Jun
30

New USCIS Webpage for EB-5 Customer Support

Last week, U.S. Citizenship and Immigration Services uploaded a new customer support webpage which replaces the previous “EB-5 Inquiries” webpage. View here.

EB-5 Customer Support

Do you have a question about the Immigrant Investor Program, also known as “EB-5,” or one of the following forms?

  • Form I-526, Immigrant Petition by Alien Entrepreneur
  • Form I-829, Petition by Entrepreneur to Remove Conditions
  • Form I-924, Application For Regional Center Under the Immigrant Investor Pilot Program

General Inquiries and Communications

Write to the EB-5 mailbox at USCIS.ImmigrantInvestorProgram@uscis.dhs.gov if you need to:

  • Check the status of an EB-5 application or petition that is outside normal processing times (For cases within processing times, please visit Case Status Online to view the status);
  • Change the contact or attorney information on an EB-5 application or petition;
  • Report changes to a designated regional center’s address, contact information, principal(s), contracting agents or other similar changes to its operation or administration (within 30 days);
  • Report problems with EB-5 related biometric (e.g., fingerprint) processing;
  • Report that an EB-5 petition receipt notice or Application Support Center notice has not been received or contains incorrect information;
  • Request expedited processing of a pending EB-5 application or petition (the request must include supporting evidence to demonstrate that at least one of the criteria listed on the Expedite Criteria page has been met); or
  • Report any EB-5 notice or decision that appears to contain a gross error.

Note: Writing to the EB-5 mailbox will not suspend any deadline for you to respond to a request for evidence, decision or notice or to file an appeal or a motion to reopen or reconsider a decision. Inquiries that are not EB-5 related will not be addressed.

If you have a case-specific question, you may also contact our National Customer Service Center at 1-800-375-5283 or1-800-767-1833 (TDD for the hearing impaired).

Stakeholder Engagements

Please contact us by email at  IPOStakeholderEngagement@uscis.dhs.gov if you want to:

  • Inquire about upcoming EB-5 engagements; or
  • Provide comments to USCIS relating to a stakeholder engagement.

The EB-5 mailboxes noted on this page are not a forum for:

  • Policy and legal questions about adjudicative procedures or decisions;
  • Questions about the interpretation, implementation or administration of EB-5 laws and regulations, or about official agency guidance related to the adjudication of EB-5 applications or petitions;
  • Responses to case-specific requests for evidence, notices or decisions; or
  • Any matters unrelated to the EB-5 program.

Please click on the links below for more information on specific topics.

If you want to:
Check your case status online https://egov.uscis.gov/cris/Dashboard/CaseStatus.do
Send a case-specific inquiry https://egov.uscis.gov/e-request/
View EB-5 policy memoranda EB-5 Policy Memoranda
Email the EB-5 stakeholder engagement team EB-5 Stakeholder Engagement
View other general information on immigration benefits http://www.uscis.gov

 

Jun
26

RCBJ Retrospective: Removal of Conditions for EB-5 Investors: Practical Guidance in Preparing I-829 Petitions

760b3435-57de-4737-b0a4-c05a0aca3dd0Removal of Conditions for EB-5 Investors: Practical Guidance in Preparing I-829 Petitions (Volume  2, Issue 3, Pg.  22-24 )

by Elsie Hui Arias*, Partner, Srone Grzegorek & Gonzalez LLP  

Securing the initial I-526 petition approvals for a particular new commercial enterprise (“NCE”) represents a significant milestone for a regional center.  For the individual EB-5 investor, though, obtaining approval of the I-829 petition for removal of conditions is far more critical as the ultimate immigration goal — it allows the investor’s family to remain in the United States indefinitely.  On the other hand, denial of the I-829 petition leads to termination of resident status and initiation of removal (deportation) proceedings.  The stakes are high, and significant risk attaches to the removal of conditions process.  Drawing from our law firm’s experience in successfully representing more than 1,000 individual investors across dozens of NCEs in removal of conditions cases, it is imperative that regional centers engage in careful planning about removal of conditions at the outset of raising EB-5 capital.  Due consideration must be given to understanding the requirements for USCIS adjudication of I-829 petitions, monitoring significant events in the business of the job creating entity, tracking job creation progress, organizing supporting documentation, and engaging expert immigration counsel for guidance on how to craft successful I-829 petitions in an environment of constant business change.  This article provides to regional centers an overview of the legal and regulatory requirements for I-829 petitions, as well as practical guidance in tackling challenging issues that may arise during the removal of conditions process.

General Procedures

To remove the conditions from permanent resident status, the EB-5 investor must file Form I-829 with USCIS within the 90-day window immediately preceding the expiration of the two-year conditional period.  A failure to file timely may be excused only “for good cause and extenuating circumstances.”  The divorced spouse of the petitioner and a child who has married since obtaining resident status may be included in, or may file separately, the I-829 petition to remove conditions.  Also, the surviving spouse and children of an investor who has died may file an I-829 petition.

Upon the filing of the I-829 petition, USCIS will issue a receipt notice to the principal and verification notices to the dependents, reflecting that conditional resident status is automatically extended for one year (or until the I-829 petition is adjudicated).  The notices also serve as a travel document, enabling the investor and family members to travel and return to the United States as conditional residents.  Should the I-829 petition remain pending for more than a year, the petitioner and family members can obtain I-551 stamps from a local USCIS district office through an InfoPass appointment.

The investor and dependents need not be in the United States at the time the I-829 petition is filed, but they will be required to attend a biometrics appointment at a USCIS application support center approximately 30 to 60 days after the I-829 petition is filed so travel will need to be coordinated accordingly.  Biometrics processing reveals any arrests or convictions.  The ramifications of any arrests or convictions should be closely analyzed by the investor’s immigration counsel to determine whether an incident could trigger removal (deportation) proceedings.  If there are pending charges, USCIS will likely withhold approval of the I-829 petition until a final adjudication has been made in the criminal proceedings.

