5/1 Stakeholder Non-Engagement

May 1, 2012 15 Comments

Here’s what came out of today’s hotly-anticipated in-person EB-5 stakeholder meeting at the California Service Center:

  • USCIS did not allow questions about and did not comment on the “tenant occupancy” issues.
  • USCIS did not provide a PowerPoint presentation, and did not address the stakeholder questions solicited and provided in advance of the meeting. (This may have been an error of organization, as it was announced at the beginning of the call that the panelists had prepared to answer the questions submitted in advance.)
  • Although quite a few senior staff were present at the meeting, they said little. Sasha Haskell of Service Center Operations did nearly all the talking.
  • USCIS acknowledged comments on but expressed no specific plan or goals to improve processing times.
  • USCIS acknowledged comments on but expressed no specific plan or goals to improve communication through the public engagement mailbox or through the I-924 applicant email lines.
  • USCIS acknowledged comments on but expressed no specific plan or goals to communicate expectations and standards in a more open manner.
  • USCIS provided the usual EB-5 statistics, and promised that stats will be published consistently in the future.
  • USCIS suggested that a new draft of the EB-5 policy memo will be emerging “in a few weeks,” and that the service is not currently deferring to the draft memo or implementing the “material change” guidance included.
  • USCIS confirmed that, as indicated in yesterday’s general email from the Office of Public Engagement, applicants who were issued a “tenant occupancy” RFE will be contacted with a notice that their deadline for response will be extended. However, there were no promises of forthcoming guidance related to the RFE.

I have uploaded my recording of the call, but I don’t recommend it, except for the eloquent appeals expressed by members of the EB-5 community. I approached this meeting full of sympathy for the USCIS panelists and their difficult task of engaging upset stakeholders on the complex and valid concerns that have recently arisen. But  as it turned out, I had no occasion for sympathy. Engagement hardly occurred.   After the moderator had ended the meeting, the mic caught a private comment that I interpret to be Sasha Haskell saying aside: “I think we’re doing fine, I don’t care what they say.” I’m almost certainly mishearing, but if Ms. Haskell did say that, it is consistent with the dense, unaccommodating attitude that was apparent throughout the meeting, and that bodes ill for future improvement.

I am sad. The EB-5 Regional Center program has so much promise, and yet this meeting highlighted management problems and points of confusion while giving no indication that they are being seriously addressed or will go away any time soon.  I spent the weekend at the IIUSA conference talking to people with proposals for  projects involving real job creation and significant economic development, and today’s “engagement” doesn’t leave us any closer to knowing whether it’s safe for business people to use EB-5 to support those plans.

7/03/2012 Update: USCIS has published a very informative Executive Summary covering questions not addressed at the meeting.

Filed under EB-5 Events, Updates from USCIS

Mayorkas Statement on Tenant Occupancy

April 27, 2012 4 Comments

Today’s “Conversation With The Director – Tenant-Occupancy Economic Model” proceeded much as I expected, with participants airing concerns and confusion and Director Mayorkas maintaining that issues in the “tenant occupancy RFE” reflect fact-specific questions, not new policy. The Director made a useful opening statement, which I have transcribed below.  Pay attention to his comments on the specific types of previous approvals that may be given deference. Director Mayorkas promised that a follow-up engagement involving the USCIS-contracted economists will be arranged ASAP, with a tip sheet of econ analysis guidance to follow. He also agreed to inquire into the possibility of getting the RFE deadline extended to allow more time for those who want more guidance before responding.

