New Orleans Cautionary Tale

March 25, 2012 1 Comment

The principals of New Orleans Mayor’s Office RC (www.nobleoutreach.com) are named in a suit in Federal Court brought by 27 EB-5 investors who allege fraud and mismanagement. The court has yet to judge the validity of the finger-pointing, but it’s clear at least that this case exemplifies a diversified investment strategy gone very wrong.  With this case in mind, I can see why USCIS is demanding extreme clarity and specificity in the I-924 and I-526 petitions regarding path and use of investor funds. See the article EB-5 Investors File Suit Against New Orleans Regional Center for a summary of the key issues and a link to the case. Those responsible for drafting offering documents for EB-5 deals should pay special attention, and note the risk of inadequate disclosures.

2018 updates:

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

Forums on the Latest EB-5 Developments

March 13, 2012 Leave a comment

It has been a wild ride these past few months for the EB-5 program – so much new information, so many open questions and pending changes. I long for the opportunity to huddle with a room full of experts and process where we are and how we can best move forward with EB-5 cases in the current environment. Fortunately we have coming up a couple excellent opportunities to do just that. Be sure to book your place before these sell out!

March 30, 2012 Portland, OR “Unlocking Foreign Capital through the Federal EB-5 Program”
Unlike many EB-5 events, this conference doesn’t focus on theory for service providers but on practical information that people actually putting together a Regional Center or EB-5 deal need to know. The roster of speakers features a long list of experts including immigration attorneys, securities attorneys, an economist, experts in escrow and marketing, and principals of several successful Regional Centers. If you are exploring the possibility of using EB-5 investment, this event is a must for you. The material that you gather from listening to the presentations and networking with the speakers and your fellow participants will save you considerable time, trouble, and expense in the long run. Why learn the hard way when you can spend one day in Portland with all the brains you could want to pick arrayed before you? And if you want to make it two days in Portland, you can stay for the seminar in EB-5 marketing being held by Brian Su on 3/31 at the same venue.

April 30-May 1, 2012 Laguna Nigel, CA “2nd Annual IIUSA EB-5 International Investment & Economic Development Forum”
The IIUSA annual meeting this year promises to be an exciting one for EB-5 practitioners. It overlaps with the 5/1 in-person EB-5 Stakeholder meeting at the California Service Center, which is sure to offer fireworks, and it will unveil two significant treats: the 2010 USCIS EB-5 training materials and 2008-2009 I-829 RFEs and Denials released to IIUSA in response to FOIA requests.

You might also consider the 4/20 AILA EB-5 event, which will provide valuable legal education and let you find out how immigration lawyers behave in the Bahamas.

Filed under EB-5 Events

RC News (SD and more)

February 14, 2012 1 Comment

I appreciate the research and reporting that Adam Green and Michael Gibson have been doing over at EB5info.com, and I recommend the latest batch of posts on Regional Center activities. The story South Dakota Lawsuit Could Put EB-5 Visa Project on Hold provides a fascinating look at what can go wrong in a Regional Center-migration agent relationship. Ongoing Lawsuit Stalls Maryland EB-5 Visa Project, Promotion Persists tells a common story of how lawsuits can threaten to snarl real estate developments using EB-5 funding. Additional stories highlight potential contributions of the EB-5 program, including in North Carolina, New England, and Oakland.

Filed under EB-5 in the News

Upcoming EB-5 Events

February 9, 2012 Leave a comment

I strongly encourage participation in EB-5 educational and networking events. Especially if you’re in the process of planning or setting up a Regional Center, the information you’ll get and contacts you’ll make at one of these meetings will save you months of work and trouble. Here is a list of upcoming events, including two at which I’ll be sharing my latest EB-5 business plan secrets.

Filed under EB-5 Events

Info from 1/23 Stakeholder Engagement

January 25, 2012 3 Comments

The presentation 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, you can download my recording of the call.

