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Tracking changes in regional center approval notice language

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  • 1. Contact the author at: joseph.whalen774@gmail.com or (716)604-4233. Page 1 Tracking Changes in Regional Center Approval Notice Language By Joseph P. Whalen (May 9, 2014) Many years ago, Congress passed a law they called the Immigration Act of 1990, now known as IMMACT90 by most folks. That was when they codified and revamped what was in essence an entrepreneur or investor immigrant visa which INS had created in 1967 through regulations that clarified some ambiguous language in the Immigration Act of 1965. Yes, folks I am talking about the birth of the employment-based, fifth preference immigrant visa, better known simply as EB-5. INS promulgated some rather strict regulations in accordance with the statute as passed. The EB-5 visa hardly got noticed and was utilized even less than that due to the strict regulations. In its wisdom and in full-on “pandering mode”, Congress revisited the EB-5 visa situation and created a “Pilot Program” that made reference to an undefined term known as a “Regional Center” specifically including language to exclude some of the restrictions in the original version of the regulation. Congress further tasked the Attorney General (now reassigned to the Secretary of DHS) to create the Regional Center Pilot Program. That was done through the promulgation of new additional regulations. The controlling statute has been altered a few times over the years but the regulations have not kept pace. USCIS as the current agency charged with administering the program is currently seeking its stakeholders’ help to update the regulations concerning all things EB-5, including Regional Centers. It is long past due. The regulation changes take more time than reality takes to effectuate real changes in processes, procedures, and policies. We can readily see the policy changes as they are made public and spread far and wide, i.e. the May 30, 2013, EB-5 Adjudications Policy Memorandum was welcomed with open arms. We can also glean some information from the recently restarted EB-5 Engagements and from recently released AAO non- precedential Administrative Decisions posted online. From the public realm we can see certain other USCIS Decisions if made public. Generally, these consist of Regional Center Designation Letters. Some have been made available through a large FOIA request which was then posted on the USCIS website (heck, the actual grunt work was done, so why not make use of it?). That FOIA request was submitted a few years ago and addressed 218
  • 2. Contact the author at: joseph.whalen774@gmail.com or (716)604-4233. Page 2 Regional Centers. Many more Regional Centers have been approved since then, as of April 1, 2014, USCIS had approved at least 480 as per their own website. Some of the more recent ones have posted or otherwise shared their Designation Letters and Amendment Approvals. I will attempt to point out some of the highlights of the changes I see in USCIS’ approach and choice of phraseology in the Approvals/Designations over the years. Here goes! From a very recent Designation Letter dated March 10, 20141: “I. Executive Summary of Adjudication Effective the date of this notice, USCIS approves the Form I-924 request to designate SOBE EB5 Regional Center, LLC as a qualifying participant in the Immigrant Investor Program. 1. Effective the date of this notice, USCIS approves the Park Avenue EB-5 Investors, LLC project based on the evidence submitted with the exemplar Form I-526.” * * * * * “Note: If changes to this project and its supporting documents are found in subsequent Form I- 526 or Form I-829 petitions, USCIS will review the supporting documents once more to ensure compliance with EB-5 program requirements. The proposal identifies the new commercial enterprise (“NCE”) of the project as Park Avenue EB5 Investors, LLC, which was formed in the State of Florida on January 26, 2012. The project is located at 2216 Park Avenue in the City of Miami Beach, Florida. Ten (10) immigrant investors will subscribe to the NCE as limited partners in exchange for capital contributions of $500,000 each and an aggregate of $5,000,000. “The NCE will loan the $5 million of EB-5 capital to a third-party entity, Encotel, LLC. The EB-5 capital loan proceeds will be used to finance the construction/remodeling, and operation of the Park Avenue Hotel. The Park Avenue hotel will be a “boutique” hotel, expanded from 2 stories, 46 rooms and approximately 15,000 square feet to 5 stories, 60 rooms, and approximately 31,000 square feet. The projected total cost of the project is $12.76 million. The project will take more than two (2) years to complete and will generate approximately 118 jobs.” * * * * * “The approval of this Form I-924 application supported by an exemplar Form I-526 petition is based upon the assumptions and estimates used as inputs in the business plan for job creation. Please refer to the input and multiplier analysis table above. When an actual project is specifically named in this notice and the critical inputs remain materially unchanged, USCIS will give deference to the job creation methodology when adjudicating Forms I-526 associated with the named project. The same business plan and the 1 From: http://ebfive.files.wordpress.com/2014/03/i-924-exemplar-approval-letter-sobe-eb5-rc.pdf
