5 Law & Policy

More EB-5 AAO Decisions

April 4, 2011 5 Comments

The USCIS website has posted several more 2010 Administrative Appeals Office decisions in the EB-5 category.

Feb182010_11B7203 to Feb182010_13B7203 and Feb182010_15B7203 are additional denials related to the Capital Area Regional Center Watergate Hotel project, which I described in an earlier blog post. These cases offer interesting insight into the official understanding of “material change,” TEA designation, acceptable investment terms for regional centers, and acceptable use of EB-5 capital.

Feb182010_14B7203 and Jul082010_01B7203 are new decisions on I-829 petitions for stand-alone EB-5 investments.  The first case involves investment in an existing restaurant, and treats the issue of what constitutes a “new” commercial enterprise and the necessity of a wholly-owned subsidiary relationship between the “new commercial enterprise” and the “job-creating entity.” The July decision involves investment in an existing hotel, and discusses source of funds documentation required when the EB-5 funds come from a gift. Both decisions trace failure to demonstrate job creation to faults in the I-526 business plan — a good reminder to invest thought and experience in getting the business plan done well.

Don’t bother reading the following, which are mis-categorized or very brief: Mar292010_02D7101 (though this one is kind of entertaining: a petitioner explaining that he hasn’t met his Chinese finance due to his fear of high bridges and flying), Aug032010_01D7101 to Aug032010_03D7101, Mar082010_01B7203, May212010_01B7203 (cases withdrawn), Aug042010_01D7101,  Aug052010_01D7101, Aug052010_02D7101 (misfiled L-1).

I have, by the way, compiled a log of EB-5-related AAO decisions from 2009 and 2010, tabulating the issues involved in each case. And if you’re very nice to me, I might share.

Filed under EB-5 Law & Policy

Making the EB-5 Regional Center program permanent?

March 30, 2011 1 Comment

The EB-5 Regional Center program is currently only authorized through September 30, 2012, and Congress needs to renew it or there will be bad news for regional centers and for all investors whose petitions are still in the pipeline. With the economy as it is I can’t imagine Congress allowing a jobs program like this to expire, but still the last two renewals didn’t come until literally the last minute and caused a lot of needless stress to businesses and investors.

Fortunately IIUSA and others are pressing hard, not only for renewal well in advance of the sunset date but for the Regional Center program to be made permanent. As the IIUSA blog reported yesterday:

The Hon. Senator Patrick Leahy (D-VT), Chairman, Senate Judiciary Committee, introduced the Creating American Jobs with Foreign Capital Act (S. 642) – which would permanently authorize the EB-5 Regional Center Program – into the Congressional Record.

The bill’s proposal is commendably lean and to-the-point:

Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) is amended–
(1) by striking “pilot” each place such term appears; and
(2) in subsection (b), by striking “until September 30, 2012”.

Note that as part of its advocacy efforts, IIUSA is hosting a day-long EB-5 Regional Center Conference in Washington DC on 5/10/2011. This conference will be a unique opportunity to network with the prominent movers in the EB-5 community and to advocate for the extension of the Regional Center program. Although I personally fear networking and lobbying, I’m considering attending the conference for two sessions planned on topics that are extremely hot for EB-5 at the moment: SEC-compliance and job creation methodologies. The excellent line-up of guest panelists includes:

  • Representative from SEC Office of Small Business Policy
  • Howard L. Kramer, Partner, Schiff Harden, LLP (former SEC Senior Associate Director of Division of Market Regulation)
  • Zoe Ambargis, U.S. Dept. of Commerce, Bureau of Economic Analysis (invited)
  • Kim Atteberry, USCIS, Investment & Economic Analysis Division (invited)
  • John Barrett, Principal, IHS Global Insight, Inc.
  • Hart Hodges, Director, Western Washington Universiry, College of Business and Economics (former President of Association of University Busines and Economic Research)

Filed under EB-5 Events, EB-5 in the News, EB-5 Law & Policy

New EB-5 info posted at USCIS.gov

March 14, 2011 Leave a comment

Just in time for this week’s quarterly EB-5 stakeholders meeting, USCIS has posted an Executive Summary for the 12/16/2010 meeting.  In addition to summarizing the content of the Meeting Presentation, this summary provides information from the Q&A session. A few highlights:

On the volume of Regional Center proposal filings, and high percentage of denials:
USCIS shared regional center filing receipts and final case actions in fiscal year 2010 highlighting that that 110 initial regional center proposals were received, 36 regional center proposals were approved while 30 were denied.  Also received in fiscal year 2010 were 42 amended regional center proposal filings, typically to modify the scope or activity to be conducted in a previously approved regional center. In the week prior to the implementation of the new forms, USCIS received 100 regional center initial and amended proposals, which equates to 65% of all regional center filings in FY 2010.  USCIS advised participants that the adjudication of this high volume of case filings will have an impact on processing times for Form I-924, Application for Regional Center under the Immigrant Investor Pilot Program.

Emphasizing the importance of the I-526 business plan:
At the I-526 stage, the agency is focused on analyzing whether the investment will create the required jobs within the conditional permanent residence period and in some limited instances within a reasonable time thereafter. What is most compelling at the I-526 stage is to have a solid business plan that transparently describes how the requisite jobs are going to be created within that timeframe.

On the question of whether it’s permissible to use EB-5 funds to pay off a loan:
If the project has essentially concluded and EB-5 capital is simply going to replace debt in which the jobs are already created through non EB-5 capital, this does not make a compelling argument that jobs were created as a result of the investment.

Filed under EB-5 Events, EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

Regional Center Proposal Denials

November 30, 2010 Leave a comment

People thinking about applying for regional center designation often ask me whether there’s any publically-available info about previously-filed applications. The answer is no, you can’t see someone else’s successful application. But you can learn something from failures. The USCIS website has a category of Administrative Appeals Office decisions for cases involving “Request for Participation as a Regional Center.” So far two cases have been posted, one from 2008 and one from 2009. I’ve summarized the key issues below.

12/22/2009 AAO decision: Regional Center Proposal Denial

The case dealt with a proposed regional center to cover fourteen counties in Maryland and invest in eleven types of projects: office buildings, lab sciences research space, biotechnology manufacturing, retail stores, restaurants, owner occupied and rental residences, hotels and short-term condominium rentals, recreational and sports activities, sports complexes, a bus station and parking garages. The proposal was denied by USCIS on 7/28/2009, and the AAO confirmed this denial on appeal on 12/22/2009. I take three key lessons from this case:

  1. Project detail is important. The regional center applicant chose not to comply with USCIS’s request, in a Request for Evidence, for a detailed business plan and more focused economic analysis for the sample projects. The applicant argued that such a level of detail isn’t required by the regulations, which only call for a “general prediction” of the projects in which it will invest. However the AAO judged that the regulations require the applicant 1) to provide whatever additional evidence the agency, in its discretion, might deem necessary, and 2) to provide “verifiable” detail as to how the jobs will be created, which could reasonably include focused economic analysis based on a detailed business plan.
  2. Details will be checked. This decision shows that the adjudicator and/or the AAO googled the proposed sample projects and found discrepancies with info provided in the application, judged the plausibility of economic predictions against publically available demographic statistics, and checked the economist’s math.
  3. Documentation is important. USCIS complained that the application didn’t include letters from developers of the proposed projects confirming that they’d work with the regional center, didn’t provide copies of industry reports cited in the economic analysis, and didn’t document the funds committed to regional center operations. The decision repeatedly states that “unsupported assertions of counsel do not constitute evidence.”

11/18/2008 AAO decision: Regional Center Proposal Denial

The case dealt with a proposal filed in 2006 and denied by USCIS out of hand, without issuing a Request for Evidence. The center proposed to cover several counties in Washington State and invest in activities that would “range from commercial real estate development to infrastructure/development financing for local utilities . . . from regional transportation to retail shops.” Some morals of this case:

  1. Don’t file prematurely. Before filing a proposal, the applicant must already exist as an entity and be able to prove it (ie by Articles of Incorporation). The applicant must already have specific potential investment projects to propose, or be able to demonstrate that it has already entered negotiations with entities interested in receiving loans. And USCIS won’t necessarily issue a Request for Evidence that allows making up deficiencies in the original proposal.
  2. Specific projects are important. It’s not enough to propose “broad investment types.” The service wants to see specific projects identified.