USCIS, also, in some cases has reviewed the travel records of an investor as part of the I-829 petition review, and probed the extensive absences outside of the United States to determine whether the investor has abandoned resident status.

There are essentially three requirements for adjudication of the I-829 petition for removal of conditions — investment of capital, sustained investment, and job creation.  These requirements will be addressed in turn.

Investment of Capital

Both the statute and regulations governing I-829 petitions require evidence that the EB-5 investor has “invested or was actively in the process of investing the requisite capital” in the NCE.  However, practically speaking, USCIS expects that all of the requisite capital has been invested in the NCE.  Documentation reflecting that the EB-5 investor has completed the investment typically includes similar evidence that was submitted in the underlying I-526 petition, i.e., the investor’s personal bank statement reflecting a withdrawal of funds directed to the NCE, and the NCE’s bank statement reflecting a corresponding deposit from the investor.  If an escrow was used to initially hold the investor’ EB-5 capital pending the fulfillment of certain conditions prior to release of funds to the NCE (e.g., approval of the I-526 petition), bank documentation should also be presented to reflect that each investor’s EB-5 capital was in fact released from the escrow account to the NCE’s account.

Given the need for biometrics in all cases, attention must be given to the possibility that USCIS could probe whether arrests or convictions relate to the investor’s source of funds.  USCIS may revisit an investor’s source of funds if the agency receives “derogatory information” following the approval of the I-526 petition.  A request for evidence (“RFE”) would question whether the investment capital was actually derived from unlawful sources.

Sustained Investment

The statute and regulations also require evidence that the investor has sustained the investment in the NCE.  This requirement focuses on the investor sustaining the investment as well as the sustaining of the business of the NCE.

The investor cannot withdraw any part of the minimum threshold EB-5 capital contribution from the NCE during the conditional resident period.  This prohibition does not disallow distributions representing profits.  With partnership accounting, the Form K-1 proves useful to indicate the EB-5 investor’s capital account has been sustained at the minimum level.  If the capital account has dropped below the required level due to non-cash expenses such as depreciation, an accountant’s letter helps to explain that the EB-5 investor has not withdrawn any part of the required capital.

The I-829 also should demonstrate that the NCE is an ongoing enterprise.  As a start, the I-829 should include documents verifying that the NCE continues to operate, e.g., income tax returns, financial statements, and/or recent bank statements.  Additional evidence would depend on the particular facts of the NCE.  As an example, if the NCE was formed for the purpose of developing and operating a hotel, the I-829 petition should include documents evidencing the expenditure of EB-5 capital towards the development of the hotel, and the status of the hotel’s construction and operations.   In another common example, if the purpose of the NCE was to raise EB-5 capital that in turn was loaned to a third party (“Borrower”), the I-829 petition should include documentation of the release of loan proceeds and of the Borrower’s expenditures.  Notably, USCIS has not provided guidance on how it views the Borrower’s prepayment of a loan to the NCE, or on whether in the circumstances the NCE should re-deploy the repaid proceeds during the EB-5 investor’s conditional residence.  This lack of guidance is especially troubling in view of the U.S. State Department’s dire predictions of visa retrogression for Chinese nationals, which among other consequences will stretch the overall timeframe for the NCE to manage the EB-5 process.

From approximately December 2009 to May 2013 (the dates of EB-5 adjudication guidance memos issued by USCIS), any “material change” from the initial Comprehensive Business Plan of the NCE would result in the denial of the I-829 petition and would require the EB-5 investor to start the process anew with the filing of a new I-526 petition.  Fortunately, USCIS adopted a more flexible view on business changes in its Policy Memorandum of May 30, 2013.    As for now, USCIS authorizes approval of an I-829 petition irrespective of a change from the initial Comprehensive Business Plan, so long as the material change occurs after the EB-5 investor has obtained conditional permanent residences, and the I-829 petition meets all other adjudication requirements including sufficient job creation.

Job Creation

USCIS interprets the EB-5 law to require proof in all I-829 adjudications that jobs have been created or will be created within a reasonable period of time.  This task of documentation may be complicated for NCEs with multiple EB-5 investors who “consume” ten EB-5 created jobs every time USCIS approves an I-829 petition.  Consequently, it is of paramount first importance that the regional center carefully track the conditional residence period and I-829 petition filing windows for all of its EB-5 investors.

Second, as part of its review and preparation for the I-829 petition, the regional center should review the job credit allocation agreement among the EB-5 investors in the NCE, set a timeline to monitor the number of jobs that must be created for each investor by a particular date, and develop a strategy that will support specific investors depending on where they are in line to receive job creation credit.

Third, in documenting job creation, the regional center will need to revisit the job impacts analysis that supported the I-526 petition approval, and prepare the evidence that shows the assumptions underlying the job impacts analysis have been realized.

It is imperative that the regional center obtain and organize these documents well in advance of the first I-829 filing deadline in order to avoid any delays for its EB-5 investors who require a prompt filing in order to obtain the notices that extend status and approve travel.  Also, advance planning is required to develop strategies for addressing any problem areas.

Examples of specific items of proof depend on the type of job creation.  Construction phase jobs are created as construction funding is expended, so the I-829 petition should include evidence of these capital expenditures.  Evidence can include a current construction budget detailing line item expenditures, sample invoices, construction draws, certification from the developer confirming capital expenditures, and documents showing the project has been completed or is near completion.

Proof of operations phase jobs will depend upon the inputs that were used in the economist’s analysis to estimate job creation.  For example, where revenues were relied upon, verification should include the job creating entity (“JCE”) income tax returns if possible and financial statements.  For tenant occupancy, evidence could include executed lease agreements, tenant affidavits regarding the type of business and number of employees at the leased space, and ongoing marketing efforts to attract tenants.  Where the number of on-site workers is the input to the economist’s analysis, payroll records and I-9 forms can verify the presence of on-site workers.

