Immigrant Investor Insider: EB-5 Investments, E Visas, and Other Investor News: February 2012 Information in this newsletter is being provided by the Fredrikson & Byron, P.A. Immigration Law Department. i Headlines: 1. USCIS Announces Several Thousand EB-5 Green Cards Issued So Far in First Quarter of FY 2012, Releases Latest Stats Between October and mid-january, 2,364 EB-5 green cards were issued. At that rate, over 9,000 EB-5 visas might be issued this fiscal year, which is very close to the statutory cap of 10,000. 2. USCIS Announces Entrepreneurs in Residence Initiative, Summit; Discusses EB-5 Enhancements The initiative builds upon USCIS s recent efforts to promote startup enterprises and spur job creation, including enhancements to the EB-5 immigrant investor visa program. 3. USCIS Issues Draft EB-5 Memo USCIS sought stakeholder input on foundational issues before providing greater detail. 4. USCIS Proposes EB-5 Immigrant Investor Rule The processes outlined in the proposed rule would provide an additional two-year period for certain immigrant investors to meet the EB-5 investment and job-creation requirements. 5. Senate Judiciary Committee Holds Hearing on EB-5 Regional Center Program Sen. Patrick Leahy, noting that current authorization for the program expires at the end of September 2012, advocated a permanent authorization. 6. AAO Denies RC Application to Build Resort Suites The AAO found that the applicant s proposal was a marketing strategy to attract buyers for vacation suites rather than investors of capital in a new commercial enterprise. Details... 1. USCIS Announces Several Thousand EB-5 Green Cards Issued So Far in First Quarter of FY 2012, Releases Latest Stats The Department of State issued 2,364 EB-5 green cards between October 1, 2011, and mid-january 2012, USCIS announced at its quarterly EB-5 stakeholders meeting on January 23, 2012. At that rate, over 9,000 EB-5 visas might be issued this federal fiscal year, which is very close to the statutory cap of 10,000. USCIS refused to discuss what it would do about pending EB-5 petitions if Congress fails to renew the regional center pilot program by September 30, 2012. Approximately 92 percent of I-526 petitions (Immigrant Petition by Alien Entrepreneur) filed each year are filed by investors in regional centers. Historically, about 80 to 85 percent of I-526 and I-829 EB-5 petitions are approved each year. The California Service Center (CSC) now has four teams of EB-5 adjudicators, an increase from one team a year ago. Despite the increased staffing, case adjudication times have not improved because of the increase in case filings. USCIS also announced that it would defer to state determinations on what constitutes a targeted employment area (TEA) for EB-5 purposes. The agency will check the data behind
states methodology, however. USCIS did not say whether a single census tract may qualify as a geographic area. USCIS said that would be covered in written materials not yet available publicly, and referred stakeholders to its December 2009 memorandum for further details (available here). USCIS acknowledged that many regional center applications are being held up at headquarters pending resolution of economic methodology issues. The USCIS hopes to resolve those issues soon. USCIS is analyzing all the I-924A forms submitted by regional centers and will draft a report that includes regional center-specific information sometime this year. The USCIS acknowledged growing pains in determining what constitutes a shovel-ready project for EB-5 purposes. It hopes to address this issue later this year when it revises the I-924 form to provide greater consistency. USCIS also released its latest data on EB-5 filings and regional centers (RCs): RC approvals continue to increase. As of January 28, 2012, there are 217 approved RCs operating in 40 states, including the District of Columbia and Guam. The agency reported 41 initial RC proposal filings in the first quarter of fiscal year (FY) 2012, compared to 192 initial filings in all of FY 2011 and 110 initial filings in all of FY 2010. The number of amended RC proposal filings was 17 by the end of the first quarter; there were 86 filings received for all of FY 2011 and 42 filings received for all of FY 2010. In the first quarter of FY 2012, the agency approved 14 of the 41 initial RC proposals and denied 22, an approval rate of 39 percent. In FY 2011, when USCIS approved 80 and denied 51, an approval rate of 61 percent. The approval rate of amended RC proposals in the first quarter of FY 2012 was 57 percent, with 4 approvals and 3 denials. By comparison, in FY 2011 USCIS