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EB-5 plan assessment template revised July 1, 2012

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EB-5 plan assessment template revised July 1, 2012

  1. 1. Page 1 of 8This is a tool to aid one in assembling and/or assessing evidence in support of USCIS Form I-924, Application for Regional Center Under the ImmigrantInvestor Pilot Program. It may aid in assessing one’s own submission, that of a client, or in preparing an RFE, a NOID, or a response thereto. REQUEST FOR EVIDENCE[THE RESPONSE IS DUE 84 DAYS (12 WEEKS) FROM DATE OF THE NOTICE. NOADDITIONAL TIME MAY BE REQUESTEDBY THE APPLICANT OR GRANTED BY USCIS.] -OR- NOTICE OF INTENT TO DENY[THE RESPONSE IS DUE 30 DAYS FROM DATE OF THE NOTICE, 33 DAYS IF RECEIVEDBY MAIL.] Time limits per 8 CFR § 103.2(b)(8)(iv).The Form I-924 and supporting documentation have been reviewed and found insufficient toapprove the application at this time. The following is an individualized discussion and evaluationof the evidence submitted thus far. Where evidence meets the requirements, it is so stated. Whereevidence is insufficient to meet requirements, it is so stated and an explanation of deficiency ispresented with specific requests for evidence or an explanation of potential remedies. In that theunderlying business decisions that the applicant makes will guide the course that the applicantwill take in order to meet the statutory and/or regulatory requirements, any evidence submitted inresponse will be considered and evaluated on its own merits. The basic requirements fordesignation as a USCIS authorized Regional Center under the EB-5 Immigrant Investor Program[8 USC 1153 Note] are further explained at 8 CFR § 204.6(m)(3)(i)-(v), shown interspersedbelow with recitation and evaluation of evidence following each listed criterion. Furtherexplanatory notes are included.NOTE TO APPLICANTS: It is always best to start with a cover letter that acts as an executivesummary followed by a table of contents of the various tabbed sections to follow.Each Regional Center sponsor/applicant wishing to participate in the Immigrant InvestorPilot Program shall submit a proposal [in support of form I-924] ... to the … [Director,California Service Center] …, which:(i) Clearly describes how the regional center focuses on a geographical region of the UnitedStates, and how it will promote economic growth through increased export sales, improvedregional productivity, job creation, and increased domestic capital investment;The supporting documentation submitted with the form includes: • X
  2. 2. Page 2 of 8 • Y • ZThe supporting documentation submitted with the form:Meets the requirements as follows. [Explain.]Does not meet the requirements as follows. [Explain with specificity and suggest/requestspecific and/or general changes.]NOTE TO APPLICANTS: In reference to 8 CFR 204.6(m)(3)(i) as stated above thegeographical area must be contiguous and clearly delineated. It is most helpful to provide thefollowing series of maps, charts or written descriptions: • The entire desired Regional Center Area; • Standard Metropolitan Statistical Areas (SMSA’s); • IF KNOWN or as reasonably estimated and based on current data: High Unemployment Targeted Employment Areas (TEA’s) as would likely be determined by the Governor or designee, (1.) areas within SMSA’s or 2.) population centers of 20,000 or more outside SMSA’s; with unemployment rates 150% or more of the national rate; • Rural Area TEAs (areas outside SMSA’s with populations under 20,000 people); • Census Tracts, Cities, Towns, Counties, etc.; • Unemployment Rates by Cities, Towns, Counties or Census Tracts, etc.8 USC § 1153 Note: Pilot Immigration Program, includes: “.... A regional center shall have jurisdiction over a limited geographic area, which shall be described in the proposal and consistent with the purpose of concentrating pooled investment in defined economic zones. ....”A geographic subdivision would be an area carved out based on the physical features of theEarth’s surface. (Good examples would be XYZ Valley, XYZ Bay, etc;). A contiguous block ofcensus tracts is generally an acceptable defined geographic area UNLESS, the grouping isblatant gerrymandering. For EB-5 purposes gerrymandering is: a grouping that includesextraneous tracts for the sole purpose of artificially increasing the “weighted average”unemployment rate in a particular tract to be developed which is otherwise a non-qualifyingtract qualitatively unrelated to the others in the block.A political subdivision would be a division of a state that exists primarily to discharge somefunction of local government, such as a civil administrative unit of a county or city.(Administrative units of the federal or state government do not qualify for special designation.)Accordingly, a Congressional District or even a State Legislative District would be out of therunning but a much smaller ward, district, or neighborhood represented by an alderman or acity or county council-member would be acceptable.Individual state governments handle their responsibilities per 8 CFR § 204.6(i) differently.