Following business realities, it is not uncommon that the assumptions underlying the job impacts analysis fail to transpire in accordance with the original timeline due to construction delays or lower leasing levels.  USCIS tracks the number of jobs it deems to have been created by a particular NCE and the number of I-829 petitions that have been approved for investors in that NCE.  It will issue RFEs to the EB-5 investors who are up for adjudication after the job creation capacity of the NCE has been filled.  Success in those I-829 cases will depend on documenting the amount of jobs already created and the additional jobs that will be created within reasonably identifiable timeframes, such as within a particular quarter.  Where, for example, the NCE funded the development of a hotel it is possible to qualify most of the EB-5 investors for removal of conditions based on the construction expenditures alone, without having to document the operations phase jobs.  On the other hand, EB-5 investors who are at the end of the line for job creation credit purposes may be entirely dependent on documentation of the performance of the hotel in terms of operating revenues.

Where jobs have not yet been created as of the date of the I-829 adjudication, the petitioner must argue that the jobs will occur by a certain date which amounts to “within a reasonable period of time.”  The Policy Memo sets the outer limit of this timeframe as three years following the initial conditional permanent residence date.  Because EB-5 investors in a particular NCE generally immigrate over a protracted period of at least 1 to 2 years, which could be further distended due visa retrogression, the three year deadline will differ from one investor to the next.  The strategy and supporting evidence, consequently, needs to be adjusted for different groups of investors depending upon the window for I-829 petition filing and the evidence of job creation that then is available.

Options if I-829 petition is denied

Unfortunately, there is no extreme hardship or good faith waiver for EB-5 investors who fail to meet the requirements for removal of conditions.  Also there is no administrative appeal available for a denied I-829 petition.  Routinely, USCIS now encloses with the I-829 denial a “Notice to Appear” thereby vesting jurisdiction with the immigration court.  The government bears the burden by a preponderance of the evidence to prove to the immigration judge that the I-829 petition should be denied.  The mere submission by the government of the USCIS denial of the I-829 petition is not sufficient in immigration court; the USCIS denial signals only that the petitioner did not meet the burden of proof before USCIS.  Although the law in this area is less than clear, the EB-5 investor should be able to present in immigration court evidence of subsequent events, such as additional job creation.  The immigration judge has the authority to remove the conditions on the investor’s residence, or alternatively to deny the I-829 petition again and order the deportation of the investor and family.

Conclusion

When a regional center assists the immigrant investor to reach the end zone with an approval of the I-829 petition, a family’s immigration dream of unconditional permanent residence is realized.  It shows that the regional center serves the primary motivation of its EB-5 investors.  The regional center notches another victory for its own organization, a feat that strikes a harmonious chord when promoting to prospective EB-5 investors.

*Elsie Hui Arias (elsie@sggimmigration.com) is a partner of Stone Grzegorek & Gonzalez LLP, in Los Angeles, and is certified as a specialist in immigration and nationality law by the California State Bar.

RCBJ Retrospective articles are reprinted from IIUSA’s Regional Center Business Journal trade magazine. Opinions expressed within these articles do not necessarily represent the views of IIUSA and are provided for educational purposes.  

Jun
25

Resolution Supporting EB-5 Adopted at 83rd Annual Meeting of the U.S. Conference of Mayors

USCOME

2015 Adopted Resolution

The U.S. Conference of Mayors
83rd Annual Meeting
June 19-22, 2015
San Francisco
(View All Adopted Resolutions Here)

EB-5 Immigrant Investor Program

(View Resolution)

WHEREAS, EB-5 is the designation for the fifth employment-based preference immigrant visa category established by Congress in 1990; and

WHEREAS, Congress established the Immigrant Investor Pilot Program in 1992 to create Regional Centers which aid foreign investors, by directing and professionally managing their investments while concentrating pooled investments in defined distressed economic zones; and

WHEREAS, EB-5 allocates 10,000 visas annually to foreign investors and their families who invest at least $1 million (or $500,000 in a target employment area) which must generate at least 10 jobs; and

WHEREAS, EB-5 has become a vital source of urban redevelopment funds; and

WHEREAS, since 2008 over $8.6 billion has been invested in qualified American projects; and

WHEREAS, that investment has supported over 171,000 American jobs; and

WHEREAS, over 200 additional regional centers were approved in Fiscal Year 2014 alone; and

WHEREAS, currently there are over 13,000 pending applications for EB-5 related visas, representing $6.5 billion in potential direct investment and 130,000 jobs; and

WHEREAS, the EB-5 Program had record-breaking capital formation in FY2014 and Q1-2015 with $2.5+ billion and $826 million in foreign direct investment respectively; and

WHEREAS, in 2012 Congress passed legislation to reauthorize the Regional Center Program, with a unanimous vote in the Senate and a vote of 412-3 in the House; and

WHEREAS, mayors are working with private parties to use EB-5 foreign direct investment to finance job creating projects and downtown revitalization projects; and

WHEREAS, without Congressional action the EB-5 Program will sunset on September 30, 2015; and

NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of Mayors urges Congress to include a robust EB-5 Program through legislation including additional visas, ensuring that any reform of the EB-5 Program maintains the ability to deliver job-creating capital to urban areas, permanent authorization of the Regional Center Program, and streamlined approvals for all applications.

Projected Cost: None

Jun
25

USCIS Publishes “Talking Points” From June 4th EB-5 Interactive Series on Expenses that are Includable (or excludable) for Job Creation

This week, U.S. Citizenship and Immigration Services (USCIS) published talking points from the June 4th EB-5 Interactive Series Engagement on Expenses that are Includable (or Excludable) for Job Creation.

On the call, economists from the USCIS Immigrant Investor Program Office (IPO) gave a short presentation and the answered a number of non-case specific stakeholder questions concerning this topic.

If you’d like to listen to the recording, please click here.

To review the published talking points in PDF, click here or read below:

Introductory Points Regarding Job Creation

* EB-5 petitioners must demonstrate that their investments will create or maintain at least 10 fulltime positions for qualified U.S. employees within the required timeframe.

