EB-5 Update: USCIS Provides Insight into Delayed I-924 Adjudications, Cites “Tenant Occupancy” Methodology

The USCIS Office of Public Engagement issued a statement on February 17, 2012, regarding the internal agency debate over certain economic methodologies that has delayed for many months the adjudication of dozens of I-924 Applications for Regional Center Designation. The statement offers no guidance to applicants with respect to the standards by which the agency’s in-house “experts” have determined they will evaluate the merits of these applications, noting that RFE’s will now be issued to those applicants whose economic methodologies are in question, giving the applicants an opportunity to respond on the record. The issue appears to focus on job projections based on a “tenant occupancy” methodology. The USCIS statement reads as follows:

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.


Upcoming EB-5 Workshop March 5, 2012 in Orlando, Florida

Carroll & Scribner, P.C. attorneys Ed Carroll and Susan Pilcher will be featured in a full-day, comprehensive workshop on the EB-5 Immigrant Investor Program sponsored by immigration law publisher ILW.com in cooperation with the University of Central Florida. Mr. Carroll will be moderating the workshop in its entirety. Information about the program and speakers can be found here.

On February 2, 2012 at 2:00 p.m. EST, Ed Carroll will be presenting at an AILA Webinar on EB-5 Regional Centers. For more information and to participate, click

Upcoming Webinar on EB-5 Regional Centers

EB-5 Update: Notes from the January 23, 2012 Quarterly Engagement

Statistics shared by USCIS confirm phenomenal growth of the EB-5 program. The CSC adjudications unit has quadrupled in size during the past year, and the agency reports ongoing improvements in workflow.
USCIS acknowledged that a large number of Regional Center applications are being held in abeyance pending resolution of “an issue with the economic analysis.” The agency has been consulting with a contract economist and hopes to have that issue resolved within the next few weeks, after which applicants will begin to see decisions, RFE’s or denials.
The agency’s comments revealed no clear resolution on such questions as under what circumstances an employer will be provided the opportunity to replace a nonqualifying worker with a qualifying worker in response to an RFE, under what circumstances identical project documentation will be given deference in I-526 cases where bridge financing is used, and under what circumstances real estate-based investments may be used as part of a portfolio of investments.
There will be several new developments to watch for in the coming quarter. EB-5 processing times will be reported separately from the general CSC report and will be made available on the USCIS website. The new processing time reports will reportedly include more transparency. Also, summarized data from the I-924A process will also be published on the USCIS website. USCIS is compiling information on the most common reasons for denial of an I-924 and an I-829 and may make those available at the next stakeholder meeting. Finally, the revised I-924 form is in development and will be published for notice and comment. The new form will lay out standards for “shovel ready projects.”

Director Mayorkas Discusses EB-5 Issues

USCIS Director Mayorkas hosted a small group discussion, attended in person by 25 stakeholders including Carroll & Scribner’s Ed Carroll (Susan Pilcher attended by phone), in order to solicit reaction and input into the latest iteration of a Draft Policy Memorandum to guide EB-5 adjudications. A copy of the Draft Policy Memorandum can be found here. While there is no formal comment period for this version of the memo, Director Mayorkas invited stakeholders to provide input through the public.engagement@uscis.gov e-mail address. The agency contemplates further revisions to this “foundation document” in the weeks and months ahead, to be followed by amendments to the Adjudicator’s Field Manual.

The very interactive discussion yielded some insights into areas of EB-5 adjudication policy where the agency seems to have achieved some clarity, and it also revealed several areas in which mixed signals and inconsistent interpretations remain. Importantly, the Director continues to agree that predictability in adjudications is of paramount importance to project developers and investors. The following are key highlights of the discussion that will be of interest to the EB-5 community:

* There was consensus that it’s the New Commercial Enterprise – not the investors’ funds – that creates the jobs, and that interpretations and adjudications need to be guided by this principle.

* In the standalone EB-5 context (i.e. direct jobs), there can be multiple job-creating entities or projects so long as they are wholly-owned by the New Commercial Enterprise. This effectively eliminates the venture-capital-fund model from consideration in the standalone or direct-job context.