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

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

Insights from Conversation with Director Mayorkas

January 18, 2012 2 Comments

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 23rd 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…

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

“On hold at USCIS headquarters”

January 17, 2012 9 Comments

2/17 update: USCIS has identified the problem as relating to whether for a particular case “it is economically reasonable to attribute ‘tenant-occupancy’ jobs to the underlying EB-5 commercial real estate project.”
2/6 update: I recommend this article on the issue by Bernard Wolfsdorf , an attorney who works with EB-5: “Transitions and Predictions for the EB-5 Program”
1/23 update: In the 1/23 EB-5 Stakeholder meeting, Sasha Haskell confirmed that the hold at headquarters indeed resulted from questions about the economic analyses that were raised by USCIS’s contract economists and currently under review by the senior leadership.

A number of Regional Center applicants, including a few who filed over a year ago, have been told that their applications are currently “on hold at USCIS headquarters pending resolution of an issue.”

This hold hasn’t affected all I-924s (the CSC has issued recent Regional Center approvals and RFEs), but it’s a significant phenomenon. I’ve heard several personal reports from attorneys and applicants in the last couple months, and the audience at the 1/12/2012 EB-5 engagement asked USCIS Director Mayorkas about it.

So far as I’ve heard, communications from USCIS to the affected applicants haven’t disclosed the nature of the hold-up(s) or when resolution might be expected, and Director Mayorkas didn’t give much more information at last week’s meeting. He agreed that USCIS should be able to identify the issues and provide a timetable for resolution, and he suggested that the matter will be treated at the up-coming January 23 EB-5 stakeholder meeting. (He didn’t agree that it was unfair for applications filed many months ago to be judged according to current standards. He also noted that the unusual volume of new RC applications has been naturally accompanied by an unusual volume of unprecedented issues requiring judgment calls, thus the need for evolving guidance.)

While we wait for the 1/23 meeting, can we guess what might be the unresolved issue(s) holding up some Regional Center applications? Let’s review a few questionable/questioned areas that we know of:

1)     Econometric Studies
As a layman I’ve struggled to make sense of the economic impact reports and job counts that get filed with Regional Center applications, and I’ve wondered what to conclude when different professional economists working with EB-5 criticize each other’s approaches. How do the adjudicators at the CSC interpret and assess these reports? What do they make of the widely varying length, level of detail, and use of methodologies? And now that USCIS has just hired three new economists, do they disagree among themselves as much as the economists preparing the reports do? Perhaps most adjudicators used to rubber stamp the econometric studies, not being qualified to critique them, but now the new team of USCIS economists is providing more oversight and raising questions? I’ve heard several people (including Joseph McCarthy, who asked about holds at the in-person meeting with Director Mayorkas) speculate that issues raised by the newly hired economists may explain the “hold at headquarters” phenomenon.  I expect that the 1/23 stakeholder meeting will include new guidance for econometric studies.

2)     Targeted Employment Area Designation
Even the New York Times recently joined the clamor pointing out “rule-stretching” to allow projects with apparently prosperous surroundings to take advantage of the $500,000 EB-5 investment threshold that Congress intended to benefit areas of high unemployment. Surely USCIS has also noticed the negative press, and is struggling to create guidelines that will limit applicants’ self-serving creativity and the states’ inconsistent practice in TEA designation. For in-depth analysis of the issues at stake, see two excellent articles by EB5info.com (New York Times, EB-5 Visa, TEAS, and Gerrymandering Part I and Part II). I particularly note the issue of whether a census tract per se is an allowable building block for a TEA. Census tracts were the common building block until questions started to be raised last year, and apparently the jury is still out on whether a single census tract or census tract group can qualify as a geographic area or political subdivision for TEA designation purposes. As recently as the 1/12/2012 meeting, Director Mayorkas said that he couldn’t say for sure and would huddle with his team to consider the matter. The conclusion could affect a lot of pending applications.