Filed under EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

Final I-924 Forms

November 22, 2010 4 Comments

Beginning 11/23/2010, all regional center proposals need to be filed with a Form I-924 “Application for Regional Center” and a $6,230 filing fee. The final versions of the I-924 forms are not yet linked from the EB-5 program page, but I shall guide you to them:

I-924, Application For Regional Center Under the Immigrant Investor Pilot Program

I-924a, Supplement to Form I-924

I regret to say that these forms include not one significant change from the 08/04/01 versions. A few minor words changed here and there (ie “Applicant’s Signature” revised to “Signature of Applicant”), but that’s all.

Note that a Fact Sheet and Q&A on the Final Fee Rule have been published by USCIS.

Filed under EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

EB-5 Construction Jobs?

November 21, 2010 1 Comment

USCIS has posted a few new 2010 AAO decisions. From March and June, the decisions (denials, of course) deal with standard EB-5 cases unaffiliated with regional centers. However I did find the March 15 cases interesting for discussion of the construction job issue. Technically direct construction jobs can be counted for EB-5 if they last for more than two years, but in practice it’s very difficult to count them.  Here is how the AAO explains the problem.

The petitioner submits evidence that the construction project should begin in 2009 and be completed in 201 1. The petitioner concludes that CIMC will employ the necessary employees for more than 24 months on this single project alone and will roll these positions over to new projects.

The director concluded that constructions workers utilized for a limited duration construction phase of less than three years could not serve to satisfy the employment creation requirement.

As stated above, the U.S. District Court for the Eastern District of California stated that the AAO had not abused its discretion “in construing full-time employment to mean continuous, permanent employment.” Spencer, 229 F. Supp. 2d at 1039. The alien in that case had not documented that the construction positions, while full-time for a given week, would be continuous rather than intermittent as the workers’ skills were needed. For example, the plan in that case indicated that the number of framers required would fluctuate month to month. The court concluded that the jobs “do not appear to qualify as permanent, full-time positions, but rather arise when building trade skills are needed during a phase of construction.” While only a district court decision, this decision was affirmed by the Ninth Circuit. 345 F.3d at 683.

The phrase “construction crew workers” is extremely vague. It is not known whether these employees include workers in concrete, framing, finish carpentry, masonry and roofing trades as in Spencer, 229 F. Supp. 2d at 1039. Solely for purposes of employment creation in the context of section 203(b)(5) of the Act, while the individual filling the position need not remain in the position, the position itself cannot be intermittent. Without a more detailed plan of which type of construction workers would be required in each phase, we cannot determine which of those positions, if any, are continuous rather than intermittent. In light of the above, the business plan is insufficient to establish that the petitioner has created or will create the necessary continuous positions.

Further clarifying the issue, here is a footnote that has been appearing on recent Requests for Evidence from USCIS. Though oddly written, the note does confirm that indirect and induced jobs from the construction phase can be counted even if the direct jobs are disqualified as intermittent. And your direct construction jobs may count if your project is “massive and expansive and major.”

USCIS does not accept or credit creation of direct temporary “construction jobs” within a business plan or economic job creation forecasts activities which involve a limited duration construction phase of less than 2 years unless the scope, complexity, and the ongoing construction phase must be fully sustained for all the construction phase jobs for 2 years or more with respect to the size, scope, nature, engineering/technology challenges and breadth of the project — for example a massive-scale nuclear power facility, or major Dam or a giant oil refinery, or similar type of massive and expansive and major engineering project. Shorter term construction jobs less than three years in duration have been determined to be of such a short term in nature as to not be sustained and to decrease and disappear as the initial construction activities wind down to completion. Such shorter term construction jobs in many locations are seasonal at best. Nevertheless, for all capital investment expenditures for the construction phase, all capital-induced “down-stream” support activities and “indirect” jobs impacted and associated with the construction activities such as suppliers, transportation, engineering, and architectural services, maintenance and repair services, interior design services, manufacturing of components and materials, etc., may be factored into the calculations for creation of indirect jobs.

Note that indirect and induced construction jobs can be counted in the Regional Center context. See the January 2009 letter from USCIS to Senator Cornyn regarding construction jobs and the July 2009 Neufeld Memo regarding Job Creation and Full Time Positions.