Transcription of the opening statement by Director Mayorkas 
We are focused this morning on the tenant occupancy economic methodology. We appreciate the fact that there is a lack of certainty in the community with respect to how our agency is addressing EB-5 applications and petitions that are predicated on that methodology to prove the required job creation. We thought we should have this engagement to address the uncertainty.
Our intention this morning is to clarify for you what we have done and are doing with respect to cases that are predicated on the tenant occupancy methodology. It is not, I should say at the outset, it is not my intention to discuss the intricacies of the economic methodology itself, though we will certainly listen to your concerns and address them as and when appropriate.
First, if I can provide you with some assurances. We well understand the law, that there is no requirement to present a particular methodology in support of a petition. Rather, the law requires a “reasonable” methodology. Whether or not the tenant occupancy methodology is reasonable in proving job creation in a particular case is a fact-specific and fact-dependent inquiry. We have not changed any policy with respect to the tenant occupancy methodology, nor have we changed the applicable criteria.
This is, instead, what we have done. In response to the request of adjudicators and your — stakeholders’ – request – and a very appropriate request — we have hired full time economists and business analysts to improve the analysis of EB-5 petitions and the quality of our work. I should note also that we have announced or are about to announce other positions as well such as a hiring of corporate attorneys to interpret the many legal documents that petitions often include. Our new experts have reviewed cases, not previously adjudicated, that are predicated on the tenant occupancy methodology, and based on the specific facts of those cases have raised questions as to whether the evidence presented proves the required job creation, or instead merely establishes job relocation, for example. We have issued Requests for Evidence to obtain additional evidence that our experts will review and analyze.
A decision, as I mentioned, on the economic methodology presented in the EB-5 case, including the tenant occupancy methodology, is very fact specific. Consistent with our deference policy, we are communicating to our adjudicators that they are to accord deference to prior adjudications. Our adjudicators should rely on a previous determination that the economic methodology is reasonable when the economic methodology is presented to us in later a proceeding based on materially similar facts.
For example, if we approved a Form I-924 Regional Center Application based on a specifically-identified project, including the specific locations and industries involved, we will not revisit the determination that the economic model and underlying business plan were reasonable when adjudicating related Form I-526 petitions, Form I-485 applications, or Form I-829 petitions. If we approved an I-526 petition for an immigrant investor based on a specifically-identified project, not associated with a Regional Center, we will not revisit the determination that the business plan was reasonable when adjudicating the investor’s related I-485 or I-829 petition. If, however, the facts underlying the application of the economic methodology have materially changed, then we will conduct a fresh review of the new facts to determine whether the petitioner or applicant has complied with the requirements of the EB-5 program, including the job creation requirement.

That is, in summary, what we have done, and what we have not done.

I have uploaded my recording of the meeting to Dropbox, for the convenience of those who would like to re-listen for insights or actionable points that I missed.

Filed under Updates from USCIS

JOBS Act Implications & Other Articles

April 19, 2012 1 Comment

First, a reminder to RSVP to participate in the 5/1 USCIS EB-5 Stakeholder’s Meeting, either by teleconference or in person at the California Service Center in Laguna Niguel. Also consider attending the IIUSA EB-5 International Investment & Economic Development Forum held concurrently. Everyone who is anyone will be there. I’m teleconferencing the USCIS meeting because it’s going to be piping hot and I’m squeamish about war zones, but I will be at the IIUSA event, giving away my deepest business plan secrets. I’m looking forward to the comprehensive lineup of speakers arranged by IIUSA, and especially to the session “FOIA Report: 2008-2009 I-829 RFE/Denials & 2010 USCIS EB-5 Training Materials” with Robert Divine and Stephen Yale-Loehr speaking.

And a few articles on recent topics of interest.

Insights on the JOBS Act and its relevance for EB-5
Woo Hoo! The JOBS Act’s Passage Means No More Securities Compliance, Right? Not So Fast! by Michael G. Homeier
The Jobs Act: Improving Access to Capital Markets for Emerging Growth Companies by Kate Kalmykov

Articles related to the “tenant occupancy” issue
EB-5 Visa and the Tenant Occupancy Issue as Applied to Hotel Employees by Catherine DeBono Holmes and Victor T. Shum
EB-5 Job creation without project duplication – new USCIS target? by Kevin Jeffers
How Many Kinds of Nexus Can You Find Within EB-5? and Some Thoughts on USCIS Tenant Occupancy RFE by Joseph Whalen

Filed under EB-5 Resources

RC Application Materials Posted!