3)     Project Detail
An unresolved issue that I notice is the question of how much and what kind of project detail needs to be included with a Regional Center application. The I-924 instructions say “The job creation analysis for each economic activity must be supported by a copy of a business plan for an actual or exemplar capital investment project for that category.” The EB-5 community tends to pull one way, taking that “or exemplar” option to allow filing applications based on briefly sketched hypothetical projects, while USCIS tugs the other way, issuing RFEs that request extensive real-world project information, often quoting the further I-924 instruction that: “A business plan provided in support of a regional center application must contain sufficient detail to provide valid and reasoned inputs into the economic forecasting tools and must demonstrate that the proposed project is feasible given current market and economic conditions.”  Official guidance (notably the 2009 Neufeld memo) specifically allows for “hypothetical” projects in RC applications, but I get the sense that the adjudicators currently don’t like them very much and may be debating what to do with initial RC applications not grounded in actual projects.

Anyone else have first hand evidence or guesses about the reasons for the hold on some I-924s at USCIS headquarters? I’m not happy that we have to speculate about this, but also thankful that USCIS is trying to be vigilant. I hope that eventually the new standards will be honed so that the many good proposals aren’t delayed and the many faulty applicants/projects are cut off before they go live and disgrace the EB-5 program. (But if I had to choose delays or disgrace, I’d choose delays.)

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

1/12 Conversation with Director Mayorkas

January 5, 2012 1 Comment

1/11 UPDATE: The USCIS Office of Public Engagement has emailed a revised draft of the EB-5 policy memorandum and a red line version of the memo for our review in advance of the 1/12 call with Director Mayorkas.

The USCIS Office of Public Engagement has just emailed another invitation:

Dear Stakeholder-

USCIS is pleased to invite you to the second in a series of Conversations with the Director. During these small group sessions, members of the public will have the opportunity to meet with USCIS Director Alejandro Mayorkas and senior members of the USCIS leadership team to discuss discrete policy issues.

The engagement will be held on Thursday, January 12, 2012 at 3:00 PM (EST). Director Mayorkas will provide updates on the USCIS EB-5 Immigrant Investor program, including the draft policy memorandum published on November 9, 2011.

This small group discussion will complement the existing quarterly EB-5 engagements, the next of which will take place on January 23, 2012, by allowing for a more in-depth dialogue on policy issues related to the EB-5 program.

You may attend this engagement either in person or by teleconference. However, those attending via phone will be in listen-only mode. If you wish to attend in person, attendance is limited to the first 25 people who register. The session will be intentionally limited to 25 people in order to allow for a robust, in-depth discussion. Additionally, in person participation will be limited to one person per organization or practice.

To Participate in the Session
If you wish to attend, please respond to this invitation by contacting the Office of Public Engagement at public.engagement@dhs.gov and reference the following in the subject line of your email:
“EB-5 Conversation – in person” if you wish to attend in person
“EB-5 Conversation – phone” if you plan to attend via telephone

Please include your full name and the organization you represent, if any, in the body of the email.

Kind Regards,

Office of Public Engagement
U.S. Citizenship and Immigration Services

Filed under EB-5 Events

USCIS 2012 EB-5 Events

December 19, 2011 2 Comments

The USCIS Office of Public Engagement has announced dates and topics for 2012 EB-5 stakeholder meetings.

Engagement Date

Engagement Format And Topic

Deadline to Submit Agenda Items
1/23/2012, 1:00PM – 4:00PM (ET) Teleconference Only Focus: EB-5 Discussion with State Governments 12/27/2011
5/1/2012, 1:00PM – 4:00PM (ET) In-Person, Teleconference & Live Web Streaming USCIS California Service Center
24000 Avila Road
Laguna Niguel, CA 92677
Focus: General EB-5 Discussion		 4/1/2012
7/26/2012, 1:00PM – 4:00PM (ET) Teleconference Only Focus: Regional Center Discussion 6/25/2012
10/18/2012, 1:00PM – 4:00PM (ET) In-Person, Teleconference & Live Web StreamingTomich Center
111 Massachusetts Avenue
Washington, DC 20529
Focus: General EB-5 Discussion		 9/17/2012