  3. 3. Page 3 of 8(ii) Provides in verifiable detail how jobs will be created indirectly through increased exports 1;The supporting documentation submitted with the form includes: • X • Y • ZThe supporting documentation submitted with the form:Meets the requirements as follows. [Explain.]Does not meet the requirements as follows. [Explain with specificity and suggest/requestspecific and/or general changes.]NOTE TO APPLICANTS: In reference to 8 CFR 204.6(m)(3)(ii) as stated above for aRegional Center it is imperative to fully explain indirect job creation, as well as the direct andinduced jobs, if any. The requirement of creating at least 10 new full-time (35 hours per week)jobs per each individual alien investor may be satisfied by showing that, as a result of theinvestment and the activities of the new enterprise, at least 10 jobs per alien investor will becreated directly or indirectly through an employment creation multiplier effect.Submit an Economic Analysis (EA) and model that shows and describes job creation for eachcategory of economic activity (for example, manufacturing, food production/processing,warehousing, tourism and hospitality, transportation, power generation, agriculture, etc.)Aspects of this element of the proposal may be combined with item below in a single economicanalysis and job creation model. TheUSCIS has voiced concerns about the deficiencies in details in the Business Plans (BPs) andimpact analyses, which makes sound business sense and would likely be found insufficient tosupport the individual investors’ I-526 petitions. Unfortunately that level of detail is notexplicitly required under the provisions of the law which apply to the Immigrant Investor PilotProgram Application for a Regional Center (I-924) nor specific amendments to that statute,especially in the 2002 amendment Per Public Law 107-273, enacted November 2, 2002, whichclearly states, in pertinent part: “§610(a) .... The establishment of a regional center may be based on general predictions, contained in the proposal, concerning the kinds (plural) of commercial enterprises (plural) that will receive capital from aliens (plural), the jobs that will be created directly1 The need for inclusion of an “exports” component was dropped as a mandate from that statute after this regulationwas written. It is safest to continue to support the rest of the requirements with “verifiable detail” which is mostuseful in satisfying the requirement of “establishing reasonable methodologies”. See 8 USC § 1153 Note--§610(c).
  4. 4. Page 4 of 8 or indirectly as a result of such capital investments, and the other positive economic effects such capital investments will have.” “§610(c) In determining compliance with section 203(b)(5)(A)(iii)[(ii)] of the Immigration and Nationality Act [8 U.S.C. 1153(b)(5)(A)(iii)[(ii)]], and notwithstanding the requirements of 8 CFR 204.6, the Secretary of Homeland Security shall permit aliens admitted under the pilot program described in this section to establish reasonable methodologies for determining the number of jobs created by the pilot program, including such jobs which are estimated to have been created indirectly through revenues generated from increased exports, improved regional productivity, job creation, or increased domestic capital investment resulting from the pilot program.”When relying on econometric models for indirect job creation it is imperative that “direct jobs”will be real identifiable jobs supported by W-2, W-4, state wage reports, and/ or I-9 formsotherwise they must be explicitly identified as “base-level”, “tenant jobs”, “hypothetical”, or“third party” in nature and only referred to as “direct” as used in the economic model’s and/oranalysis’ sense of the term. Another method would be to predict jobs based on theallowable/acceptable dollar amount invested 2 in the overall project, this too must be made clear.This distinction will be critical at the I-829 removal of condition stage of the immigrationprocess and dictate the required evidence to meet the “back-end” burden of proof.(iii) Provides a detailed statement regarding the amount and source of capital which has beencommitted to the regional center, as well as a description of the promotional efforts taken andplanned by the sponsors of the regional center;The supporting documentation submitted with the form includes: • X • Y • ZThe supporting documentation submitted with the form:Meets the requirements as follows. [Explain.]Does not meet the requirements as follows. [Explain with specificity and suggest/requestspecific and/or general changes.]NOTE TO APPLICANTS: In reference to 8 C.F.R. § 204.6(m)(3)(iii), a proposal must includea detailed statement regarding the amount and source of the capital that has been committed tothe Regional Center, in addition to the description of the promotional efforts taken and planned2 USCIS has stated that certain expenditures don’t count because they don’t contribute directly to “job creation”.This is in keeping with normal business practices and econometric modeling; it is not an earth-shatteringannouncement. However, such items as a parcel of property may be attributable as an asset contribution by an EB-5investor as a capital investment. This is distinguishable and complicates the math.