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Comprehensive Immigration Reform Act of 2010

November 1, 2010 Leave a comment

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.

Filed under EB-5 in the News, EB-5 Law & Policy

Form I-924 “Application for Regional Center”

October 25, 2010 1 Comment

[Note: See my 11/22 post for an update with links to the final forms.]
The bad news is that the new Form I-924, effective Nov. 23, will have a $6230 filing fee. The good news (for regional center applicants more than for lawyers and business writers) is that the Form might actually simplify the proposal and make it less expensive to prepare. I’ve been hesitating to comment on the Form I-924 since it will (we all hope) be significantly revised following another round of comments just provided to USCIS. But based on the 08/04/10 version (posted 9/27/2010 at www.regulations.gov), here are some possible changes to keep in mind:

  1. The current I-924 doesn’t specifically request Targeted Employment Area analysis. USCIS recognizes that an area needs to be a TEA at the time of investment, which may make TEA analysis at other times irrelevant. The Form does ask the applicant to identify the anticipated capital investment threshold ($1 million or $500,000) for each investor, so maybe attorneys will think it advisable to include some unsolicited TEA documentation.
  2. The current I-924 doesn’t request much information on the regional center’s geographic areas and industries, just a map and list of NAICS codes. The “Overall Plan” we used to include with proposals, a lengthy business plan of the target industries within the proposed area, seems no longer necessary. The I-924 only requests details on regional center operations and specific projects, not a profile of the regional center generally. This is a little odd considering that the economic analysis will need demographic and industry data for the regional center area as a whole, and USCIS repeatedly emphasizes that the economic analysis inputs are supposed to come from an underlying business plan. But anyway, the I-924 currently only requests a map and code list.
  3. The current I-924 doesn’t explicitly offer the option to include an exemplar I-526 petition, which would include a Matter of Ho-compliant comprehensive business plan. Instead the I-924 requests an “underlying business plan for the determination of prospective EB-5 job creation through EB-5 investments in [each] industry category.” It appears that this plan for an “actual or exemplar capital investment project” can be fairly simple: just “contain sufficient detail to provide valid and reasoned inputs into the economic forecasting tools and demonstrate that the proposed project is feasible under current market and economic conditions.”

The first round of comments on the 06/2010 version of the I-924 and I-924A and USCIS’s response to the comments can be reviewed at www.reginfo.gov.  Last Friday IIUSA, a trade association for EB-5 of which I am a member, sent off another round of comments on the 9/2010 version. You may thank me for the following entry:

The I-924 Instructions should coordinate with the I-924 Form. Preferably align the numbering between Form and Instructions, but at least be sure that the content matches. On the Form/Instructions posted 9/27, for example, #4 on the Instructions calls for an operational plan to include content that is divided between Part 3 Question 5 and 3 Question 6 on the Form. Instruction #6 doesn’t have any corresponding mention or entries on the Form. Instruction #3 includes several items that don’t coordinate with the Form (ie the paragraph beginning “The application should be supported by a statement from the principal of the regional center…” doesn’t match instructions on Part 3 Question 4 of the Form). This is likely to be confusing for both attorneys and adjudicators as they try to clearly enumerate the required info and ensure it’s all included. Also, for consistency, decide whether to write “Regional Center” (as in the Instructions) or “regional center” (as on the Form).

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AAO Material Change Decision

October 15, 2010 Leave a comment

A new EB-5-related AAO decision has been published on the USCIS website (Sept 21, 2010). This is another in the series of decisions (mostly published on 2/18/2010) involving the Capital Area Regional Center and an investment in development of the former Watergate Hotel. You can read my summary of the cases, and USCIS’s reasons for denial, including discussion of the “material change” issue. The September case has the additional interest of involving an investor from Iran.

Filed under EB-5 Law & Policy

I-924 and Final Fee Rule

September 23, 2010 Leave a comment

The USCIS website posted today (9/23) “After Public Comment, U.S. Citizenship and Immigration Services Announces Final Rule Adjusting Fees for Immigration Benefits.” The announcement confirms that beginning November 23,2010, Regional Center applications will have a filing fee of $6,230.  (Fees for I-526 and I-829 petitions will also increase, to $1,500 and $3,750 respectively.)  The forms can be downloaded for review from www.regulations.gov.
[Note: See my 11/22 Update for the final forms.]  Fortunately for me, the Form I-924 still requires Regional Center applications to include business plans.

