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  • Article: Dissecting The SIMPLE Regional Center Designation Letter by Joseph P. Whalen

    Dissecting The SIMPLE Regional Center Designation Letter

    By Joseph P. Whalen

    These short (usually 4-page) Regional Center Initial Designation Letters have been going through a series of revisions but it looks like USCIS has winnowed the chaff and whittled it down to a likely[1] final form. They appear to be quite formulaic and vague on purpose. They help the agency more quickly issue an Initial Regional Center Designation Decision and I am sure that many stakeholders will join in applauding that effort. However, as with anything else, haste can make waste. These Notices are much less informative and vague; based solely on the USCIS-defined “Hypothetical Project(s)”; offer no DEFERENCE which means that they will instill little if any CONFIDENCE in the projects being offered for EB-5 investment. Not to worry on that point because follow-up filings are expected and an opportunity to gain DEFERENCE and therefore CONFIDENCE remain easily within reach. It is interesting to note that in some cases USCIS has taken what was put forth as either an “actual” or even an “exemplar” project and treated it and labeled it as a “hypothetical” due to a lack of Matter of Ho-Compliance issues. That, in my not so humble opinion, is OK because at least it is not a flat-out denial which leaves room for hope through bumped up efforts.

    These purposely formulaic and vague Regional Center Designation Letters are obviously based on a SIMPLE template. They tend to have just a few predesigned sections marked by headings and the text within those sections only varies marginally, if at all. I have reviewed quite a few of these SIMPLE Designation Letters and have chosen the most recent I could find to use as an example. The California Sunshine Regional Center Designation Letter[2] is dated August 7, 2013. I incorporate text from that Notice[3] below. Of great note to me and I hope to the reader are the “Note”s found within the latest version of the Notices below II.A, II.B, and at the end of IV. I shall intersperse comments throughout in flush left larger text as shown here.

    I. Executive Summary of Adjudication

    Effective the date of this notice, USCIS approves the Form I-924 request to designate California Sunshine Regional Center LLC as a qualifying participant in the Immigrant Investor Program.

    II. Regional Center Designation

    USCIS approves the applicant‘s request to focus, promote economic growth, and offer capital investment opportunities in the following geographic area and industry categories:

    A. Geographic Area
    Santa Cruz

    Note: Pursuant to the Policy Memorandum on EB-5 Adjudications Policy (PM-602-0083), an amendment request is not required if investment opportunities arise outside the geographic area referenced above. USCIS will evaluate eligibility upon the filing of an initial Form I-526 related to that new investment opportunity.

    The above “Note” must be read with caution. It is obvious that such a request will deal with expanding geographic boundaries. That said, the resultant area must still be contiguous and make sense. In other words be a defined economic zone as stated in the statute that created the Regional Centers. See 8 U.S.C. 1153 Note; §610(a) of Pub. L. 102-395, as amended. For Sunshine, in central California, crossing into an adjacent county such as Santa Clara should be no problem. However, it would appear to be ridiculous to submit a project in Mendocino or Trinity which are far to the north and almost into Oregon. Think about it. As an even more simplistic example, suppose they found a great investment in Florida, Texas, or New Jersey? Do you think that that would be acceptable to USCIS? I don’t.

    B. Industry Categories
    Commercial and Institutional Building Construction
    53112 Lessors of Nonresidential Buildings (except Miniwarehouses)

    Note: Pursuant to the Policy Memorandum on EB-5 Adjudications Policy (PM-602-0083), an amendment request is not required if investment opportunities arise outside the industry categories referenced above. USCIS will evaluate eligibility upon the filing of an initial Form I-526 related to that new investment opportunity.

    Unlike the “Note” under II.A, above, expanding industry categories could be easier and safer. That said, realistic considerations must be made. This type of expansion without amendment will require a new Ho-Compliant Business Plan and sufficient Economic Impact Analysis. The Regional Center would still need to show their verifiable detail and source the data used as inputs as well as justify the need for the project in the first place.

    III. Job Creation

    USCIS approves the geographic area and industry categories noted above based on the economic impact analysis presented and reviewed in conjunction with the adjudication of this regional center proposal.

    The single sentence above may be the most critical sentence in this notice. I have underlined the most critical consideration made in this adjudication. USCIS sees that the entity that applied demonstrated sufficient knowledge, skills, and abilities (KSAs or core competencies) to deserve a chance at being and running an EB-5 Regional Center. USCIS feels that they are not incompetent which by itself allows for some confidence in the Regional Center to be gleaned from this minimal Designation Letter.

    This hypothetical project does not have the factual details necessary to be in compliance With the requirements described in Matter of Ho, 22 I&N Dec. 206 (Assoc. Comm'r 1998), and therefore, USCIS’s approval of the hypothetical job creation estimates presented in the Form I-924 will not be accorded deference and may not be relied upon by an individual investor when filing the Form I-526. The business plan and job creation estimates will receive a de novo review by USCIS when an individual investor files Form I-526. Once an actual project is adjudicated upon the filing of the initial Form I-526, USCIS will give deference to subsequent Forms I-526 when the critical assumptions remain materially unchanged from the initially-approved Form I-526.

    I ask: How will USCIS determine that the critical assumptions have remained unchanged after the first I-526 is approved? The best answer I can guess is that they will shred each and every subsequent I-526 anyway, searching for something that someone is trying to slip past them. No offense to the folks at California Sunshine—MY STATEMENT APPLIES TO EVERY REGIONAL CENTER—PAST, PRESENT, AND FUTURE.