approved 43 amended RC proposals and denied 7, an approval rate of 86 percent. USCIS also reported significant increases in individual I-526s and I-829s (Petition by Entrepreneur to Remove Conditions). In the first quarter of FY 2012, USCIS received 1,293 I-526 petitions, compared to 3,805 for all of FY 2011. USCIS received 250 I-829 petitions in the first quarter of 2012. By comparison, USCIS received 2,345 I-829 petitions in all of FY 2011. In the first quarter of FY 2012, the agency approved 1,076 I-526 petitions and denied 222, an approval rate of 83 percent, while in all of FY 2011 USCIS approved 1,563 and denied 11, an approval rate of 93 percent. USCIS approved 1,067 I-829 petitions and denied 46 in all of FY 2011, an approval rate of 96 percent. The full list of RCs by state is available at http://www.uscis.gov/working-unitedstates/permanent-workers/employment-based-immigration-fifth-preference-eb-5/immigrantinvestor-regional-centers. The next USCIS stakeholder engagement meetings are scheduled for May 1, 2012 (general EB-5 discussion); July 26, 2012 (regional center discussion); and October 18, 2012 (general EB-5 discussion). - 2 -
2. USCIS Announces Entrepreneurs in Residence Initiative, Summit; Discusses EB- 5 Enhancements As part of the Obama administration s Startup America efforts to encourage high-skilled immigration into the U.S. under existing laws, USCIS Director Mayorkas announced the Entrepreneurs in Residence initiative to use industry expertise to strengthen USCIS policies and practices surrounding immigrant investors, entrepreneurs and workers with specialized skills, knowledge, or abilities. Director Mayorkas announced the initiative in October at the High Growth Entrepreneurship Listening and Action Session at AlphaLab in Pittsburgh, before the quarterly meeting of the President s Council on Jobs and Competitiveness with President Obama. Director Mayorkas said the introduction of expert views from the private and public sectors will help us to ensure that our policies and processes fully realize the immigration law s potential to create and protect American jobs. USCIS will launch the Entrepreneurs in Residence initiative with a series of informational summits with industry leaders to gather strategic input. Informed by the summits, the agency will create a tactical team including entrepreneurs and experts, working with USCIS personnel, to design and implement effective solutions. Director Mayorkas said the initiative will strengthen USCIS s collaboration with industries at the policy, training, and officer level[s], while complying with all current Federal statutes and regulations. The first information summit is planned for February 22, 2012, in Silicon Valley, California, from 8:30 a.m. to 5:30 p.m. Those interested should e-mail public.engagement@dhs.gov by February 3, 2012. Include your full name and the organization you represent, if any, in the body of the e-mail and reference Entrepreneurs in Residence in the subject line of the e- mail. The initiative builds upon USCIS s recent efforts to promote startup enterprises and spur job creation, including enhancements to the EB-5 immigrant investor visa program. USCIS said that since August, it has been conducting a review of the EB-5 process, working with business analysts to enhance related adjudications, implementing direct access to adjudicators for EB-5 regional center applicants, and launching new specialized training modules for USCIS officers. At a related press conference, Director Mayorkas explained that [w]e as an agency have been focused in the absence of legislative action to create newer broader pathways for the best and brightest from around the world to come to the United States and really take advantage of the opportunities here to enable our economy to grow and to create jobs for American workers. He said that the administration is reviewing our policies and our processes to ensure that we are capturing the existing laws and the legislative intent behind those laws. Director Mayorkas said that Entrepreneurs in Residence and what it represents cuts across all visa lines and is not limited to the EB-5 program by any measure. He said that DHS will be looking at the initiative s applicability in the arts and entertainment arenas, the O and P visa lines, and the H-1 categories. - 3 -