* Regional center investors may rely on indirect jobs to meet this requirement.

* Regional center petitioners may use reasonable methodologies to demonstrate job creation (both direct and indirect).

* Most regional centers and regional center investors seem to rely on input/output models as the reasonable methodology to demonstrate job creation. Most also use expenses as inputs, rather than the alternatives (jobs, revenues).

* Therefore, the focus of this interactive is on what types of expenses may or may not be included in an input/output model to demonstrate job creation for regional center petitioners.

Hypothetical, Actual, and Exemplar Projects

*USCIS economists evaluate the evidence provided by an applicant or petitioner to determine if the proposal more likely than not conforms to the regulatory requirements.

* Regional centers may be designated based upon a general proposal for a project, which USCIS generally refers to as a hypothetical project.

* If the Form I-924 application contains more verifiable detail and includes a Matter of Ho compliant business plan, and/or the commercial enterprise’s organizational and transactional documents, the regional center may be designated with an actual or exemplar project. This designation accords deference to subsequent Form I-526 petitions involving the same project and material facts.

* The evidence necessary for economists to make a decision on whether and how to designate a regional center will also depend upon the organizational structure of the new commercial enterprise and job-creating entities, if any; the industries involved; and other factors.

 *In order to make today’s stakeholder engagement as useful as possible, the rest of our presentation will focus on discussing the types of expenses that may or may not be includable in an input/output model, when such a model is presented with a Form I-924 actual and exemplar project filing, as well as Form I-526 petitions.

Direct, Indirect, and/or Induced Jobs (Note: Unless otherwise stated, references to “direct” or “indirect” refer to the legal definitions, not to references to the output of an economic model.)

* Direct jobs are jobs created directly by the new commercial enterprise, which must itself be the employer of the qualified employees who fill the positions. For example, if full-time staff at a hotel are in jobs created by the new commercial enterprise, but are employed by a separate job staffing firm, then those jobs would not be considered direct jobs.

* Indirect jobs are those that are held outside of the new commercial enterprise but are created as a result of it. For example, in a construction project, the jobs may be derived from expenses to backward linkages such as the purchase of building materials from various suppliers (concrete from one company, lumber from another, and so forth). Indirect jobs may also include induced jobs, which may be derived from forward linkages such as consumer spending by construction workers and operating staff using their incomes.

  • As USCIS has stated in policy memos, due to the nature of accepted job creation modeling practices, which do not distinguish between full- or part-time jobs, USCIS relies upon the reasonable economic methodologies to determine whether, more likely than not, the indirect jobs were created.
  • USCIS will not request additional evidence to validate to a greater level of certainty that the indirect jobs are full-time or permanent.
  • USCIS may, however, request additional evidence to verify that the direct jobs are, or will be, full-time and permanent. This request may include a review of W-2s or similar evidence at the Form I-829 stage.
Eligible Hard Construction Expenditures, Soft Costs, and Transfers Hard Cost Construction Expenditures

*USCIS economists will typically ask for itemized information to ensure that only eligible costs are input into an accepted economic model or other methodology.

* Simply stated, total aggregate hard costs will likely be insufficient to demonstrate eligibility. Rather, costs should be broken down into specific expenditure categories (such as masonry work, plumbing, flooring, hardscaping, softscaping, etc.), so that USCIS economists can assess whether these costs are reasonable inputs.

* Certain types of evidence may strengthen the credibility of a filing. For example: If the assumptions are accompanied by a third-party market feasibility report, or if a developer shows a successful track record in completing similar projects. The important thing to remember is that the burden is on the petitioner to provide sufficient evidence.

Assessing Contingencies at the Form I-526 and I-829 Stages

*Generally speaking, USCIS considers contingency and reserve funds that adhere to acceptable industry practices to be permissible inputs into an economic model for estimating job creation.

* At the Form I-829 stage, USCIS will review whether contingency and reserve funds have actually been spent on eligible expenses.

Furniture, Fixtures and Equipment

*Furniture, fixtures, and equipment may be eligible expenditures as an input into an economic model.

* The applicable multiplier depends on the specific project type (for example, constructing a building vs. a ship).

Soft Cost Construction Expenditures 

* A number of soft costs may be ineligible.
  • For example, a stock market transaction that involves the exchange of two paper assets (i.e., money for shares of stock) creates no economic impact. Similarly, there are some transactional costs, such as brokerage fees for services related to the transfer payment transaction, that may not be eligible. Most petitioners do not request job creation from these categories.
  • With respect to land purchases, there are some closing costs that may be eligible; however, the actual purchase of a title from the previous land owner does not create any economic activity, and is thus ineligible. Some transactional costs, such as realtor and title policy expenses, appraisals, site inspections and site clean-up, may be ineligible if they were incurred before the immigrant investor capital was placed at risk.

Land Purchases

In terms of using funds from EB-5 investors to acquire real estate, Matter of Izummi requires that the “full amount of money must be made available to the business(es) most closely responsible for creating the employment upon which the petition is based.” For example, a job-creating entity may propose to allocate some EB-5 funds to purchasing land and other EB-5 funds to developing and operating a business on the purchased land. The jobs created by the enterprise can be apportioned among all the EB-5 investors. It is important to note, however, that real estate acquisition is not recognized as a jobcreating activity in and of itself.

Thus, it is not generally reasonable to treat funds spent on real estate acquisition as inputs to an employment impact model. Where some EB-5 funds will be used for real estate acquisition, such apportionment should be detailed in the business plan.

Note: USCIS does recognize that certain soft costs directly related to real estate transactions may reasonably be counted as valid job-creating expenditures and inputs to regional input/output models. In addition, soft costs related to the development and construction of EB-5-supported projects on designated land parcels may be considered on a case-by-case basis. If developer costs are used as a job creating input in an economic model, they should provide adequate detail to ensure that they are actually expenses that create jobs and not a return of a developer’s capital that will not create jobs within the project in review.