Filed under EB-5 Events

EB-5 items of interest

December 13, 2011 Leave a comment

BigJoe5 gave this blog a shout-out in his Useful Links for EB-5, so I should admit how much I benefit from his slideshare and perspective as a former adjudicator. A few particularly timely recent updates from his site:

AILA also has a few recent posts that I should mention:

Filed under EB-5 Resources

Regional Center News and Cautions

December 7, 2011 Leave a comment

US Advisors (www.eb5info.com) has just issued another very interesting and informative newsletter. Follow the links below to read the stories.

Huge Chicago EB-5 Multi-Hotel Project Under Scrutiny by Investors
At $249.5 million, this multi-hotel EB-5 visa project will be one of the largest offerings the program has seen to date. But with overseas agents collecting exorbitant fees from the regional center, potential investors may be unaware that the promoters extolling the project have an enormous conflict of interest.
Read More »
China’s Migration Agents – Polarized by EB-5 Failures and Demands for Higher Commissions
According to Kevin Jeffers of Pinnint, Ltd., there is a growing culture of “profit at any cost” among many of China’s migration agents. “Performance claims continue to be exaggerated with risk understated,” he says.
Read More »
Four Conferences, Four Cities: EB-5 Visa Project Risk & Due Diligence Presentations
At a number of recent EB-5-related events, USAdvisors.org’s Michael Gibson spoke about EB-5 due diligence issues, their complexity, and the potential for failure in many EB-5 visa offerings. His notes and slides from these presentations are now available on our blog.
Read More »
Could a New Visa Law Affect the EB-5 Program?
A new bill would make it easier for foreign citizens to obtain U.S. tourist visas if they purchase homes costing $500,000 or more – with cash. Some are already saying that this measure could impact the EB-5 visa program.
Read More »
IIUSA Calls for Support Letters From EB-5 Advocates
In a recent message to members, IIUSA requested advocacy for EB-5 permanency: “In the past couple of years, the economic impact generated by [the EB-5 program] has become truly national in scope. Join us in telling that story to our legislators, so we can secure passage of the [EB-5 permanency legislation] and get about the business of creating U.S. jobs.”
Read More »
New Owner Means New Projects at One EB-5 Regional Center
With new ownership, the InvestAmerica EB-5 Regional Center (formerly Colorado Intercontinental Regional Center) will pursue completely different projects from the ones we reported on last year. Instead of turning Colorado timber into cellulosic biofuel, the regional center will move forward with one of the EB-5 program’s most popular investment types – hotel construction.
Read more »
More Ski Resorts? You Bet. New EB-5 Regional Centers Make Headlines
A menagerie of EB-5 regional centers received media attention this fall. As should come as no surprise, many of them will pursue real estate projects. A few will even have a go at what seems to be an EB-5 standby: the ski resort.
Read more »
Former USCIS Adjudicator Calls Material Change Prohibition “Onerous”
“The [material change] precautions have gone too far,” declares a former adjudicator. At a time when the EB-5 program is undergoing reform, might USCIS also reconsider the notion of material change that investors and their attorneys believe makes participation in the EB-5 program more difficult?
Read more »
Crowdfunding Legislation Passes in House, Good for EB-5 Funding
The “Entrepreneur’s Access to Capital Act,” which lets small businesses sell non-public securities through social media solicitations, has just passed with overwhelming bipartisan support from members of Congress and support from the White House. But how might it affect EB-5 funding?
Read more »

Filed under EB-5 in the News

Choosing NAICS Codes

December 6, 2011 Leave a comment

2016 Update: If you came seeking assistance for handling NAICS reporting on the Form I-924A, visit my I-924A Resources post instead. USCIS’s 2011 Q&A for Form I-924A says “The NAICS code identified in Part 3.2 of Form I-924A should have sufficient detail to identify the industry for the primary business activity of the capital investment project.  In general a NAICS code with four-digits, which identifies the industry group of a given economic activity would be an appropriate entry.”

