I share the following comments after spending two days in Washington, DC attending the Congressional EB-5 hearing and the EB-5 Stakeholders Meeting, as well as listening to the meeting with USCIS Director Mayorkas:

Premium processingis unlikely to be implemented in the very near future.  My best estimate is the first half of calendar year 2012, and maybe the first quarter.  It will likely be limited to regional center designation applications and exemplar I-526 (project pre-approval) petitions.  There is a possibility that individual I-526 investor petitions will be eligible for premium processing at a later date.  In the meantime, regional centers and investors should file petitions in the normal fashion.  If premium processing is implemented, almost certainly it will apply to pending petitions.

There appears to be agreement between Republicans and Democrats in the House of Representatives for a long term and hopefully permanent extension of the regional center pilot program.  The biggest area of disagreement may be whether, as part of the extension, Congress implements a new EB-6 program for venture capital financing of startup ventures in the U.S.  If so, there is some indication that at least the Republicans in the House of Representatives may want to take the visa numbers for the EB-6 program out of the EB-5 quota.  EB-5 advocates will be arguing against any attempt to reduce EB-5 numbers.

USCIS has already hired three new business analysts and is in the process of hiring one or more economists.  Hiring and training these individuals will be a critical part of implementing premium processing and implementing the proposed Decision Board, which would allow for in-person or telephonic discussions between regional centers and CIS prior to decisions on regional center designations and project pre-approvals.

Even without premium processing, regional center designation applications and project pre-approval applications will likely be processed more promptly than the present 8 to 10 months.  Now that USCIS has mostly completed the November 2010 filings, and since there were far fewer filings in the months following November 2010, processing times should improve.  It is not as clear that processing times will improve on the investors’ I-526 petitions.

USCIS will not commit to a formal position on three legal issues “for several weeks” and likely will include most or all of the positions in a new policy memorandum.  The three issues are:

• Deference to safe designation letters with respect to geographical areas of TEAs;
• EB-5 money used to pay down bridge financing;
• Definition of “material change” for purposes of condition removal and what must be done in the event of a material change.
• It appears likely that CIS will agree that it should defer to state designation of geographical areas of TEAs and that EB-5 money can be used to pay down bridge financing.  Until issuance of a policy memorandum, there are indications that CIS adjudications on these issues have been more favorable since we had our meeting with Director Mayorkas on August 10.  The material change issue will likely be the subject of a separate USCIS stakeholders engagement meeting prior to issuance of any memorandum.

Following our August 10 meeting, it appears that USCIS is rethinking its policy on exemplar.  Hopefully, the policy memorandum will include a commitment that, if the documentation regarding the regional center and the project in the investor’s I-526 petition is identical with the exemplar 526, CIS will be bound by the approval of the exemplar.  Unless and until that happens, there does not appear to be any good reason for waiting the necessary time for approval of the exemplar 526 if it will be filed independently of a regional center designation application. If it will be filed concurrently with a regional center designation application, since the processing time will be the same as the regional center designation processing time, it may be sensible to continue filing the exemplar 526 for the first project.

Many immigration attorneys hesitate to take the leap into representing investor clients in the EB‑5 process.  For those attorneys, partnering with an experienced EB-5 attorney should be considered.  Not only might this provide a learning experience and lead to the possibility of the attorney handling future EB-5 cases, but there is also significant EB-5 spin off work that the immigration attorney can handle.

Following the approval of the EB-5 petition, the investor needs to apply for adjustment of status or consular immigrant visa processing.  The immigration attorney can handle that work even if he does not handle the EB-5 petition.  Likewise with reentry permit applications, which are very common for EB-5 investors who become permanent residents.

Five years after obtaining conditional permanent residence based on an EB-5 petition, the investor and his family may choose to naturalize.  This is further spin off work for the immigration attorney.  After naturalization, the investor may sponsor family members for permanent residence, which creates even further spin off work.

Some immigration attorneys perform non-immigration legal services.  The EB-5 process leaves plenty of room for other services, including tax advice, corporate structuring advice, real estate purchases, employment law issues, etc.

Finally, the immigration attorney may receive a finder’s fee from a regional center even if he does not perform the legal work for the investor.  However, the finder’s fee should not be accepted until the attorney does a careful review of both securities law ramifications and the rules of professional responsibility in his jurisdiction of practice.

1. There is a difference between an approved regional center and an approved project.

–a regional center designation has absolutely nothing to do with whether any particular project within a regional center is a good project for EB-5 purposes.

2. Don’t just accept an I-526 or I-829 package prepared by a regional center.

–if the package prepared by the regional center raises questions or issues in the mind of the investor’s attorney, it may very well raise questions in the minds of USCIS. The issues should be resolved in advance of filing.

3. It’s all about the I-829.

–the I-526 EB-5 petition must be prepared with the I-829 condition removal application in mind.

4. Only 6 regional centers have I-829 approvals.

–this does not mean that the other regional centers have had their I-829 applications denied. A very large majority of regional centers have not been around long enough to reach the I-829 approval stage.

5. An investor is best advised not to be the first or last investor in a project.

–the first investor may find to his chagrin that the project does not attract sufficient investors to be fully funded. The last investor might discover that insufficient jobs were created, and all of the created jobs were allocated to the earlier investors.

6. It is critical for a regional center to have a more general and conservative business plan, rather than a specific, aggressive business plan.

–any change in a business plan might be considered a “material change.” The more specific the business plan, the more chance of a change. Also, a more conservative business plan may have more reachable targets.

7. The availability of a reduced $500,000 investment is not known until each investor’s I 526 petition is approved.

–USCIS regulations and interpretations are that the targeted employment area (TEA) issue is not decided until the time of investment. In the case of an investment put in escrow until the I-526 is approved, the date of investment is considered the date that the escrow is released following the approval.

8. An investor does not have to prove the lawful source of all of his or her money.

–an investor only has to prove the lawful source of $500,00 or $1,000,000, depending on the amount of the investment.

9. There is a difference between a direct job as defined by USCIS and a direct job as defined by an economist.

–USCIS defines a direct job as being a W-2 employee of the new commercial enterprise in which the investor invests. Economists define direct jobs as direct employees of the job creating enterprise or the construction company, as opposed to indirect or induced employment.

10. It is better to rely on indirect and induced jobs, rather than direct jobs.

–reliance on direct jobs could result in condition removal denial if there are less direct jobs than projected or if some of the employees can’t be proven to be U.S. citizens or permanent residents. Relying on indirect or induced jobs, such as through an economic model that relies on expenditures, may result in the regional center having more control over proving the required facts for condition removal.

Developers seeking capital under the EB-5 program have 3 options available to them.  Each of these options has advantages and disadvantages.

One option is applying to be designated as a regional center.  A second option is seeking to have an already-designated regional center “adopt” the developer’s project.  The third option is to have prospective investors in a pooled investment project file individual EB-5 petitions. 

A new article entitled “Three Options for Developers Seeking Capital under the EB-5 Program” has been added to our EB-5 website www.eb5immigration.com.  This article provides a list of advantages and disadvantages of each of the three options.