EB-5 Program statistics released

     The EB-5 immigrant investor visa program is still woefully underutilized, if newly released statistics are any guide.  The Office of Performance and Quality of U.S. Citizenship and Immigration Services shows that 1,563 I-526 petitions (for the conditional immigrant visa) were approved in federal fiscal year 2011, up from 1,369 in FY 2010.

     But based upon preliminary data from the first two quarters of FY 2012, 2,101 I-526 petitions were approved.  That's better, but still nothing for USCIS to crow about considering Congress makes available 10,000 visas each federal fiscal year.

     On the backside of the process, USCIS approved 1,067 I-829 petitions to remove conditions on residence, and there were 522 approvals during the first two quarters of FY 2012.

     The approval percentage for I-526 petitions in FY 2011 was 81 percent, and for the first two quarters of FY 2012, it was 85 percent.

New York EB-5 summit

I will speak to this group on April 27 at the Hilton in New York City.

EB-5 New York Summit

I invite you to sign up and attend if you want to learn more about the EB-5 Program.

USCIS throws EB-5 Program another curveball

I always enjoy talking with Jeffrey B. Carr. He is one of the most creative thinkers about EB-5 issues, particularly when it comes to economics and job creation.
Jeff is president and economist at Economic Policy Resources of Williston, Vermont (eb5economics.com).  I spoke with him Monday, March 5, when I addressed a special EB-5 seminar for Immigration Lawyers on the Web (ILW) in Orlando, Florida.
Jeff and I discussed a new "jobs displacement" issue that has popped up in who knows how many requests for additional evidence.  USCIS recently papered the country with requests that applicants show their investment project will not "displace" existing U.S. workers.
He said there is disagreement now between how USCIS defines a "direct job" and how EB-5 economists, generally, define a "direct job".  He said EB-5 economists can produce a rationale for counting tenant jobs as direct jobs.
The "tenant jobs" issue came up within the past couple of weeks after USCIS issued a memo declaring that "tenant jobs" are not "direct jobs".  Then we started seeing the RFEs referring to "jobs displacement".  I think this is going to get much worse for all of the stakeholders in the EB-5 Program, including -- most importantly -- foreign investors.
As a practical (real world) matter, the "jobs displacement" issue is never a consideration because the economy -- locally, regionally, nationally -- is constantly changing and evolving.  Some sectors of the economy and companies or industries do well; others don't.  Competition is a big part of this.  Businesses that compete effectively and adapt succeed; others fail.  A new hotel is built in a locale; an older hotel loses occupancy and closes.  That's life.

Another serious problem created by USCIS

I didn't want to blog about this matter before I decided what I really wanted to say about it.  This action on the part of USCIS is so serious, in fact, that it could spark lawsuits by investors and invalidate securities offerings, putting EB-5 project developers and regional center principals in danger of federal and state criminal prosecution.
On February 17, 2012, USCIS issued a memorandum on "Tenant Occupancy".  This was the "mystery issue" that was holding up I-924 applications for new regional centers.  To boil it down, the newly hired USCIS economists say they don't see the job-creation connection between office space or shopping centers and "tenant jobs."  The memo said RFEs were coming and it didn't take long.
"After reviewing the tenant-occupancy methodology presented thus far," one RFE said, "USCIS observes that the nexus between the investment and the job creation is either too attenuated or too incomplete to constitute a reasonable economic methodology.  Consequently, the existing record presents USCIS with a justification to recognize only those employment impacts that could be attributed to [the project] such as those resulting indirectly from the construction activity and, if applicable, the ongoing building management activities that will be required to maintain the building."
Most regional centers -- certainly a majority, probably a lot more than that -- are built precisely around creation of tenant jobs and this economic methodology.  Because USCIS -- your federal government -- has taken this astounding position, I predict there will be a rash of lawsuits due to invalidation of securities offerings, and possible federal criminal charges brought against EB-5 project developers and regional centers by the federal and state securities commissions.  The EB-5 business plan and the economic methodology are part of the securities offerings.
This is your federal government making big trouble for this job-creation program.  I do see that in order to successfully navigate this minefield, EB-5 economists are going to have to go to school about how to put together a report that satisfies whoever this is inside USCIS.

Conversation With the Director

I participated in a conversation with USCIS Director Alejandro Mayorkas on Thursday, January 12.  He apparently called the meeting to roll out a [nearly] final draft of his EB-5 memo and to discuss a variety of other issues.
The one on my plate -- readjudication of "pre-approved" EB-5 investment projects at the I-526 petition stage -- he apparently doesn't get yet.  He referred to situations in which a "general" I-924 is filed with EB-5 project specific documents, including the business plan, and other or different documents are filed with the I-526 petition.  I can assure the director that none of the I-924s filed by my regional centers can be fairly called "general" in nature.  The docmentation is voluminous and very specific, and is the same as the documents filed with the I-526.
But the director did recognize the readjudication issue as "a core issue for us to get right."
The main issue from the director's point of view was to develop and provide accurate guidance to his immigration service officers.  The main issues from my point of view were elimination of readjudication and establishing predictability and certainty in the adjudication process.
"We're moving as fast as possible  to implement [15-day] premium processing," Mayorkas declared.
While that's good to hear, most insiders don't think they will see premium processing for at least another six months or more.
Other news concerned embrace of the "fund" concept.  In the regional center context, Mayorkas said, as long as the new commercial enterprise is a holding company, it can invest in a variety of businesses such that if one or more fail, investors may still be successful in removal of conditions if one or two businesses are successful.
Mayorkas confirmed that bridge loans are permitted where they are referred to in the business plan and are necessary to get an new commercial enterprise started.  He and his lawyer also confirmed that census tracts may be used to identify a targeted employment area, and that unemployment data may come from reliable sources other than local area unemployment statistics produced by a government agency, U.S. Census Bureau data, and data from the American Community Survey.
Mayorkas also referred to three new hires -- economists, I think -- and said USCIS is conducting interviews in a move to hire "entrepreneurs in residence".
The meeting was more then three hours long.

What are we paying for?

Often I read an article in the mainstream media that screams, "I don't know what I'm writing about!"  But every now and then I see something truly accurate written about the much-maligned EB-5 Program.
A San Diego colleague, Brandon Meyer, was allowed a guest editorial on another colleague's blog, so here you go:  CLICK HERE.

What the EB-5 Program hasn't got

I'm going to write about something that the EB-5 Program hasn't got: Certainty or continuity.
Very important words, these. The employees responsible for the EB-5 Program at U.S. Citizenship and Immigration Services HQ and the California Service Center may, in fact, be smart people who understand the EB-5 Program. I don't believe that, but let's say, for the purposes of this blog, that they do.
What they don't have is the ability or the motivation to give the EB-5 Program certainty and continuity so that the stakeholders -- regional centers, investment project developers, EB-5 lawyers, EB-5 investors -- can count on anything -- anything at all.
New memos coming out of USCIS show time and again that these employees are intent on making things worse for the EB-5 Program, not better, more complicated, not easier for anyone to navigate. In fact, they often change the rules in the middle of the game.
Your federal agency makes it possible for an investor plunk down $500,000 or $ 1 million and apply for a green card, and your federal agency better be able to provide some certainty and continuity.
That is not happening today, and it won't until or if the stakeholders turn up the political heat.