April 4, 2012 Leave a comment

I have sighed through the part of  EB-5 stakeholder meetings when a newbie calls in to ask  about the availability of example actual Regional Center applications, and receives the usual and obvious answer that such documents are full of proprietary business detail that USCIS has no right to share with the public. But I sighed too soon. Joseph Whalen just alerted me to the fact that USCIS has released application materials for several Regional Centers in connection with FOIA (the Freedom of Information and Privacy Act). The file for each RC runs to many hundreds of pages — many of the pages blank (redacted) but also many pages offering bits of actual business plans, offering documents, Requests for Evidence, and responses to RFEs. The EB-5 Related Documents posted by USCIS are as follows:

A note of caution. These materials will be of interest to voyeurs and historians, but not so useful to those who mainly want an example to copy. Most of the materials are at least three years old, and applications filed in 2012 are subject to different expectations. Also, the heavy redacting means that it’s hard to put these materials in context. For example there’s no way to tell whether the segment of business plan copied on page 652, with many blank pages on either side, represents part of the initial application or an amendment, whether USCIS accepted or challenged that segment, and whether or not the RC actually implemented that aspect of the plan. So I wouldn’t suggest relying on these documents for any guidance, though they are a trove for the curious.

Filed under Updates from USCIS

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

EB-5 Visa Stats as of 03/2012

March 23, 2012 3 Comments

The State Department Visa Office has still not released its report for 2011 (and about time, too, since its FY2011 ended last September), but IIUSA has obtained a report on EB-5 visa usage up to 03/2012. IIUSA thoughtfully provides charts that illustrate the increase in visa usage by year and track trends by country. I’m interested to note that Iran and Venezuela have moved into the top five countries by visa usage, and that Chinese nationals continue to dominate the list (accounting for nearly 70% of EB-5 visas issued in 2011 and 2012 to date).

Filed under EB-5 Statistics

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

Tenant-Occupancy Request for Evidence

February 27, 2012 13 Comments

6/23 Update: Note that I have set up a page collecting information on this issue, including details on the conference call with USCIS economists.
3/23 Update: Note that the comments to this post offer interesting discussion and useful insights.
3/1 Update: Peter Joseph of IIUSA, who has been collecting redacted RFEs, confirms that this is indeed the common language, and that applications using a variety of methodologies (including IMPLAN, RIMS II, and REMY) have been affected.

In the past week I have seen three new RFEs on initial Regional Center applications. Each application involved a different economist and attorney and different types of real estate development projects, but each RFE includes identical language related to the “tenant-occupancy” issue.  Since this language was applied to three such different cases, it’s evidently not case-specific and USCIS should have released it to the community at large. The fact that they didn’t, but instead released an evasive Public Engagement email while hiding the specifics in individual RFEs, suggests that they are uncertain and open to change based on feedback. And they will get feedback. Let’s not panic, but instead hunker down to create a solid response that addresses the root concerns and clarifies the misconceptions reflected in the following request, and prevents it from being repeated in future RFEs or official guidance.

Upon further review, it appears that __RC is using EB-5 capital to construct commercial buildings. The job creation estimates employed in this application are based, at least in part, on the assumptions that direct employees of the future tenants of the buildings can be utilized as inputs into the applicable input-output model. However, USCIS has concerns that the attribution of these direct jobs to the EB-5 investment may not be based on reasonable economic methodologies, and therefore do not demonstrate in “verifiable detail” that the requisite jobs will be created. Rather, contemporary economic methodologies appear to indicate that such jobs would be more appropriately be attributed to the tenants themselves and not to __RC because the demand for labor precedes the decision about where to house that labor as a general economic principle. For example, if a federal agency determined that additional federal employees needed to be hired to fulfill the agency’s mission at a particular location, the federal agency would see to hire the requisite number of employees and as part of that process, would also take steps to lease the appropriate physical premises to provide sufficient workspace for the new hires. In this instance, it is the federal agency that is creating the jobs through its decision to hire more employees, not the landlord who will ultimately lease the workspace to the federal agency.