  5. 5. Page 5 of 8by the Regional Center’s sponsors. USCIS has interpreted the words, “amount and source ofcapital that has been committed to the Regional Center” to mean the capital sufficient to sustainthe Regional Center distinct from immigrant investors’ required capital investment in a newcommercial enterprise within the Regional Center.The detailed statement that is required to meet the regulatory requirement relating to the amountand source of capital committed to the Regional Center should include: a) the exact amount of funds that have been dedicated to the Regional Center to accomplish the goals of the Pilot Program; b) the source of such funds; c) whether the amount is sufficient to sustain the Regional Center; and d) evidence that funds have already been committed to the Regional Center.None of the capital sustaining the Regional Center can come from immigrant investors’ requiredthreshold capital investment (as distinct from the new commercial enterprises’ revenues). Thisseparation of funds is necessary to enable the alien entrepreneur to qualify for the conditionalEB-5 immigrant investor classification at the I-526 petitioning stage of the immigration process.Also, under 8 CFR 204.6(m)(3)(iii) as stated above for any individual alien investor who will besolicited by a Regional Center to invest the requisite capital into a Regional Center commercialactivity, it will be incumbent on the Regional Center to engage in a due diligence process toestablish that all sources of capital can be fully explained and clearly shown to have beenlawfully obtained.Submit a plan of proposed Regional Center operation which addresses how investors will berecruited and how the Regional Center will conduct its due diligence to accommodate therequirement that all immigrant investor funds will be lawfully obtained and describe whatmeasures will be taken by the Regional Center to ensure and validate this. Will the submission ofcertain financial documents be required of foreign investors or will the Regional Center, forexample, utilize a professional investigating firm to vet a potential investor’s source of funds?What are your plans in this regard?Having a solid plan in-place, up-front should make the required I-924A annual reportingan easy matter of routine. Also, how will evidence be tracked in order to support investors’I-829s?Lastly under 8 CFR 204.6(m)(3)(iii), USCIS interprets the words “promotional efforts” to meanan advertising or marketing program planned by the sponsors of the Regional Center that isdesigned to attract immigrant investors to the Regional Center. Regional Center proposalsrequire a full description of the past, current and future promotional activities for the RegionalCenter. This shall include a description of the budget for this activity as well as a statement as tothe source of those funds used to accomplish this necessary task.
