The U.S. Citizenship and Immigration Services (USCIS) sent out an email that it would be holding a stakeholder teleconference “listening session” on Thursday, July 13 from 1 to 2:30 p.m. Eastern “to provide feedback on potential regulatory and policy changes for the EB-5 Regional Center Program.” Then their notice went on to say that “We look forward to hearing your individual feedback on the four topics listed below during the listening session” and then provided the 4 topics in the email.
- Regional Center Lifecycle – from initial designation, to continued participation, through termination;
- Regional Center Exemplar Process;
- Regional Center Compliance Audits; and
- Indirect Job Creation Methodologies.
So, many people attending the conference who had only read the first part of the notice (like me ^^) dialed into the conference thinking they would be listening to USCIS’s updates on the said topics. To the disappointment of many, the call turned out to be a series of questions and comments made by the people dialing in with the USCIS refusing to provide any responses, because, well, it was a Listening Session and they were there only to listen.
So if you are reading this article in the hopes that USCIS gave any indication on when the minimum investment amount would be increased sorry to say but the USCIS cut off people asking those questions early on in the call! They did, however, say that with regard to the proposed administrative regs, they are working on those comments to finalize the rules soon.
Nevertheless, it was useful to hear concerns of other stakeholders. The following is a list of the more pertinent questions and comments made by the participants. (My comments in parentheses.)
Topic 1: Regional Center Lifecycle
- RCs can be terminated if it is no longer “demonstrates the regional center is continuing to promote economic growth, improved regional productivity, job creation, or increased domestic capital investment in the approved geographic area.” So it is unfair for RCs who have existing investors in their pipeline but not launching new projects to be getting NOITs. This is a big problem and needs to be fixed. This is also making it difficult for RCs who are trying to wind down. Related to that a different commenter suggested creating a separate regulation for RCs wanting to wind down. (This makes me wonder if there are RCs out there who have existing investors but no new projects that have been getting NOIT notices.)
- USCIS needs to work on RC termination procedures. Some RCs have been getting a second NOIT (Notice of Intent to Terminate) even after the RC successfully responded to a first NOIT and got their RCs designation reaffirmed. This is causing a lot of uncertainty.
- The USCIS is making it more difficult for RCs to carry out their mandate of promoting economic growth by requiring RCs to have an approved exemplar to expand out their geographic coverage. (This is in response to a sudden policy change the USCIS abruptly introduced late last year without any advance notice. Since the May 2013 Policy Memo, RCs have been able to expand out into contiguous territories without having an exemplar approval. But late last year, the USCIS suddenly started requiring this again, meaning that I-526 petitions cannot be filed before the said exemplar application is approved.)
- If the RC termination is overturned then the USCIS should reinstate the related I-526 revocations that have been issued. Currently it is not doing that.
- If misappropriation of fund or fraud is the termination reason, it should say so in the NOIT letter instead of just quoting broad language such as failure to promote regional economic activities.
Topic 2: Regional Center Exemplar Process (including Material Change Issues)
- The USCIS should be obligated to give a decision on exemplar applications filed on I-924s within a set period of time. One commenter suggested 180 days.
- Another commenter suggested having a 90 day approval process for I-924s even if that means reallocating resources from I-526 and I-829 teams. The idea was that it doesn’t matter if I-526s take longer to be approved for Chinese investors who account for over 85% of I-526 filers since they have to wait for PD to become current anyways. (While I agree with the sentiment that I-924s need to be approved more quickly, I disagree that investors will be OK with even longer delays on I-526 and I-829 approvals.)
- Currently the USCIS is trying to introduce a rule that I-526 petitions can only be filed for projects that have already been approved. This will not work because currently it is taking on average 21 months for an exemplar application to be approved. This would mean a shovel-ready project that has filed an I-924 exemplar application, would not be able to take in EB-5 investors for at least 21 months. Which will mean that the project, by definition, would have to get a bridge loan that is at least 21 months long. But given the USCIS requirement that bridge loans be “temporary” and lack of guidance of how long a bridge loan can be to be deemed temporary, the requirement that a project must have exemplar approval before I-526s can be filed will cause a lot of problems.
- Currently all I-924s have a $17,794 filing fee attached to it. The USCIS needs to introduce a separate line for simple I-924s (for example an RC name change or ownership change) that has a lower filing fee and a shorter waiting period.
- One commenter suggested that they would be happy to pay more than the current almost $18,000 fee if the answer could be quicker. The next commenter quickly disagreed ^^.
Topic 3: Regional Center Compliance
- These audits and site visits are happening. From the questions it sounds like they are starting with the older, bigger regional centers.
- Apparently the people who are making these visits do not really understand how the mechanics work. For example, in one site visit the USCIS representative asked the construction site manager about individual investors.
- One commentator suggested that given that an exemplar approval does not touch on the credibility or commercial viability of projects themselves, the USCIS should try to ascertain these items during site visits. (I don’t see how the USCIS would be capable of doing that.)
- A really interesting comment: One commentator asked why the USCIS was wasting so much energy on tracking down Regional Centers that are inactive when those resources can be better used to focus on actual projects that have a real impact on investors.
- The USCIS needs to provide better guidance on what types of documents a Regional Center needs to be preparing for audits similar to what IRS/SEC/FINRA does.
- According to the USCIS, RCs are responsible for “monitoring and supervision” of projects but they need to provide more specific guidance. For example, if there are misappropriation of funds by the JCE, it is not something the RC can control – need more specific guidance.
Topic 4: Indirect Job Creation Methodologies
- The May 30, 2013 Policy Memo states that indirect jobs do not have to be full-time due to the nature of the job creation models that do not distinguish between full-time and part-time jobs. But the November 2016 Policy Manual says the exact opposite: that the USCIS may require additional evidence that indirect jobs created are full time. Hopefully this is a typo but please clarify that this is not the case.
Other general topics
- The USCIS really needs to provide better communication channels to the stakeholders. Currently the only mode of communication is through RFEs and NOIDs which is very inefficient. For example, according to the commenter, the USCIS recently introduced much stringent restrictions on what constituted a permissible bridge loan. This is a very important issue for many projects but it was impossible to discuss this in depth with the USCIS because there are no channels for communication.
- The USCIS needs to introduce a transition period before new rules and policies are put into place instead of just abruptly introducing them. Many parties spend a lot of time and resources on structuring projects so it is important to know ahead of time if a certain policy is going to change.
- The new policy rules introduced in June 2017 say that if an investor already has a conditional greencard and the related regional center is terminated, the investor’s I-829 can still be filed. This is a positive change. However, it also says that if the RC is terminated before the investors become conditional GC holders, then that will constitute a material change which means that the investor has to file a new I-526. Considering how long the wait times are, this is really arduous for existing investors so the USCIS should really considering changing this so that more investors can be protected should a RC be terminated.
- Some commenters were asking about the need for Premium Processing for I-526s. (Not happening. There are currently over 40,000 I-526s waiting to be adjudicated, and every single one of those investors would be more than happy to pay the $1225 Premium Processing fee to get a response in two weeks: it is just not physically possible unless the IPO (Immigrant Program Office) hires ten times more people.)
- The above is not an exhaustive list of comments that were made. For example, one Indian gentleman complained that because the exchange rates for Indian Rupees is going up, $500,000 is already plenty expensive – so if the minimum investment amount goes up, even less people from India would be interested in EB-5 ^^. (Points for trying!) But I have tried to include the more important issues provided to the USCIS by the EB-5 community. We hope that they will in fact listen to our concerns.