2013 Update:  Since the 5/30/2013 EB-5 Adjudications Policy Memo, NAICS questions have become less important because Regional Centers are no longer restricted by NAICS codes, though the codes are still used for reporting and economic impact analysis. The Policy Memo (footnote 5 on page 26) describes the way that USCIS now handles Regional Center industry categories:

Industry codes are useful for determining that verifiable detail has been provided and the estimated job creation in the economic methodology is reasonable, however it should be noted that these industry codes are used for informational purposes in estimating job creation and do not limit the economic or job creating activity of an approved regional center or its investors. Jobs created in industries not previously identified in the economic methodology may still be credited to the investors in subsequent Form I-526 and Form I-829 filings, as long as the evidence in the record establishes that it is probably true that the requisite jobs are estimated to be created, or have been created, in those additional industries.

Original Post

Each Regional Center is approved for “a limited geographic area” and “defined economic zones” (see Public Law 107-273). USCIS now specifies that economic zones need to be defined according to the North American Industry Classification System (NAICS). The I-924 Form directs applicants to “Identify each industry that has or will be the focus of EB-5 capital investments sponsored through the Regional Center” by filling in the “NAICS Code for the Industry Category.”

What is NAICS? How can you choose the NAICS codes that are appropriate for your investment focus? How specific do you need to be?

NAICS stands for North American Industry Classification System. You can find NAICS codes and their descriptions at the US Census Bureau.

The I-924 Instructions explain:
Provide the industry category title and the North American Industry Classification System (NAICS) code for each industry category. The NAICS code can be obtained from the U.S. Department of Commerce, Census Bureau. Enter the code from left to right, one digit in each of the six boxes provided in the form in Part 3, item 7. If you use a code with fewer than six digits, enter the code left to right and then add zeros in the remaining unoccupied boxes.

The 9/15/2011 EB-5 Stakeholder Meeting Presentation includes some advice on NAICS codes in answer to the question “What are common reasons for RFEs and denials on I-924 applications?”
…3. Choosing and Identifying Appropriate NAIC Codes. (Form I-924, Part 7.)
A. NAIC code should be appropriate to the requested industry;
B. An overly broad NAIC code may not be representative of the requested industry;
C. An overly narrow NAIC code may be too restrictive for the scope of the contemplated investment project(s) in the requested industry, e.g “NAIC Code 62” includes assisted living facilities but also covers hospitals. There may be a more appropriate for the requested industry.

The The 12/06/2011 I-924a Q&A provides guidance for the I-924a that may also apply to the I-924.
Q. What level of detail must a regional center use to identify the NAICS code for the Industry Category in Part 3.2 of Form I-924A?

  • A. The purpose of collecting North American Industry Classification System (“NAICS code”) information regarding the industries in which EB-5 capital is invested and jobs are created is to enable USCIS to provide information to internal and external stakeholders about the industries that are participating in EB-5 capital investment projects.
  • According to the U.S. Census Bureau’s FAQs regarding the NAICS codes, NAICS is a two- through six-digit hierarchical classification system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first two digits designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry.
  • The NAICS code identified in Part 3.2 of Form I-924A should have sufficient detail to identify the industry for the primary business activity of the capital investment project. In general a NAICS code with four-digits, which identifies the industry group of a given economic activity would be an appropriate entry. For example, if the capital investment project involved Fruit and Nut then the appropriate NAICS code to use would be 1113.

USCIS’s Executive Summary of the 5/1/2012 EB-5 Quarterly Stakeholder Engagement includes this advice regarding specificity:

NAICS Codes
Q: In a regional center application, kindly confirm that two digits of North American Industry Classification System (NAICS) codes are considered sufficient with the industry cluster specified and economic report elaborating the same. The rationale behind this is because in a retail and office setting, three digit code tenants are not ascertained at the time of filing the I-924.
A: This is not acceptable. Even within clusters and projects that incur similarities, USCIS requires four digit NAICS codes at a minimum.