If the input/output model used in the economic impact analysis provides specific categories for the soft costs, the multiplier categories specific to these costs should be used instead of bundling such costs under general construction expenditures.

Soft Costs

Architectural/Engineering Services 

* Generally, USCIS finds it permissible to include architectural/engineering expenditures as an input into the economic model.

Legal fees

* Some legal fees are eligible, others are ineligible.

  •  USCIS has determined that legal fees related to complying with the EB-5 program or counseling immigrant investor clients are not permissible as inputs. However, legal fees related to counseling a business enterprise in the normal course of complying with local regulations, tax laws, employment laws and so forth are permissible as inputs.
  • For regional center affiliated projects, eligible legal expenditures are permissible as an input into an economic model. The important thing to note here is that the input should be transparent, clarifying that only those legal costs not associated with EB-5 compliance are included
Financing Fees

* Similar to legal fees, some financing fees are ineligible when related to EB-5 capital. Financing fees from other loan or equity funding may be eligible.

Evidentiary Standard of Proof

* USCIS economists make a determination that a petitioner’s investment will more likely than not create the minimum number of required jobs within the requisite timeframe. Per the May 2013 policy memo, I-924 actual projects “will be accorded deference to subsequent filings under the project involving the same material facts and issues.” Deference will not apply, however, if there is “material change, fraud, willful misrepresentation, or a legally deficient determination” (pages 14-15).
Jun
23

IIUSA Statement in Response to SEC Action Against Unregistered Broker-Dealer Activity in EB-5

As the national trade association representing over 275 EB-5 Regional Centers, IIUSA welcomes the Securities Exchange Commission’s (SEC) action against two companies for unregistered broker-dealer activities related to raising capital under the EB-5 Program (the “Program”).  
 
Compliance with – and effective enforcement of – U.S. securities laws is as essential for the EB-5 Program as it is for any investment vehicle to maintain the confidence of all stakeholders (from investors to project developers and the often many organizations in between) and ensure that the Program continues to bring capital and job creation to American communities.  Inter-agency oversight of the Program is needed to protect its integrity and this latest enforcement action demonstrates that federal authorities take the role of deterring non-compliance with U.S. securities laws seriously to ensure lawful capital raising activities are undertaken to contribute to economic growth and create jobs in America.  In FY2013 alone, the Program generated $2.0 billion in foreign direct investment, contributed $3.58 billion to U.S. GDP and supported over 41,000 jobs at no cost to taxpayer.
 
IIUSA has a track record of working cooperatively with the SEC and other regulatory agencies to strengthen the integrity of the program.  For example, IIUSA filed an amicus brief supporting earlier SEC action that stopped a Regional Center and developer from making misleading claims about investment opportunities, and we regularly provide our members with opportunities to hear from experts in securities and immigration law – including representatives from federal and state regulatory agencies — to better understand program requirements and support their compliance.  
 
IIUSA has engaged with the Council of Development Finance Agencies (CDFA), the North American Securities Administrators Association (NASAA), the SEC, U.S. Department of Commerce, staffs of several Governors, the National Association of Counties (NACo), U.S. Conference of Mayors and many other stakeholders to educate them on the EB-5 program and engage them as partners in deterring fraud and abuse. And, we have worked with leading members of Congress to develop legislation that will further enhance Program integrity.
 
As Congress works on legislation to reauthorize the EB-5 Regional Center Program, we look forward to providing comments on reform measures to strengthen government enforcement capabilities and oversight responsibilities.  
Jun
23

Effective Immediately: USCIS Discontinues Electronic Processing of EB-5 Petitions

This week, U.S. Citizenship and Immigration Services announced the suspension of the USCIS Electronic Immigration System (ELIS) for Form I-526, Immigrant Petition by Alien Entrepreneur. Effective June 15, 2015, USCIS will no longer accept electronically filed forms for the EB-5 category. Additionally, USCIS ELIS will no longer support the Regional Center Document Library. For more, please review the the USCIS Electronic Filing Webpage.

If you recently filed a Form I-526 in USCIS ELIS:

You can still access your case electronically to:

*     Review and attest existing deal packages created by the Document Library Manager;

*     Respond to a request for evidence;

*     Check case status; and

*     Update your profile.

If you started a Form I-526 petition in USCIS ELIS, but have not yet completed it:

You will have 30 days (from the date you began) to complete and submit your petition using USCIS ELIS. If you are unable to submit your petition within 30 days, you must file on paper.

EB-5 Regional Centers also must use the paper channel to submit documents in support of a Form I-526 or Form I-924, Application for Regional Center Under the Immigrant Investor Pilot Program.

Jun
22

S. 1501 Statement for Congressional Record

On June 3rd, the Senate Judiciary Committee introduced S.1501, legislation to reauthorize the EB-5 Regional Center Program in advance of the September 2015 sunset date. IIUSA statement of the proposed legislation can be found here.

Congressional Record – Senate: June 3, 2015
Statements on Introduced Bills and Joint Resolutions 

Senator Patrick Leahy, Ranking Member of the Senate Judiciary Committee, submitted comment to the Congressional Record on behalf of the bills co-sponsors. Senator Leahy stated:

By Mr. LEAHY (for himself and Mr. GRASSLEY):

S. 1501. A bill to promote and reform foreign capital investment and job creation in American communities; to the Committee on the Judiciary.

Mr. President, today I am proud to introduce the bipartisan American Job Creation and Investment Promotion Reform Act of 2015, which will extend and significantly improve the EB-5 Regional Center program. Since its inception in 1993, the EB-5 Regional Center program has generated billions of dollars in capital investment and created tens of thousands of jobs across the country, much of which has occurred in areas that traditionally struggle to attract investment and jobs. The program’s authorization is set to expire at the end of September. My legislation would reauthorize it for 5 years while enacting broad reforms to enhance the program’s integrity. I am proud to be joined by Senator Grassley in this effort.