* In the Regional Center context, the agency has yet to clarify its thinking as to whether it is permissible for the New Commercial Enterprise to invest pooled funds in multiple job-creating and job-inducing projects. There was considerable discussion about how created jobs would be allocated among investors in this kind of scenario, and whether this issue would need to be fleshed out in the business documents of the project or whether it would be a function of the order of adjudications. No clear consensus emerged, and the Director committed to studying this issue further.

* What is “a reasonable time” for projected job creation if unforeseen circumstances have made it impossible to create all of the jobs by the time of I-829 filing? While all agreed that what was reasonable would turn on the facts and the credibility/viability of the business plan, Director Mayorkas noted that wide latitude on this issue would not be received favorably, and it is his expectation that the “reasonable time” contemplated by the statute would be “fairly short” in duration. The Director invited stakeholders to submit for consideration a variety of fact patterns to illustrate what would be a reasonable time under the circumstances.

* Regarding RFE’s on lawful source of funds issues, stakeholders reported seeing an upswing of RFEs regarding the tracing of funds involving Chinese intermediaries, the source of administrative fees, the lawful source of funds of Regional Center developers’ funds, and compliance with Chinese currency control and tax laws. The Director noted that the agency is currently taking a close look at the currency control and tax compliance issues, particularly with respect to Chinese investors, and we should expect continued close review of these issues. There was considerable discussion of whether it was reasonable and within the scope of the statute to examine the lawful source of funds that were commingled with investment funds in a single bank account. No clear consensus emerged, although it was clear the agency is unwilling to draw a bright line on these issues.

* Considerable confusion emerged over the agency’s approach to bridge loans. Although the Director expressed the view that the agency had signaled its clear acceptance of the use of bridge loans (again, based on the concept that it is the New Commercial Enterprise-not the investors’ funds—that creates the jobs), agency representatives seemed to balk at the notion that investors whose funds are used to repay bridge loans after the jobs have already been created could be credited with having created those jobs. There was some discussion as to whether clarifying the role of EB-5 funds in the loan documents would eliminate uncertainty, but a clear consensus did not emerge.

* The agency will be looking further at corporate law to further develop policy with respect to “restructuring/reorganizing” sufficient to result in a New Commercial Enterprise. USCIS continues to work on the Draft Policy Memorandum and invites stakeholder comments as it proceeds. The next USCIS Stakeholder Engagement on EB-5 issues is scheduled for January 23, 2012 at 1:00 pm EST. For more information about the scheduled Engagement, click here.

USCIS Issues Draft Consolidated Guidance for Comments

USCIS Director Alejandro Mayorkas today released a draft memorandum intended to consolidate and replace preexisting policy memoranda and clarify EB-5 adjudication standards for the benefit of agency adjudicators and the public. Notably, the draft memorandum opens with an overview of the job-creating goals of the program, and Director Mayorkas emphasized in his opening remarks that EB-5 adjudications should be guided by this overarching mission. The agency will accept comments on the draft memorandum for a period of 20 days, after which it will issue revised guidance.

USCIS Director Mayorkas Outlines Ongoing EB-5 Program Improvements

This afternoon, USCIS Director Alejandro Mayorkas hosted a small group discussion regarding ongoing concerns with the EB-5 Immigrant Investor Program, as part of his new Conversations with the Director initiative. Among the 25 in-person attendees was Ed Carroll, representing the interests of this firm’s clients.

Director Mayorkas outlined an ongoing agenda of improvements to the EB-5 program, including the hiring of economists and business analysts in an effort to bring real-world insight into EB-5 case processing. The business analysts have been hired and will be involved in the EB-5 unit’s operations “within 2-3 weeks,” and applications for the economist positions are under review.

Attendees raised several key issues of ongoing concern to participants in the EB-5 program, including:

– Reliance on state TEA designations;

– Clarification of policy regarding use of investor funds to pay off bridge financing;

– The locus of authority for policymaking;

– Alternatives for ameliorating the “age-out” problem in the event of a “material change”; and

– Multiple-project venture capital funds as EB-5 commercial enterprises.

Director Mayorkas listened attentively to participants’ comments and expressed a commitment to refining the operation of the EB-5 program in ways that removed agency-related barriers to investor confidence while retaining the integrity of the system. “Our goal,” he said, “is to move with speed and predictability sufficient to remove any negative influence” on investor participation.

We look forward to more tomorrow during the agency’s Quarterly Engagement.