USCIS observes that the tenant-occupancy methodology (that the direct jobs created by future tenants are intended to be attributable to the EB-5 investments) is not economically reasonable on the facts as presented. To allow for the existing methodology would require USCIS to credit the prospective EB-5 investors in the new commercial enterprise with the employment impacts created by the unrelated business ventures of future tenants (even though such tenants might engage in business activities within the requested industry categories and NAICS codes). After reviewing the tenant-occupancy methodology presented thus far, USCIS observes that the nexus between the investment and the job creation is either too attenuated or too incomplete to constitute a reasonable economic methodology. Consequently, the existing record presents USCIS with a justification to recognize only those employment impacts that could be attributed to __RC, such as those resulting indirectly from the construction activity and, if applicable, the ongoing building management activities that will be required to maintain the building.

However, USCIS does not foreclose the possibility that __RC might present additional evidence to demonstrate an economically acceptable nexus between the EB-5 investment and responsibility for the job creation asserted in the application. Accordingly, __RC may present additional evidence to demonstrate that the proposed methodology is economically reasonable.

To help illustrate the factors that USCIS finds central to adjudicating the fundamental reasonableness of this particular economic methodology, USCIS requests that any response address the following points:

    1. Evidence that there is excess demand for the specific types of tenants (various tenants as indicated in the business plan and economic analysis) to your construction project and business plan. Please provide a data-based assessment, and the source of data utilized by the assessment. To show such excess demand, the assessment should:
    a. Analyze: whether prospective tenants which would locate in the commercial space that will be constructed and/or renovated under the proposed project are currently suffering from a lack of a unique or specialized business space, that, in economic terms, such prospective tenants are “constrained” from commencing or expanding their businesses by a lack of unique or specialized business space.
    b. Provide a data-based analysis, including the source of data, which establishes whether there is “pent-up” demand for the specific professional and business services relevant to your project. Such data-based analysis should include:
    i.      Evidence of congestion externalities as demonstrated by a low vacancy-unemployment ratio pursuant to specific space and businesses seeking to expand, respectively; and
    ii.      Evidence of upward wage and rental pressures in specific regional sectors that are likely to be attracted to the proposed project space.
  1. The jobs that become located within the tenant space of the project should be shown to be a result of an expansion in specific services driven by your project as opposed to tenant shifting and/or relocation of already-existing jobs. Please explain how it will be verified that the jobs that will become located within the tenant space of the project can be considered “new” jobs.

Alternatively __RC is afforded the opportunity to provide business plans and an economic impact analysis for any industry categories and NAICS codes to demonstrate employment creation which is not based on tenant occupancy.

Filed under Updates from USCIS

I-924 Processing Times Published

February 23, 2012 Leave a comment

The EB-5 Regional Center page on the USCIS website now includes a table reporting I-924 Regional Center application processing times. Here is the current report:

Data as of March 31, 2012
Processing Time
Summary		  Target Case
Processing Time		  Actual Case
Processing Time
 I-924 Initial Application  4 months   6  months
 I-924 Amendment Application  4 months   8  months

Processing for the I-526 and I-829 petitions are still reported at 8 months and 6 months respectively (as of the 12/31/2011 California Service Center processing times report).

Filed under Updates from USCIS

Economic analysis problem revealed!

February 17, 2012 12 Comments

2/27 Update: see my post including generic text seen in several recent RFEs.

The USCIS Office of Public Engagement has just sent the following email:

Dear Stakeholder,

In our last stakeholder call regarding the EB-5 immigrant investor program, a number of stakeholders raised questions with respect to our adjudication of petitions that for purposes of the job creation requirement have utilized what has been commonly termed a “tenant-occupancy” methodology. In light of the number of questions we received on this subject, we thought that providing clarification of our approach was warranted.

The “tenant-occupancy” methodology seeks credit for job creation by independent tenant businesses that lease space in buildings developed with EB-5 funding. USCIS continues to recognize that whether it is economically reasonable to attribute such “tenant-occupancy” jobs to the underlying EB-5 commercial real estate project is a fact-specific question. Each case filed will depend on the specific facts presented and the accompanying economic analysis.