Filed under EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

AILA EB-5 Presentation Notes

September 13, 2010 Leave a comment

PowerPoint presentation notes from six of the sessions at at the August 27 AILA EB-5 Investor CLE conference are available on the AILA website — and anyone can download them! AILA is usually more stingy with its non-members, so this is a happy surprise. I have also listened to recordings from the event, and especially recommend the “EB-5 Lore vs. EB-5 Law” and “Removal of Conditions” presentations.

Filed under EB-5 Events, EB-5 Law & Policy, EB-5 Resources

“Material Change” AAO Decisions Published

August 26, 2010 Leave a comment

The USCIS website has now published the famed “material change” decision involving the Philadelphia Industrial Development Corporation (PIDC), which is managed by CanAm Enterprises. The decision is a scary-must read for all those regional centers out there whose project plans or area demographics might change over time, or who thought they could use bridge loans. I previously posted a summary of the PIDC decision. An additional denial involving Capital Area Regional Center Job Fund has also been published. My summary of the CARc decisions, which also involve material change and acceptable use of funds, can be reviewed below.

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AILA summary of new EB-5 developments

July 28, 2010 Leave a comment

The AILA yesterday published a useful document entitled “New Developments in EB-5s.” Prepared by Ron Klasko, Chair of AILA’s EB-5 Committee, the report presents developments/clarifications in EB-5 processing taken from EB-5 stakeholders meetings and memoranda from June 2009 through June 2010. Topics include condition removal, troubled businesses, job creation, TEA designation, Regional Center proposals and business plans, requirements for the manner and timing of EB-5 investment, new commercial enterprise issues, and the material change problem.

Filed under EB-5 in the News, EB-5 Law & Policy, EB-5 Resources

2010 AAO Decision (CanAm)

July 26, 2010 1 Comment

This fascinating AAO decision (April 23, 2010) was referenced by CSC Division III Supervisor Blake Gotto at the March 16, 2010 EB-5 Forum at the California Service Center as an example of USCIS thinking on the “material change” issue. Apparently a lot of people asked about it, and the decision was distributed by USCIS to participants in the June 16 EB-5 Stakeholder Meeting in Washington, DC, with the caveat that it is “not being used as a binding decision on the agency, but does reflect their perspective.” The decision includes a number of very interesting features.

Reading between the black-outs, the case involves a Partnership under Philadelphia Industrial Development Corporation (PIDC), which is operated by CanAm Enterprises, a weighty and professional player in the EB-5 field. The petitioner in this case filed an I-526 in May 2005 and an I-829 in November 2008. The I-829 was denied for the following reasons:

  • Material change issue: “The petitioner’s failure to execute the plan presented in support of the form I-526 petition by not only switching to a project that USCIS had never reviewed but also by financing different expenses with the original project than those projected in the original business plan.” The project as presented at the I-526 stage involved acquisition and renovation of a warehouse to be used by a discount seller of home improvement materials; the EB-5 funds were in fact used to pay off interim financing and an existing mortgage for a restaurant. Citing Matter of Izumi, Chang vs. United States of America, and the 12/11/2009 Neufeld Memo, the AAO argued that the I-829 could not be decoupled from the I-526, or rely on approval of a Form I-526 for an investment project that USCIS did not review as part of that adjudication.
  • TEA designation issue: The petitioner demonstrated TEA-designation for an address other than the address where the project was in fact located.
  • Investment structure issue: A bridge loan does not allow the petitioner to be credited with the statutorily-required job creation.

The website for Philadelphia Industrial Development Corporation states, presumably relevant to this case, that “Consistent with the offering [for EB-5 Immigrant Investment Project loan to 1801 Restaurant Partners], an attractive alternative investment was recommended by the general partner. All limited partners who elected not to make the alternative investment have received a full return of their $500,000 principle investment.”

Filed under EB-5 in the News, EB-5 Law & Policy, EB-5 Resources

2010 AAO Decisions (CARc)

July 24, 2010 2 Comments

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.