He also noted that DHS does not plan to bring in a large cadre of experts, but rather to start tactically and surgically with a small group of people, some working on strategy and some on tactics. He said that DHS is still working out the details and will release more information on next steps later. USCIS s statement on Entrepreneurs in Residence is available here. A transcript of a related press conference held in October 2011 is available here. 3. USCIS Issues Draft EB-5 Memo USCIS released a draft memorandum to address certain foundational issues in the EB-5 immigrant investor program. USCIS seeks stakeholder input on these foundational issues before providing greater detail and addressing additional issues. On a conference call held on November 9, 2011, to discuss the draft memo, Mr. Mayorkas said that it differs from other policy memos in that it gives adjudicators the context of the EB-5 program: that it is important because it creates jobs for U.S. workers. Mr. Mayorkas said that this context should guide adjudicators. USCIS subsequently released a revised memo on January 11, 2012, and held a related stakeholder meeting the next day. Among other things, the memo lays out the preponderance of evidence standard: [T]he petitioner must establish each element by a preponderance of the evidence. That means that the petitioner must prove to us that what he or she claims is more likely so than not so. This is a lower standard of proof than the standard of clear and convincing, and even lower than the standard beyond a reasonable doubt that applies only to criminal cases. The petitioner does not need to remove all doubt from our adjudication, but must instead show that what he or she presents is more probable than not. In general, the memo will only take effect when USCIS finalizes it. However, effective immediately, USCIS generally will defer to a state s targeted employment area (TEA) designation. The memo notes: USCIS is to give deference to the state s designation of the physical boundaries of the geographic or political subdivision that will be the targeted employment area. It adds, however, that USCIS must ensure compliance with the statutory requirement that the proposed area designated by the state in fact has an unemployment rate of at least 150 percent of the national average rate. For this purpose, USCIS will review state determinations of the unemployment rate and, in doing so, USCIS can assess the method or methods by which the state authority obtained the unemployment statistics. The memo states that acceptable data sources for purposes of calculating unemployment include Local Area Unemployment Statistics produced by a government agency, U.S. Census Bureau data, and data from the American Community Survey. State unemployment determinations should be based on the most recent publicly available data from the source relied upon. The memo also clarifies that while the immigrant s investment must result in the creation of jobs for qualifying employees, it is the new commercial enterprise that creates the jobs. An - 4 -
investor s money that goes into a new commercial enterprise can be used in a variety of ways, including bridge financing, hiring personnel, or operating the company. USCIS Director Alejandro Mayorkas said the draft memorandum is a work in progress, and that the agency is sharing it now to obtain valuable real-time input and to define a collaborative approach with the stakeholder community. He noted that the draft memorandum is not operative and will not guide adjudication decisions until it is published in complete and final form. Current policy memoranda continue to guide our adjudications. Mr. Mayorkas said that USCIS plans to consolidate all existing EB-5 memos into one. The second draft released on January 11 incorporated comments received from stakeholders. Initial comments were taken until December 9, 2011. Additional opportunity to comment is available now that the second draft has been released. The revised draft memorandum released on January 11, 2012, and a cover message are available here. The original draft memo and a statement from Mr. Mayorkas are available here. 4. USCIS Proposes EB-5 Immigrant Investor Rule USCIS published a proposed rule on September 28, 2011, that would enable the agency to process certain EB-5 immigrant investor applications approved between 1995 and 1998. The proposed rule would implement provisions of the 21st Century Department of Justice Appropriations Authorization Act that apply to a group of immigrant investors who had a Form I-526, Immigrant Petition by Alien Entrepreneur, approved between January 1, 1995, and August 31, 1998. Specifically, the rule would enable USCIS to process cases for approximately 580 principal immigrant investors and their dependents whose I-526 petitions were approved during that period and who, before November 2, 2002, sought to: Register for permanent residence or adjust their status (using Form I-485); or Remove conditions on permanent residence obtained as an entrepreneur (using Form I- 829). The processes outlined in the proposed rule would provide an additional two-year period for most of these immigrant investors to meet the EB-5 investment and job-creation requirements. This rule would not impact any other applications or petitions filed under the EB-5 program. Comments were accepted until November 28, 2011. The proposed rule is available at http://www.gpo.gov/fdsys/pkg/fr-2011-09-28/pdf/2011-24619.pdf. USCIS corrected the docket number for the proposed rule on October 4, 2011; see http://www.gpo.gov/fdsys/pkg/fr-2011-10-04/pdf/2011-25463.pdf. - 5 -