USCIS is now moving forward with the adjudication of certain pending I-924 Applications For Regional Centers Under the Immigrant Investor Pilot Program that are supported by the “tenant-occupancy” economic methodology. Our newly-hired economists and business analysts will be bringing expertise to these new adjudications, and requests for evidence will be issued to certain applicants and petitioners to address any questions or issues we have about the economic methodologies employed in their specific cases. Our adjudications will continue to be made on a case-by-case basis and we do not intend to revisit factual findings. I-526 Immigrant Petitions by Alien Entrepreneurs and I-829 Petitions by Entrepreneurs to Remove Conditions will have predictability in connection with early regional center adjudications.

Our retention of experts with economic and business analysis expertise is part of our ongoing efforts to improve our administration of the EB-5 program. We are taking other steps to both improve the efficiency of the program as well as to ensure its integrity. We look forward to keeping you informed of these improvements.

Kind Regards,

Office of Public Engagement
U.S. Citizenship and Immigration Services
http://www.uscis.gov

The caginess of this phrasing is nice in that it avoids undercutting previous approvals, but gives no guidance for how we should deal with “tenant-occupancy” jobs going forward and what will and won’t be acceptable. This is huge. I hope that Requests for Evidence issued will provide further hints.

Filed under Updates from USCIS

New AAO Decision (RC denial with econ analysis issue)

February 16, 2012 1 Comment

Thanks to Joe Whalen for pointing out that USCIS has posted another AAO decision affirming denial of a Regional Center application (May 2, 2011). This decision is very important and interesting. It discusses issues that I suspect underlie many recent denials of applications for initial RC designation (44% of all RC applications adjudicated from 10/2010 to 12/2011 were denied) and details what USCIS is looking for in the economic impact report and TEA information. As the AAO summarizes the issues resulting in denial:

The applicant seeks approval of an extremely broad proposal that covers seven broad investment possibilities. For the reasons discussed below, while the applicant need only support the proposal with general predictions, the economic analysis fails to sufficiently address all of the proposed types of investment possibilities for which the applicant seeks approval. In addition, parts of the analysis rely on assumptions for which Dr. _ provides no source. Finally, the AAO acknowledges that a regional center may include investments in non-targeted employment areas. Nevertheless, the proposal implies that the regional center would strive to focus investments within targeted employment areas (TEAs). The petitioner, however, has not established that any such areas exist within the proposed geographical limits of the regional center.

After you read the decision, I recommend you to Joe Whalen’s entertaining and insightful analysis of it.

Filed under EB-5 Law & Policy

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

FY12 Q1 EB-5 Statistics

January 23, 2012 8 Comments

USCIS has released new statistics as part of the presentation for the 1/23 EB-5 Stakeholder Meeting. This data shows us that USCIS has generally liked what it’s seen in I-526 and especially I-829 filings, and has found a lot not to like in recent Regional Center applications and amendments.

Form I-924 (& Pre-I-924) Regional Center Initial Applications

Fiscal Year or Quarter 

Receipts

Approvals

Denials

FY12 Q1

41

14

22

FY11

192

80

51

FY10

110

36

30
  • Note: There are currently 194 approved Regional Centers (RCs), operating in 40 states, including the District of Columbia and Guam. A complete list of approved RCs is also available online at http://www.uscis.gov/eb-5centers . 

Form I-924 (& Pre-I-924) Regional Center Amendment Requests

Fiscal Year or Quarter 

Receipts

Approvals

Denials

FY12 Q1

17

4

3

FY11

86

43

7

FY10

42

42

11

Form I-526 Petition Final Actions

Fiscal Year and/or Quarter

Form I-526 Approvals

Final Action %

Form I-526 Denials

Final Action %

FY12 Q1

1,076

83%

222

17%

FY11

1,563

81%

371

19%

FY10

1,369

89%

165

11%

FY09

1,262

86%

207

14%

FY08

640

84%

120

16%

FY07

473

76%

148

24%

FY06

336

73%

124

27%

FY05

179

53%

156

47%
  • Note: Approximately 92% of the individual Form I-526 petitions filed each year are filed by Investors who are investing in RC-affiliated commercial enterprises.