The EB-5 Regional Center program faces significant challenges. I have always been supportive of its ability to create American jobs but the program has experienced some problems in recent years. There have been troubling reports of fraud and abuse, concerns regarding onerous processing delays for developers and investors, and questions over whether the program is truly benefiting those that Congress intended. These concerns can overshadow the many success stories, and have led some to understandably lose faith in the program.

I have not seen any flaw inherent to the EB-5 Regional Center program that could not be remedied, and I strongly believe that this is a program worth fixing. Over the last two decades this program has proven it can result in significant investment and jobs in communities that desperately need both, all at no cost to American taxpayers. While our immigration system as a whole is broken, and only comprehensive reform will remedy its many injustices, reforming and reauthorizing the EB-5 Regional Center program warrants our immediate attention because the program is set to expire in a matter of months.

In Vermont, this program revitalized rural communities during the worst of economic times. At the height of the recession, Country Home Products was able to speed up its engineering initiative to develop a new line of equipment in the power tool market. Sugarbush ski resort invested in new facilities and resources to increase visitors and keep its doors open. Without EB-5 capital , these manufacturing, construction, and hospitality jobs would likely not exist in Vermont. The state-run Vermont Regional Center continues to attract substantial capital investment and–with the Department of Financial Regulation now joining the Agency of Commerce and Community Development in overseeing the program–also provides unparalleled oversight of EB-5 projects.

I have long sought substantial reforms to the EB-5 Regional Center program at the Federal level. Last Congress, my EB-5 amendment to Comprehensive Immigration Reform provided the Department of Homeland Security the authority to revoke suspect regional center designations or immigrant petitions. This amendment, which was unanimously approved by Senate Judiciary Committee, also provided for increased regional center reporting, background checks, and oversight related to the offer and sale of securities. Sadly these improvements have all had to wait, as the House of Representatives failed to allow a vote on the bipartisan immigration reform bill that passed the Senate last Congress.

Fortunately, however, the agency that administers EB-5 has not stood idly by waiting for Congress to strengthen the program. I credit Alejandro Mayorkas, the former Director of United States Citizenship and Services, with bringing many concerns to light. The agency has since transformed its review of EB-5 applications. Staff levels have increased nearly ten-fold, in-house economists now analyze proposed business plans, and fraud detection and national security staff now sit side-by-side with adjudicators. These actions have all helped the agency to guard against abuses.

However, as Congress now faces reauthorizing this job-creating program, I have listened to concerns raised about how the program functions. I believe we must do more, which is why I have been working for over a year to further reform and modernize the Regional Center program. The bill I introduced today builds upon what the Senate passed last Congress as part of Comprehensive Immigration Reform.

This legislation, if enacted, would provide the Department of Homeland Security additional, much-needed authorities, including further expanding background checks, conducting a more thorough vetting of proposed investments earlier in the process, and providing for the ability to proactively investigate fraud, both in the United States and abroad, using a dedicated fund paid for by certain program participants. The bill would also provide investors with greater protections and more information about their investments. It would provide project developers clarity and shorter processing times in order to make the program more predictable and functional. It would raise minimum investment thresholds so more money goes to the communities that need it. It would help to restore the program to its original intent, by ensuring that much of the capital generated and jobs created occur in rural areas and areas with high unemployment.

Taken together, the oversight tools, security enhancements, and anti-fraud provisions included in this legislation provide the framework for a complete overhaul of the EB-5 Regional Center program. These reforms will instill both confidence and transparency in the program.

I look forward to continuing to work with all Senators and stakeholders to improve and reauthorize this important program. I am confident our work will result in a secure EB-5 program that will create American jobs and promote economic growth throughout our country, particularly in the rural and distressed communities that need it most.

The full text of the Congressional Record for June 3rd can be found here.
Jun
15

U.S. Department of State Visa Bulletin Reveals Cutoff Date for Mainland China-born EB-5 Applicants Moves Forward to September 2013

The U.S. Department of State – Bureau of Consular Affairs released its Visa Bulletin for the month of July (displayed below, view PDF). The bulletin reveals that for Mainland-China born EB-5 visa applicants, the cutoff date is now September 1, 2013, moving up from May 1, 2013 in the last two previous monthly bulletins.

This means that, as of July 1, 2015 Chinese investors who filed their I-526 petitions before September 1, 2013 can have interviews scheduled at the U.S. Consulate in Guangzhou and be issued conditional immigrant visas to enter the U.S. or, if in the U.S., can apply for adjustment of status.

The reason for the four month advance of the cutoff date is that the level of EB-5 demand from other countries has been less than expected. This is important because lower worldwide demand means more applicants from China can be included in the 10,000 worldwide limit. The Department of State advises that the cutoff date may further advance in the last two months of the fiscal year ending September 30, 2015, with the best case scenario for Mainland-China EB-5 applicants being a November 2013 cut-off date.

Implications on Child Status Protection Act (CSPA)

In April, IIUSA looked at the implications of a recent State Department “white paper” about the Child Status Protection Act (CSPA).

Importantly, the State Department has “made good” on its commitment to send out immigrant visa processing “fee bills” to investors whose I-526 petitions were approved up to April 30, 2013, even if the National Visa Center (NVC) did not get around to receiving the petition file from USCIS and processing the fee bill until after May 1, 2015 at a time when a visa number was not available because the priority date was after the initial cut-off date of May 1, 2013.  Investors receiving such fee bills have been thwarted from paying them electronically because of systems problems at NVC, but it appears that NVC intends to accept payments (including by mail, if necessary) and to credit that step as “seeking to acquire” the visa for purposes of locking in the child’s derivative eligibility under the Child Status Protection Act.

It seems likely, however, that going forward (for petitions approved after May 1, 2015), the NVC will not send out fee bills unless the investor’s priority date is before or near to the cut-off date.  Investors wishing to “lock in” a child’s age for CPSA purposes should proceed to pay the fee bill when sent, or to file with USCIS for adjustment of status promptly after I-526 approval if a visa number is available.