Filed under EB-5 Resources

Mid-November news

November 18, 2011 Leave a comment

This week I don’t have much to report except what’s missing.

IIUSA held its teleconference this week on the I-924a form (annual reporting requirement for Regional Centers), and we discovered that the even the experts don’t know how those blanks are “supposed to be” filled in.  The official instructions don’t define or explain the questions, and the form runs into basic ambiguities in the program such as “what is a RC direct job?” and “how do we define and identify the entities relevant to RC job creation?” The IIUSA panel basically advised regional centers to report whatever they individually judge should be reported, and accompany answers with notes explaining how the RC interpreted the I-924a questions. That way (in case USCIS reviews the forms in police mode) the RC can at most be charged with innocently misunderstanding the question, not with providing misinformation. Another rule of thumb is that the safest answer to any question is probably the answer most consistent with information previously filed by the RC with USCIS. [Update: see the I-924a Questions and Answers published on 12/06/11 by USCIS]

And now this weeks’ EB-5 tragedy: the USCIS list of approved Regional Centers has been completely reformatted, and currently lists only the names of Regional Centers! I wonder if the webmaster got sick of being called on to change phone numbers and fix spelling mistakes. What will I do for entertainment now that I can’t stalk RC contact people? How will we know the industries and geographic areas being approved for each center?  I hope that the full directory is restored to us soon!

But not to forget the good news: we have a golden opportunity to help flesh out the new draft EB-5 Adjudications Policy. The comment period ends December 9, 2011.

Joseph Whalen, who manages to keep up with the Federal Register, reminds me that USCIS published this week an Information Collection on the Form I-526, which means an opportunity for the public to suggest changes to the form. Relevant info is published at at www.regulations.gov.

Filed under EB-5 Resources

11/9 call with Director Mayorkas

November 9, 2011 Leave a comment

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.

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

New USCIS Policy Guidance!

November 4, 2011 4 Comments

The USCIS Office of Public Engagement has just emailed an invitation to a teleconference next week 11/9 (1 pm EST) to chat with Director Mayorkas about “new USCIS policy guidance on the EB-5 Immigrant Investor Program”. Could this be the comprehensive guidance memo promised in this summer’s stakeholder meetings?  I’m so excited!  I’ll post links to the invite and the new guidance as soon as they’re posted on the USCIS website.

11/9 Update: here is the Draft Policy Memo.

Filed under EB-5 Events, Updates from USCIS

Form I-924A due 12/29

October 31, 2011 2 Comments

UPDATE: See my 2015 I-924A Reminder post for the latest information.  (The post below is from 2011.)

Approved regional centers should should start thinking about the annual reports to USCIS that they’ll be filing with the Form I-924A. (Click here for the form and instructions).

The Form I-924A, Supplement to Form I-924, is the Form for approved regional centers to use for the yearly RC reporting requirement in 8 CFR 204.6(m)(6). Each approved RC is now 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.) The filing of Form I-924A will be required for all approved RCs for Fiscal Year 2011 on or before December 29, 2011.

Update: see the I-924a Questions and Answers published on 12/06/11 by USCIS

Filed under EB-5 Resources

Stakeholder Meeting Q&A

October 12, 2011 Leave a comment

USCIS has promised to publish “Frequently Asked Questions” for EB-5, but I haven’t seen this yet. However the documents released in conjunction with the EB-5 stakeholder meetings include many valuable questions and answers. I consult them often — sometimes paging through all those presentations one by one trying to remember which meeting included the answer I’m looking for. Now I have compiled all the Q&A in table form and added a page to this blog (EB-5 Q&A) to share the result. This list doesn’t include the unpublished Q&A, but does include material from the published executive summaries. I’ve sorted the questions according to topic as follows:

EB-5 Q&A with USCIS since 12/14/2009 by Topic:

You’re welcome.