Form I-829 Petition Final Actions

Fiscal Year and/or Quarter

Form I-829 Approvals

Final Action %

Form I-829 Denials

Final Action %

FY12 Q1

144

93%

11

7%

FY11

1,067

96%

46

4%

FY10

274

83%

56

17%

FY09

347

86%

56

14%

FY08

159

70%

68

30%

FY07

111

69%

49

31%

FY06

106

64%

59

36%

FY05

184

62%

112

38%

EB-5 Visa Usage

Fiscal Year 

Total EB-5 Visas Issued 

FY12 YTD*

2,364

FY11

3,463

FY10

1,885

FY09

4,218

FY08

1,360

FY07

806

FY06

744

FY05

158

*Estimate of FY12 Visas Issued YTD, reported by the Department of State as of 01/17/2012.
  • Note: This includes visas issued to the investor and dependents. Historically an average of 2.5 visas are issued per principle applicant.

Filed under EB-5 Statistics

New AAO Decision (RC application denial)

January 19, 2012 2 Comments

The AAO has published another EB-5-related decision (04/26/2011), this one affirming denial of a Regional Center application filed on behalf of The Statesman Group and its Pleasant Harbor Marina and Golf Resort project in the North Olympic Peninsula. The decision is interesting, if unsurprising. To quote a portion of the analysis:

… the AAO finds that the applicant’s proposal is a marketing strategy to attract buyers for vacation suites rather than investors of capital in a new commercial enterprise. Specifically, the evidence incontrovertibly establishes that the applicant proposes that “investors” would purchase a vacation suite as either a “primary residence,” “second home” or “investment property.” For the reasons discussed below, the AAO affirms the director’s determination that such a real estate purchase of a private residence, even if still under construction, is not an at-risk investment of capital that can be credited with direct or indirect job creation under the employment creation program set forth at section 203(b)(5) of the Act and the implementing regulation at 8 C.F.R. § 204.6. The purchase of individual residential suites by alien “investors,” even if concentrated in one resort complex, is also not the type of “pooled investment” concept Congress envisioned for the regional center program. In addition, the offer in the record indicates an alien “investor’s” funds would be returned should the residence not be completed on time, even if the alien has already adjusted to conditional permanent resident status. Thus, the alien’s funds would not be at risk if the project failed or construction was delayed. Furthermore, the record does not identify a new commercial enterprise, such as a limited partnership, in which alien investors invest capital. Rather, their full involvement would be to purchase residential units from the regional center. Finally, the applicant asserts that membership in the resort’s Homeowner’s Association will constitute management in a new commercial enterprise. As the Homeowner’s Association is not the new commercial enterprise in which the alien investors will invest, this assertion lacks credibility. As the described proposal does not contemplate an investment of capital in a new commercial enterprise, the job creation at a proposed resort is immaterial.

According to the Peninsula Daily News, The Statesman Group is planning to try again with its Regional Center application, this time “expecting better luck… because he hired a professional writer to pen the application.”  (Hooray for professional writers!) I trust that the writer in question will take care to keep in tune with “the letter and spirit” of the EB-5 regulations, as the AAO’s summary requests. To be fair to The Statesman Group, this is surely not the only RC application denied for trying to frame purchase of residential real estate as an EB-5 investment.

For all EB-5-related AAO decisions, see my AAO Decision summary page.

Filed under EB-5 Law & Policy

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

Revised EB-5 Policy Memo

January 11, 2012 Leave a comment

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.

Note that this memo is still in the draft stage not to be taken as  final policy. The most interesting additions include new language on diversified investment on page 6 and an additional paragraph related to consistency in adjudications on page 19 of the redline version.

Filed under 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

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