Investors should consult their immigration counsel about the complex technicalities of the CSPA and related issues.

Jun
12

Two Key Senators Introduce Bill to Extend and Improve EB-5 Program By Stephen Yale-Loehr

Stephen Yale-Loehr

Two Key Senators Introduce Bill to Extend and Improve EB-5 Program

By Stephen Yale-Loehr, President Emeritus, IIUSA; Of Counsel, Miller Mayer LLP

On June 3, 2015, Senators Patrick Leahy of Vermont and Chuck Grassley of Iowa introduced a bill in the U.S. Senate to reauthorize and improve the regional center part of the employment- based fifth preference (EB-5) green card program. The 79-page bill (S. 1501) would extend the EB-5 program for five years and make several changes to the program. [1] This article summarizes key provisions of the bill.

EB-5 Overview

Congress enacted the EB-5 program in 1990. [2] At the time, the program granted lawful permanent resident status only to immigrant investors who directly invested in and managed job-creating commercial enterprises. Since 1992, with enactment of the regional center pilot program, potential immigrant investors can also invest through EB-5 regional centers. [3] In 2012, Congress reauthorized the regional center program through September 30, 2015. [4] Today, there are over 800 approved EB-5 regional centers. [5]

As background, a potential EB-5 recipient must first file an I-526 petition with the U.S. Citizenship and Immigration Services (USCIS) requesting classification in the EB-5 category. Upon USCIS’s approval and a background check, the investor becomes a conditional resident for two years. [6] At the end of that two-year period the applicant must file an I-829 petition with USCIS. The investor must prove that he or she has invested the required capital and that the investment created or will create ten full-time jobs for U.S. workers.

Key Features of S. 1501

S.1501, called the American Job Creation and Investment Promotion Reform Act, would make significant changes to the EB-5 program, including:

EB-5 Regional Center Program Extension

Section 2 of S. 1501 would reauthorize the EB-5 regional center program for five years, until September 30, 2020. The bill would also repeal section 610 of the original 1992 appropriations law that set up the regional center program and move it to INA § 203(b)(5)(E).

Minimum Investment Amount

Currently, EB-5 investors invest $500,000 if their investment is in a targeted employment area (TEA) and $1 million otherwise. S. 1501 would increase the minimum investment amount to

$800,000 for investments in a TEA and $1.2 million for investments not in a TEA. The Department of Homeland Security (DHS) could increase that amount by regulation. In addition, the minimum investment amount would automatically increase, based on the consumer price index, every five years.

Revised Definition of a Targeted Employment Area

The current statute defines a targeted employment area as a rural area or an area that has experienced high unemployment of at least 150 percent of the national average. [7] The statute defines a rural area as an area not within a metropolitan statistical area (MSA) or the outer boundary of any city or town having a population of 20,000 or more. [8] Each state notifies USCIS which state agency will apply these guidelines, and determines TEAs for that state.

S. 1501 would revise the statutory definition of a TEA to include a rural area, a closed military base, or an area consisting of a single census tract that has 150 percent of the national average unemployment rate. For TEAs in an MSA, at least fifty percent of a project’s job creation would have to be within that MSA to be counted. If the TEA is outside of an MSA, at least fifty percent of the jobs would have to be created within the county in which the TEA is located. If not, the total number of jobs would be reduced until the fifty percent threshold is met.

Senators Leahy and Grassley, who are both from rural states, clearly would like to see more EB- 5 projects in rural areas. Some of the bill’s language on this issue, however, is ambiguous. For example, it is unclear whether a project in an area that is in two census tracts–one that has an unemployment rate more than 1.5 times the national average, the other that doesn’t–would qualify. It is also hard to know how USCIS or a project developer could determine that fifty percent of indirect jobs would be created in the relevant county.

Job Creation Requirements (Indirect Jobs)

The regional center program does not require that the immigrant investor’s enterprise itself directly employ 10 U.S. workers. Instead, a regional center project can count both direct and indirect jobs. [9]

In response to concerns about how to count indirect jobs, S. 1501 would stipulate that indirect jobs could count for no more than ninety percent of the all the jobs counted for EB-5 purposes. The bill is unclear whether the job-creating enterprise would have to have direct employees. If so, this could hurt infrastructure and other types of EB-5 projects that typically rely only on indirect job creation.

Currently, jobs created by domestic investors can be allocated to EB-5 investors. S. 1501 would change that. A maximum of thirty percent of the total jobs created through non-EB-5 investment would be allowed, even if the non-EB-5 investment represents more than thirty percent of the project’s funding. Assume, for example, that U.S. investors invest $8 million toward a new hotel, and EB-5 investors invest $2 million. Assume also that the new hotel creates a total of 100 new direct and indirect jobs. Under current law, EB-5 investors could claim all 100 jobs. Under S. 1501, only thirty percent of the jobs created by the U.S. investors could be allocated to EB-5 investors.

Regional Center Oversight and Compliance

S. 1501 would add major reporting and compliance requirements for both regional centers and enterprises associated with regional centers. This section would require regional centers to certify annually that they are complying with various requirements. This section would basically codify and expand on the current I-924A reporting requirements. Regional center principals and others associated with a regional center would not be eligible to participate in the EB-5 program if they have previous securities violations or various civil or criminal judgments for fraud, deceit, securities violations, or have been subject to discipline as an attorney.

DHS could sanction a regional center for various violations. Sanctions could include civil penalties of up to ten percent of the total EB-5 capital raise, a temporary suspension, a permanent bar from program participation, or regional center termination.

Regional centers would also have to certify that they and all parties associated with the regional center are complying with state and U.S. securities laws. DHS would have “unreviewable discretion” to terminate a regional center or a commercial enterprise associated with a regional for violations or if the regional center or an associated commercial enterprise has engaged in fraud, misrepresentation, criminal misuse, or poses a threat to national security.