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

Regional Center News

September 27, 2011 Leave a comment

I found the August 2011 newsletter from EB5info.com especially interesting. It includes a nice overview of this summer’s USCIS updates and is rich with news and links to stories — positive and negative — about current Regional Center activities and projects. I particularly appreciated “Sweet EB-5 Visa Deal Turns Sour For Investors, Missouri State Officials,” a detailed analysis of a cautionary tale that emphasizes the importance of due diligence on EB-5 projects.

Filed under EB-5 in the News

Congressional Hearing on EB-5

September 16, 2011 1 Comment

The Judiciary Committee has posted a video recording of the Hearing on: “The Investor Visa Program: Key to Creating American Jobs” from 9/14/2011. The speakers included several praising EB-5 and several supporting the proposed start-up visa, and no negative voices.

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

9/15 Stakeholder Meeting

September 15, 2011 Leave a comment

In case you missed the 9/15/11 stakeholder meeting with USCIS, you can get a copy of the presentation here, and listen to audio that I recorded today by clicking on the media player at the base of this post.

The Q&A period included a number of interesting technical points. The panelists gave advice and made statements more generously then they usually do, but keep in mind that “it depends” is probably really the correct answer to most of the questions, even if the panel was too nice this time to fall back on that response. I’d caution everyone to keep context in mind and not latch on to sentences from a conference call as the final word on any issue. For example, I doubt you can file an I-829 showing that not all EB-5 investment in a new commercial enterprise has been actually put to use in any project, with the argument “remember that call when Kevin Cummins said…” Or count on “but that one time Sasha Haskell said…” when you file an amendment to industries by “just filling out the form”  and then get an RFE pointing out that you failed to provide sufficient detail to show in verifiable detail how capital investment offerings in the requested industry will create jobs.

The presentation includes one extremely useful section: a list of the common reasons for Requests For Evidence and denials on I-924 cases. You can find this on slides 14-17 of the presentation, and I’ve also reproduced the content on my page of advice for applicants.  The list really captures the few points I see repeated over and over on RFEs.  It’s not hard to avoid an RFE; read this list and get your application right the first time.

Also note the topic of appropriate geographic areas for Regional Centers. The current I-924 form doesn’t really ask for anything on geographic area beyond a map with borders marked, and nothing prevents applicants from doing what, in fact, they do: apply for the location of their proposed project(s) plus as many surrounding counties as they dare — either because they might ever do something in those areas or (usually) to look big and assist marketing efforts. And a review of recently-approved centers shows that applicants are increasingly ambitious, with more and more full state and even multi-state centers approved. Probably this doesn’t matter since RC areas aren’t exclusive, but it isn’t what Congress had in mind when it specified that “A Regional Center may be granted jurisdiction over a limited geographic area for the purpose of concentrating pooled investment in defined economic zones.” I haven’t heard the issue raised much before, but now USCIS may be planning to crack down in this area.  According to slide 35 of the presentation:
–A Regional Center must demonstrate in the Form I-924 that its activities will focus on the requested geographic region, and not simply on isolated and unrelated areas within the region
–It may be more appropriate for the Regional Center to initially request a geographic area that is in keeping with the economic impacts of the existing project, and then subsequently file an amendment request for an expanded geographic area as the details and location of future projects become known
I’m hoping that the forth-coming revised I-924 Form will offer more guidance on appropriate geographic areas and how exactly USCIS wants applicants to demonstrate the geographic focus of their activities.

This conference call also impressed me that the leadership at least is serious about receiving feedback through the EB-5 inquiry mailbox (for case-specific issues outside the new direct email communication) and the Office of Public Engagement email address (for policy issues).  It seems that problems reported (and documented) in emails to OPE have actually been reviewed even by Director Mayorkas and used in training adjudicators, and that problems (for example in Regional Center approval letters) have actually been dealt with following emails to the EB-5 inquiry email address. And of course there’s the new direct email communication for all pending I-924 cases.

Audio recording of the 9/15 stakeholder meeting:

Filed under EB-5 Events, Updates from USCIS

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