Filed under EB-5 in the News, EB-5 Law & Policy

USCIS Presentation on EB-5

June 18, 2010 Leave a comment

USCIS prepared a useful PowerPoint presentation for the EB-5 Immigrant Investor Program Stakeholder meeting in Washington, DC on June 16. Topics of interest include:

  • A concise and helpful overview of the EB-5 program and its requirements
  • EB-5 visa, Regional Center, and case processing statistics
  • Introduction to the proposed Form I-924 and I-924A (for Regional Center application and yearly reporting)
  • Updates on EB-5 Premium Processing (not to be offered), EB-5 Inquiries (webpage and email address available), EB-5 Expedite Requests (conditions explained), and Public Law 106-273 (resolution still pending)
  • Advice for the Regional Center application economic analysis and business plans
  • Definitions of and distinctions between “commercial enterprises” and “capital investment projects.”
  • Questions related to Targeted Employment Area designation, material changes after I-526 approval, job creation, and troubled businesses.

This presentation was distributed by email to meeting attendees, but has not yet been made available on the USCIS website.

Filed under EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

Introducing Form I-924 and I-924A

June 17, 2010 Leave a comment

[Note: please check my “Recent Posts” for updates on the I-924 Form.]

At the EB-5 Stakeholder Meeting on June 16, 2010, USCIS provided the following information on its proposed forms for Regional Center applications and reporting.

Proposed Form I-924
The Proposed Form I-924, Application for Regional Center under the Immigrant Investor Pilot Program, will be used for the filing of both initial RC applications and amended RC applications. The Form I-924, which will has a proposed filing fee of $6,230 will:

  • Clarify filing requirements for the RC designation;
  • Improve the quality of RC applications;
  • Better document eligibility for the Pilot Program;
  • Alleviate content inconsistencies among applicants’ submissions; and
  • Support a more efficient process for adjudication of the RC applications.

The USCIS Services Fee Schedule “Fee Rule” was published for public comment in the Federal Register on June 11, 2010. [CIS No. 2490–09; DHS Docket No. USCIS–2009–0033] The Form I-924 and I-924 instructions are available for review at www.regulations.gov. This folder contains new and revised versions of the forms; be sure to download the most current ones (posted on 9/27/10). I have commented on the forms in a number of posts, including notes on the 9/27/10 revisions.

Proposed Form I-924A
The Form I-924A, Supplement to Form I-924, is the proposed vehicle for a yearly RC reporting requirement. Each approved RC will be required to file the I-924A to report RC-related activities for the preceding fiscal year within 90 days of the end of the fiscal year (on or before December 29th of the calendar year in which the fiscal year ended.) There is no proposed filing fee for the Form I-924A.

USCIS plans to publish an aggregation of the data provided each year by all designated regional centers, to include attributes of the RC-affiliated capital investments, such as:
1. the geographic areas and industry categories receiving investment capital;
2. The volume of regional center affiliated capital invested, and;
3. The number of jobs created or maintained as a result of the capital investments.
This summarized data will be published on the USCIS Web site for each fiscal year following the publishing of the Form I-924A. The Form I-924A is available for review at www.regulations.gov.

Filed under EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

EB-5 Inquiries

June 15, 2010 Leave a comment

The USCIS EB-5 webpage now has a link for EB-5 Inquiries under the link for the list of Regional Centers.  The content (contact email address and list of acceptable inquiries) is familiar —  nearly identical for example to the handout distributed by USCIS at the March 16th EB-5 forum at the California Service Center.

The list of acceptable inquiries is surprisingly broad, even including “to request for expedited processing of already filed I-526s, I-829s, or RC Proposals” and “to request for Regional Center Proposal filing instructions, procedures, and Regional Center general information documents.”

Filed under EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

EB-5 Stakeholder Meeting

June 1, 2010 Leave a comment

The USCIS Office of Public Engagement has issued its invitation to an EB-5 stakeholder meeting on June 16. Interested parties may participate by teleconference or in person in Washington D.C. Topics for discussion can be submitted up to June 7. Please see the USCIS notice for details and information about how to RSVP.

Filed under EB-5 Events, EB-5 Law & Policy, EB-5 Resources, Updates from USCIS

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