5. Senate Judiciary Committee Holds Hearing on EB-5 Regional Center Program The Senate Judiciary Committee held a hearing on December 7, 2011, on Reauthorizing the EB-5 Regional Center Program: Promoting Job Creation and Economic Development in American Communities. Witnesses included Bill Stenger, President and CEO, Jay Peak Resort; David North, Fellow, Center for Immigration Studies; and Robert C. Divine, Shareholder, Baker, Donelson, Bearman Caldwell & Berkowitz, P.C. Sens. Patrick Leahy (D-VT) and Charles Schumer (D-NY) issued related statements. Sen. Leahy noted that current authorization for the EB-5 regional center pilot program, which has been in existence for 18 years, expires at the end of September 2012. He advocated enactment of permanent authorization legislation that he introduced in March 2011 (S. 642). Sen. Leahy noted that in 2011, the EB-5 program is expected to have created an estimated 25,000 jobs and provided direct investments in U.S. communities of $1.25 billion. He said that if the full number of visas allocated to the program are used, based on investment and job creation requirements, the program has the potential to create or preserve 100,000 jobs per year, with contributions of $5 billion in foreign capital investment. And these benefits come at no cost to American taxpayers. Sen. Leahy noted that in addition to administrative efforts by U.S. Citizenship and Immigration Services (USCIS), he has been working for months with interested parties and USCIS to put together a legislative framework to make significant improvements to the overall program. He said the framework would provide USCIS with additional authorities to ensure that this important program maintains the highest level of integrity and efficiency. He added, It is time for a permanent authorization to provide investors with the certainty and predictability they need to invest and conduct business with confidence. Sen. Schumer outlined several examples of USCIS-approved job-creating regional center projects in New York: Steiner Studios, a film production studio in Brooklyn, which received $65 million in EB-5 funding to assist with expansion; Global Vascular Institute, on the Buffalo Niagara Medical Campus, where EB-5 funding helped support development of the new institute, creating jobs and improving health care access for the people of Buffalo; Acadia Realty Trust, which received $200 million in EB-5 funding to assist with the construction of the City Point project in downtown Brooklyn; SJM Company, which received $72 million in EB-5 funding to assist with the redevelopment of the George Washington Bridge Bus Station; and Dermot Company and Harry s Restaurant, which received $96 million in EB-5 funding to assist with the redevelopment of the Battery Maritime Building and Pier A in Lower Manhattan. Sen. Schumer said he was proud to co-sponsor S. 642 with Sen. Leahy to permanently authorize the program. Mr. Stenger testified that the region where Jay Peak Resort is located has the most significant unemployment and economic challenge of any region in Vermont. He said that - 6 -
since 2005, Jay Peak has developed several EB-5 projects, creating over 2,000 jobs in the region, and that the EB-5 investments are expected to create that many jobs again over the next two years. We are seeing this employment creation at Jay Peak and our surrounding communities in this terribly troubled economy solely because of the EB-5 foreign investor program, he said. The statements of Sens. Leahy and Schumer, along with the witnesses written testimony, are available here. 6. AAO Denies RC Application to Build Resort Suites USCIS recently published an Administrative Appeals Office (AAO) decision affirming denial of a proposal for a regional center designation. The AAO found that the applicant s proposal was a marketing strategy to attract buyers for vacation suites rather than investors of capital in a new commercial