  6. 6. Page 6 of 8 (iv) Contains a detailed prediction regarding the manner in which the regional center willhave a positive impact on the regional or national economy in general as reflected by suchfactors as increased household earnings, greater demand for business services, utilities,maintenance and repair, and construction both within and without the regional center; andThe supporting documentation submitted with the form includes: • X • Y • ZThe supporting documentation submitted with the form:Meets the requirements as follows. [Explain.]Does not meet the requirements as follows. [Explain with specificity and suggest/requestspecific and/or general changes.]NOTE TO APPLICANTS: In reference to 8 CFR 204.6 (m)(3)(iv) as stated above a detailedprediction must be provided which includes the topics of regional or national impact, householdearnings, greater demand for business services, utilities, maintenance and repair, andconstruction both within and without the Regional Center. This can be combined with itemsabove and below.The proposal should not make vague references to regional economic impacts but should provideactual monetary predictions and address the elements listed in USCIS regulations. The economicmodel and analysis requested in items above and below, will also need to address these specificpoints as listed here. Do not omit the items in the regulatory and statutory “laundry lists”.(v) Is supported by economically or statistically valid forecasting tools, including, but notlimited to, feasibility studies, analyses of foreign and domestic markets for the goods orservices to be exported, and/or multiplier tables.The supporting documentation submitted with the form includes: • X • Y • ZThe supporting documentation submitted with the form:Meets the requirements as follows. [Explain.]
  7. 7. Page 7 of 8Does not meet the requirements as follows. [Explain with specificity and suggest/requestspecific and/or general changes.]NOTE TO APPLICANTS: In reference to 8 CFR 204.6 (m)(3)(v) as stated above submit acomplete and valid economic analysis sufficiently detailed to predict the overall economicimpact to be made by the Regional Center. This can and should be combined with items above.Again it is stressed that the economic analysis is best combined with items above, must besufficiently detailed to predict the overall economic impact and localized impacts to be made bythe Regional Center’s investment activities and projects.NOTE TO APPLICANTS: (Collateral considerations)The standardized business aspects of the Regional Center and its investment projects must befully explained as to their structure. This documentation, when vetted for EB-5 compliance byUSCIS, will form the bulk of the prima facie evidence of eligibility to be submitted in support ofan individual investor’s I-526. If these preliminaries are altered post-vetting, then this willusually be branded as an impermissible material change but that is dependent on the nature ofany change. Transparent complexity may be built-in up-front to allow for certain contingenciesbased on stated variables. Using well designed “If...then...” scenarios may provide the desiredflexibility later in the process. It is not simple to achieve, and missing the wrong detail couldnegate the effort when implemented improperly or impermissibly.This aspect of a proposal may include, but is not limited to, the following basic elements orsamples of them as applicable to the business approach and structure chosen by the RegionalCenter: • An overall comprehensive, detailed ,and credible Business Plan (BP)-mandatory • Statements in the BP and EA must demonstrate a sufficient nexus between the EB-5 funds and the jobs claimed as attributable to the overall RC project. • Draft Operating Agreement • Draft Partnership Agreement • Draft Subscription Agreement • Draft Escrow Agreements and Instructions (one for capital and one for any service fees) Such agreements usually include an “out clause” in the event of an unsuccessful visa process as a marketing tool but escrow agreements are not required by any EB-5 law, they may hurt a project, and the need to get money released from will not support a request for expedited processing. • List of proposed reputable financial institutions to serve as the Escrow Agent(s), if any • Draft of an Offering Letter, Memorandum, Confidential Private Placement Memorandum, or similar offering made in writing to an immigrant investor through the Regional Center. • Draft Memorandum of Understanding, Interagency Agreement, Contract, Letter of Intent, Advisory Agreement, or similar agreement to be entered into with any other party, agency or organization to engage in activities on behalf of or in the name of the Regional Center.
  8. 8. Page 8 of 8To Summarize: Submit a description of the RC applicant’s plans to administer, oversee, andmanage the proposed Regional Center, including but not limited to such things as: • how to identify, assess and evaluate proposed immigrant investor projects and commercial enterprises; • how the proposed Regional Center would perform “due diligence” as to whether investment capital to be sought will consist solely of alien investor capitol or a combination of alien investor capital and domestic capital; • how to monitor all investment activities affiliated, through or under the sponsorship of the proposed Regional Center, and to maintain records, data and information on projects, investors, business activities, etc., in order to report to USCIS for each Federal Fiscal Year.The above is generally known as “due diligence” and is coupled with “oversight reportingresponsibilities”. See 8 CFR § 204.6(m)(6) and USCIS Form I-924A.If you would like a word version of this document, send an e-mail to:joseph.whalen774@gmail.com

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