Everyone directly or indirectly involved in running or managing a regional center would have to be a U.S. citizen or permanent resident. No foreign government entities could be directly or indirectly involved with the ownership or administration of a regional center.

Source of Funds Changes

An EB-5 investor must prove the lawfulness of the money they are investing in the United States. [10] S. 1501 would expand the “source of funds” review that USCIS conducts. For example, the regulations currently require that investors provide at least five years of tax returns. [11] S. 1501 would expand that to seven years. USCIS currently does not require investors to prove the lawful source of any administrative fees they pay in addition to their capital contribution. The bill would require administrative fees and costs to be lawfully obtained.

S. 1501 would limit the use of gifts as the source of EB-5 investments. Gifted funds could only be used for EB-5 investments if gifted by a spouse, parent, child, sibling, or grandparent.

S. 1501 would also limit the use of loans as the source of EB-5 investments. Capital based on loans would have to be secured by the investor’s personal assets. This would codify a recent interpretation by USCIS that limits certain third party loans to EB-5 investors. [12] Moreover, any loans would have to be obtained by a reputable bank or lending institution that is properly chartered or licensed under laws of the applicable state, territory, or country.

Concurrent Filing and Age-Outs

S. 1501 would allow concurrent filing of an I-526 petition and I-485 adjustment of status application if a visa number is immediately available. The bill would also amend INA § 245(k) to include EB-5 investors. This means that an EB-5 investor who has been out of status for less than 180 days would nevertheless be able to adjust status.

S. 1501 would help certain children of EB-5 investors. If a parent’s I-829 petition is terminated, the bill would allow a child to still be considered a child for EB-5 purposes if the child remains unmarried and the parent files a subsequent I-526 petition within one year after the original petition was terminated.

Other Provisions

S. 1501 would provide that if a regional center or new commercial enterprise is terminated, investors who have already obtained conditional residence would have 180 days to affiliate with a new regional center, invest in a new project in the same regional center, or make a new investment through a project affiliated with a different regional center. The two-year conditional residence program would start over.

If an EB-5 investor has sustained his investment for at least two years before being admitted to the United States, S. 1501 would allow the investor to file his or her I-829 petition at any time. They would not have to wait an additional two years after being admitted as a conditional resident. This would help EB-5 investors who make their investment but then are delayed in entering the United States because of processing delays of visa quota backlogs.

Conclusion

S. 1501 is significant because it is a bipartisan bill introduced by Senators Grassley and Leahy, who are the ranking members on the Senate Judiciary committee. No hearing date has been scheduled yet to discuss the bill.

A bill to make the EB-5 regional center program permanent (H.R. 616) was introduced in the House of Representatives in late January. That bill, which has 18 co-sponsors, would also make significant changes to the EB-5 program, such as eliminating the per-country cap for EB-5 and other employment-based green cards.

Finally, Rep. Darrell Issa and Rep. Zoe Lofgren are expected to introduce separate bills soon to extend and enhance the EB-5 program.

The EB-5 regional center program needs to be extended by September 30. If Congress fails to agree on improvements to the EB-5 program by that date, it is possible that Congress could simply extend the program for a short time without changes while it finalizes substantive changes. Stay tuned for an interesting summer and fall.


1. The full text of S. 1501 is at https://www.congress.gov/bill/114th-congress/senate- bill/1501?q=%7B%22search%22%3A%5B%22%5C%22s1501%5C%22%22%5D%7D.
2. Immigration Act of 1990, Pub. L. No. 101-649, 104 Stat. 4978.
3. Departments of Commerce, Justice, and State, the Judiciary and Related Agencies
4. Pub. L. No. 112-76, § 1, 126 Stat. 1325 (2012) (also removing the world “pilot” from the program name).
5. A list of all approved EB-5 regional centers is on the USCIS web site at http://www.uscis.gov/eb-5centers.
6. INA § 216A, 8 U.S.C. § 1186b; 8 C.F.R. § 216.6. See generally Charles Gordon, Stanley Mailman, Stephen Yale-Loehr & Ron Wada, Immigration Law and Procedure § 39.07 (2014).
7. INA § 203(b)(5)(B)(ii), 8 U.S.C. § 1153(b)(5)(B)(ii).
8. INA § 203(b)(5)(B)(iii), 8 U.S.C. § 1153(b)(5)(B)(iii).
9. 21st Century Department of Justice Appropriations Authorization Act, Pub. L. No. 107-273, § 11037(a)(3), 116 Stat. 1758 (2002).
10. 8 C.F.R. § 204.6(j)(3); see also Stephen Yale-Loehr, USCIS Explains How to Deal with EB-5 Source of Funds Issues, https://iiusa.org/blog/government-affairs/uscis-government-affairs/uscis- explains-deal-eb5-source-funds-issues-stephen-yaleloehr/; Stephen Yale-Loehr & Christopher Repole, Show Me the Money: Proving Lawful Source of Funds for EB-5 Immigrant Investors, https://millermayer.box.com/s/xy9ugp21yf80ao1l1d0t.
11. 8 C.F.R. § 204.6(j)(3)(ii).
12. Lincoln Stone & Susan Pilcher, Investing Cash from Loan Proceeds: A New Interpretation of “Indebtedness,” https://iiusa.org/blog/uncategorized/investing-cash-loan-proceeds-interpretation- indebtedness-lincoln-stone-susan-pilcher/.

Jun
09

Recording of USCIS EB-5 Interactive Series: Expenses that are Includable (or Excludable) for Job Creation Now Available!

On Thursday June 4th, U.S. Citizenship and Immigration Services (USCIS) held the second installment of the “Interactive Series” on Expenses that are Includable (or Excludable) for Job Creation. To view the PDF invitation, click here.

A full summary of the call will be forthcoming. On the call, economists from the USCIS Immigrant Investor Program Office (IPO) gave a short presentation and the answered a number of non-case specific stakeholder questions concerning this topic.

To listen to the recording, click here! (Members Only)IIUSA-PIN

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