    When filing Form I-526, it will be the responsibility of the individual investor to submit a comprehensive, detailed and credible business plan, showing by a preponderance of the evidence that his or her investment in the new commercial enterprise will create not fewer than 10 full-time positions. If prior to filing a form I-829, the job creation estimated in the business plan submitted by the individual investor materially changes or will not be realized, then it will be the responsibility of the EB-5 investor to notify USCIS of an agreed upon methodology to allocate job creation among eligible investors.

    Since this evolution within EB-5 Regional Centers is so new and probably as yet untested, there is no clear mechanism by which the above responsibility, i.e., “obligation” should be fulfilled. Think about it a bit and break it down. The affected party (the individual EB-5 investor) is a party to a new commercial enterprise (NCE) which is quite often a Limited Partnership in which the Regional Center is often the General Partner who is tasked to act on behalf of the Limited Partners. With all that in mind and keeping in mind that each Limited Partner was probably required to pay a subscription or administrative fee anywhere from $20,000 to $80,000 (I hope not more), this notification responsibility should probably fall on the Regional Center on behalf of the EB-5 investors involved in that particular project. Am I out of line on that, or not?

    IV. Guidelines for Filing Form 1-526 Petitions

    Each individual petition, in order to demonstrate that it is affiliated with the California Sunshine Regional Center LLC, in conjunction with addressing all the requirements for an individual immigrant investor petition, shall also contain the following:

    1. A copy of this regional center approval notice and designation letter including all subsequent amendment approval letters (if applicable).

    2. An economic impact analysis which reflects a job creation methodology required at 8 CFR 204.6 (j)(4) (iii) and shows how the capital investment by an individual immigrant investor will create not fewer than ten (10) indirect jobs for each immigrant investor.

    3. A comprehensive, detailed and credible business plan for an actual project that contains the factual details necessary to be in compliance with the requirements described in Matter of Ho, 22 I&N Dec. 206 (Assoc. Comm'r 1998).

    4. Legally executed organizational documents of the commercial enterprise.

    Note: The project reviewed with this Form I-924 application is a hypothetical project. Organizational and transactional documents associated with the new commercial enterprise (NCE) submitted with this Form I924 have not been reviewed to determine compliance with program requirements since these documents will receive de novo review in subsequent filings (e. g., an amended Form I-924 application with a Form I-526 exemplar or the first Form I-526 petition filed by an investor under the regional center project).

    Since USCIS will perform de novo review on organizational and transactional documents with each I-526, they are skipping that at the I-924 stage UNLESS specifically requested to review something as an EXEMPLAR I-526. This is an interesting development. It appears that the Regional Centers that get the quick Decision might be expected to follow-up with EXEMPLAR filings. Using the guinea pig I-526 approach has certain pros and cons just like the EXEMPLAR has pros and cons. For the REAL I-526, remember that it is a visa petition involving a “priority date”. It is not as flexible as the EXEMPLAR which in reality is an I-924 which has no “priority date”. If filing fees is a concern (and quite frankly I question a group of supposed millionaires where these filing fees are a concern); then file the REAL I-526, get a denial which thoroughly details what is wrong or missing and re-file another REAL I-526, and another, and another, and you are still only at $6,000 in fees as compared to $6,230 for an EXEMPLAR (I-924). The drawback to that approach is that it will take at least three times as long simply filing the EXEMPLAR in the first place. Remember that the I-924 can be perfected after filing, no harm, no foul, no “priority date”.

    V. Designee’s Responsibilities in the Operations of the Regional Center
    As provided in 8 CFR 204.6 to ensure that the regional center continues to meet the requirements of section 610(a) of the Appropriations Act, a regional center must provide USCIS with updated information to demonstrate the regional center is continuing to promote economic growth, improved regional productivity, job creation, and increased domestic capital investment in the approved geographic area. Such information must be submitted to USCIS on an annual basis or as otherwise requested by USCIS. The applicant must monitor all investment activities under the sponsorship of the regional center and to maintain records in order to provide the information required on the Form Supplement to Form I-924. Form I-924-A, Supplement to Form I-924, Application is available in the “Forms” section on the USCIS website at www.uscis.gov

    Regional centers that remain designated For participation in the Immigrant Investor Program as of September of a calendar year are required to file Form I-924A Supplement in that year. The Form I-924A Supplement with the required supporting documentation must be filed on or before December 29th of the same calendar year.

    The failure to timely file a Form I-924A Supplement for each fiscal year in which the regional center has been designated for participation in the Immigrant Investor Program will result in the issuance of an intent to terminate the participation of the regional center in the Immigrant Investor Program, which may ultimately result in the termination of the designation of the regional center.

    The regional center designation is non-transferable, as any changes in management of the regional center will require the approval of an amendment to the approved regional center designation.

    The above sentence reinforces that one cannot “buy” or “sell” a Regional Center!

    If the applicant has any questions concerning the regional center designation under the Immigrant Investor Program, please contact the USCIS by email at
    USCIS.ImmigrantInvestorProgram@ uscisdhs.gov

    1 Your guess on that point is as good as mine or anyone else’s.

    2 As posted at: http://ebfive.files.wordpress.com/20...1127150321.pdf [Thanks to Suzanne Lazicki at: http://blog.lucidtext.com/

    3 There are some minor formatting changes such as not using tables or the Letter’s pagination.

    5[/URL] NAICS Codes.

    About The Author

    Joseph P. Whalen is not an attorney. He is a former government employee who is familiar with the INA. His education is in Anthroplogy with a concentration in Archaeology and has both a BA (from SUNY Buffalo) and an MA (from San Francisco State University) in Anthroplogogy. He previously worked as an Archaeologist for the U.S. Forest Service before becoming an Adjudicator with INS which became USCIS.

    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.
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