enterprise. Specifically, the AAO said that the evidence incontrovertibly established that the applicant proposed that investors would purchase a vacation suite as either a primary residence, second home, or investment property. The AAO affirmed the California Service Center director s determination that such a real estate purchase of a private residence, even if still under construction, is not an at-risk investment of capital that can be credited with direct or indirect job creation. The purchase of individual residential suites by alien investors, even if concentrated in one resort complex, is also not the type of pooled investment concept Congress envisioned for the regional center program, the AAO noted. In summary, the AAO said: [T]he applicant has proposed an investment plan whereby alien investors would make independent, passive, personal real estate investments that garner them no equity ownership in a new commercial enterprise. Instead of presenting a plan for a pooled equity investment of capital into a new commercial enterprise, the applicant has merely put forth a marketing strategy to attract sufficient buyers to fund later phases of development. This plan does not meet the letter or spirit of [the law and regulations] designed to encourage pooled investments in a new commercial enterprise benefitting a geographic region. Member News Laura Danielson was quoted on November 3, 2011, in Dolan Media Newswires Finance & Commerce (Minneapolis, MN) in an article on the EB-5 category for foreign investors. She noted that many designated regional centers don t produce a lot of deals, but the small number of centers that do can often assemble $150 million at one time, with 100 or so foreign investors contributing $500,000 to $1 million each. Ms. Danielson also noted that - 7 -
[t]he University of Minnesota has one of the largest (if not the largest) Chinese student populations in the country. I think that there are great synergies between these students, their families and Minnesota that would make Minnesota a popular regional center. She also said she sees significant potential in a Minnesota-based EB-5 regional center helping to bring foreign investment into economically depressed urban areas such as north Minneapolis. Laura Danielson presented on EB-5 investor immigration on February 2, 2012, at an event sponsored by the American-Israeli Chamber of Commerce. Laura Danielson presented on EB-5 and other Immigration Solutions at a panel of business leaders in Mason City, Iowa on Tuesday, February 7, 2012. Laura Danielson has started a new weekly blog about immigration law and stories from a practical, human perspective. See: http://lampbesidethegoldendoor.blogspot.com/ and sign up if you want to be on the weekly feed. Green Card Stories was officially launched on January 30, 2012 in New York City, with a number of different events (radio interviews, symposia, and book store readings and signings. Please visit the Green Card Stories website to learn more at http://www.greencardstories.com/. EB-5 Government Agency Links USCIS Web Page on EB-5 Immigrant Investors USCIS Policy and Procedural Memoranda on EB-5 Investors Immigrant Investor Regional Centers List 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 Form I-924A, Supplement to Form I-924 Government Agency Links To access current processing times of the USCIS Service Centers and the Department of Labor, or the Department of State's latest Visa Bulletin with the most recent cut-off dates for visa numbers, visit http://www.fredlaw.com/. - 8 -
i Fredrikson & Byron's Immigration Department offers complete services in all areas of immigration law, with special emphasis on business, family, and arts-related immigration. The lawyers in the Immigration Group are experienced practitioners who speak frequently at national and international conferences in their areas of expertise as well as volunteer their time for various immigrant organizations. All of the individuals working in the Immigration Department share a common philosophy of wanting to provide the best, most personal representation available. Members of the Immigration and International Groups are fluent in written and spoken English, Spanish, French, German, Chinese, and Vietnamese. To contact attorneys Laura Danielson, Loan Huynh, Debra Schneider, Ashley Roth, or June Cheng, please call 612-492-7648. This newsletter was prepared with the assistance of ABIL, the Alliance of Business Immigration Lawyers (www.abil.com), of which Laura Danielson is an active member. Disclaimer/Reminder This does not constitute direct legal advice and is for informational purposes only. - 9 -