  • 3. Contact the author at: joseph.whalen774@gmail.com or (716)604-4233. Page 3 same reasonable job creation methodology and projected inputs must be submitted when the individual investor’s Form I-526 is filed in order to receive deference. It will be the responsibility of the individual investor to demonstrate that the assumptions and estimates presented as inputs to the job creation methodology remain materially unchanged when he or she files a Form I-526. When filing Form I-829 for removal of conditional status, the individual investor has the burden of demonstrating that the assumptions and estimates presented as inputs to the job creation methodology have not materially changed and have been realized (or can be expected to be realized within a reasonable time). If the job creation estimated in the business plan materially changes or will not be realized, then it will be the responsibility of the EB-5 investor to notify USCIS of an agreed upon methodology to allocate job creation among eligible investors.” This Notice is quite specific about the initial designation of the Regional Center and is also extremely specific about the “specifically named” I-526 Exemplar Project to which the agency is willing to extend deference in subsequent adjudications. Specifically named projects are “actual projects” supported by Matter of Ho-Compliant business plans (BPs) and highly detailed and comprehensive economic impact analyses (EIAs). This type of Regional Center Approval is not the same as “pre-approval” which is a term that can be misleading to the alien investors. When the term “pre- approval” is bandied about, the foreign national potential investor may get the wrong idea that their visa would be guaranteed. It is not. Other factors must be considered by the prospective immigrant investor and the Regional Center. Those other factors include, at least: the clean and clear (lawful) source and path of each and every investor’s money as well as the documentary evidence to prove it; any past or current immigration violations; any past or current criminal proceedings involving the investor or the investor’s investment partners; and of course, the specifically named project remaining “materially unchanged”. Not any and all change(s) would doom an investor’s visa but in the aggregate, there would still need to be full appropriate expenditure of the minimum required amount per investor, and sufficient jobs to enable the lifting of conditions for each EB-5 investor in the resultant accomplishment of any changed EB-5 investment project. Not every Designation Letter or Approval Notice will name a specific project. Many Regional Centers have obtained Initial designation based on “general predictions” from “general proposals”. Those types of Designations often cut down on the waiting time for an adjudication decision by USCIS as they are based on less detailed plans and less complex, less detailed economic analyses. Such Designations will be
  • 4. Contact the author at: joseph.whalen774@gmail.com or (716)604-4233. Page 4 approved as to certain “kinds of commercial enterprises that will receive capital from aliens” (see 8 U.S.C. § 1153 Note: Immigration Program). Those are based on what we are now calling “hypothetical projects” as opposed to the “actual projects” mentioned above. We can see the difference in the approaches to deference in EB-5 if we compare the language from the above linked Designation Letter to this one from January 16, 20142: “III. Job Creation A hypothetical project does not have the factual details necessary to be in compliance with the requirements described in Matter of Ho, 22 I&N Dec. 206 (Assoc. Comm’r 1998). As such, USCIS's approval of any hypothetical job creation estimates presented in a Form I-924 is not accorded deference and may not be relied upon by an individual investor when filing the Form I-526. The business plan and job creation estimates will receive a de novo review by USCIS when the applicant files a Form I-924- amendment with an I-526 exemplar or an individual investor files Form I-526. Once an actual project is adjudicated upon the filing of an I-526 exemplar or the initial Form 1-526, USCIS will give deference to subsequent Forms I-526 when the critical assumptions remain materially unchanged from the initially-approved Form I-526. In addition, organizational and transactional documents associated with the new commercial enterprise (NCE) submitted with this Form I-924 have not been reviewed to determine compliance with program requirements. When filing Form I-526, it will be the responsibility of the individual investor to submit a comprehensive, detailed and credible business plan, showing by a preponderance of the evidence that his or her investment in the new commercial enterprise will create not fewer than 10 full-time positions.” While this Regional Center was, in fact, approved, no specifically named project shall be given deference yet. Once an initial I-526 or I-924 Exemplar I-526 (I-924 Amendment) supported by a Matter of Ho- Compliant business plan (BP) and highly detailed and comprehensive economic impact analysis (EIA) has been approved by USCIS, subsequent I-526s will sail through as long as the individualized evidence is adequate. That just means that the individual investor will not have to worry about the BP and EIA and can concentrate on their own lawful source and path of funds documentation. Closely examine notices/letters before investing! That’s my two-cents, for now. 2 From: http://www.birchcapital.com/wp-content/uploads/2014/01/Birch-MD-BioPark-Regional-Center- Approval.pdf

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