Advocacy
Association Building Committee Pushes Full Speed Ahead to Reauthorization BY ASHLEY SANISLO CASEY ith a year under its belt, the IIUSA Association Building Committee (ABC) is gaining momentum and the timing could not be better. As summer kicks in to high gear, so too are the advocacy efforts to ensure reauthorization of the EB-5 Regional Center Program.
Beth Zafonte, Director of Economic Development Services at Akerman, took over as ABC Chair in April and brings with her a boastful network both inside and outside of the industry, creativity, and drive to take IIUSA’s advocacy efforts to the next level. Since Ms. Zafonte has taken the lead on this committee, the letter of support has gained over 100 signatures and the committee is working on a multi-faceted social media campaign to help spread the word of EB-5 and to better engage those who are already supporters. The committee has also set a goal to reach 1,000 signatories by September 1, a number they admit is high, but undoubtedly achievable.
jobs supported through EB-5 over the last four years and $768 million generated in state/local tax revenue in the same time period, local-level government support is crucial for IIUSA’s broad base of advocates. Through fostering relationships within these nationally influential organizations that represent the very communities that benefit from EB-5, IIUSA continues to send a message to Congress that is loud and clear: EB-5 is working and failure to reauthorize it will negatively impact hundreds of American communities. Stay tuned on IIUSA’s blog for an update on the NACo resolution.
Since the launch of IIUSA’s “EB-5 is Working” public letter of support back in December, well over 600 supporters have signed on, proclaiming the dire need for the EB-5 Program to remain a source of capital for vital regional economic development projects. The Association Building Committee is in large part to thank for this overwhelming level of support, but it is not ready to quit just yet.
On June 21, the U.S. Conference of Mayors passed a resolution in support of the permanent reauthorization of the EB-5 Program, following up on a similar resolution that passed through the organization in 2013. In July, IIUSA staff members will travel to Charlotte, NC to support the passage of a resolution at the National Association of Counties’ (NACo) Annual Meeting. With over 116,000
As we enter the “home stretch” to September 30, it is important that the entire industry engages in advocacy for the Program. Make sure your partners, or any other supporters or beneficiaries of EB-5, are signed on to the EB-5 is Working letter (available on iiusa.org) or contact advocacy@iiusa.org to find ways to become an active advocate. As a united force, we can ensure reauthorization is a reality. ■
IIUSA ADVOCACY/RESEARCH COORDINATOR
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Concessing v A Chicago to Brief in SEC Motion ng SEC’s Files Amicus 04/05 IIUSA Center Case supportito EB-5 investors. vention assets directly return frozen draft EB-5 ts on USCIS ndum submits commen 04/01 IIUSA tions guidance memora adjudica Testifies in on Peter D. Joseph Committee e Director re Executiv State Legislatu ernmental Affairs 03/11 Intergov front of Texas Trade and t in International ment Breakfas ic Develop from SenSpeakers Hosted Econom 03/05 IIUSA ton DC with Keynote Staff Washing Committee ative of the ate Judiciary Meeting, where n and represent supports Stakeholder is a featured fully trade associatio Ombudsman “IIUSA, as the Center Program industry, Joseph order and 03/05 USCIS e Director Peter D. the asset freezeaction will EB-5 Regional modify to Executiv motion to them. This by the rule the Plaintiff’s American speaker funds directly s of the North return investors’ the United States is governed ) in with member to protect investor that ion (NASAA ate meets enforced Associat demonstr and prudently 03/04 IIUSA s Administrators e in the Program of law, efficiently Securitie investor confidenc of today exacerDC times interests – restoring GuangWashington, difficult economic of United States Beijing, and as a result. The for vigilant enforcement Shanghai, that our meets with ions in China bate the need message to investors 02/25-28 IIUSA Exit/Entry Associat who do invest that sends a dong s of the Sensecurities laws for investment and those ed by member country is open protected by our laws.” hearing. success highlight are 02/12 EB-5Judiciary Committee during to proate collaboration wake ncy the Interage the Supports Program in programs around In 02/11 IIUSAthe integrity of the EB-5Center Case immigrant investornt or immigration risk. tect nt “Competing Convention without investme d that investme of the Chicago of Comworld operate Chamber investors understan associated with , American on benefits the EB-5 Program, t, Harley Seyedin meets with The immigrati transparent and predict01/06-07 IIUSA - South China Presidenrcial Service Officers risk is required. nt must be integrity of merce confidence and consistent Foreign Comme the at-risk investme with undermining and Seniors able – or risk believe this can be fixed ou, China ent proin Guangzh We policy developmindustry.” the Program. to a transparent with the in Follow Up processing times, e communication to USCIS g unimplesends letter ent regardin cess, and substantiv 11/12 IIUSA 012 EB-5 Engagem times. ■ ing process 10/16/2 and slow May 2013 mented policies Issue #1,
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Offers positive examples of restructuring/reorganization for NCEs established before Nov. 29, 1990 (converting restaurant into nightclub, or adding substantial crop production to an existing livestock farm);
7
Suggests that requested RC areas often are best justified by showing significant contribution to the supply chain and labor pool of proposed projects;
8
Recognizes that investors in troubled businesses may combine preserved and newly created jobs;
9
Recognizes, consistent with Director Mayorkas’ letter to Senator Leahy a few years ago, that investors may count indirect jobs located outside the RC boundaries [but providing no criteria about any limitations on this option, if any];
10
Hedges from prior discussion, suggesting a need for causation between injection of EB-5 capital and Adds to intro language to set a bal- creation of created jobs claimed, while recognizing that! the NCE or JCE creheard anced program tone, including refer- still voice ence to “ensuring program integrity”;your ates the jobs; to make iiusa.org Sets presumptions for I-829 adinfo@ Makes many small technical legal WAC#s to judication of “reasonable time”: and stylistic changes; backlogged one year generally OK, but beyond that Email your Opposes a guaranteed right of inonly if “extreme circumstances” such as r is vestor’s eventual ownership in april, the numbe force majeure; g ing late-A particular asset (to be subtracted from to 7,000 pendin million in pure closer $250 Articulates of+deference policy to capital at risk) [note:small USCISlikely has said this 70,000 ting over and In this prior same-project adjudi13, represen orally in n.stakeholder meetings and in illion cover formatio (or $3.5+B of inefficien day 4/10/20 kindnot range from EB-5 capital some adjudications, cations only I-924 n Wednes ing but also prior Ibut never in jobs). public This ing times to USCIS process U.S. in process letter a Furtabilitythough no deference if “material 526s, sample, writing]; months. IIUSA sent Mayorand unpredic negative twenty plus Alejandro change” meaning having a natural tenUSCIS cy to seriously five to over Director using would lead Clarifies that payment to investor ch ing backProgramoratpredictable ability t times dency EB-5 to influence ing the process on the ther resear of return onbrough investment (i.e., profit, in the economicand deference to kas concern affect thein decision, impact Status data stagger- consequencesitto is peaking detrimental vs. redemption during or after IIUSA Case ent naadjudicating I-829 exact and ofgcapital) log and its a time when I-526 approval when Program. I-526 residency is acceptable; and regional developm us to theconditional the EB-5 pendin over on same plan; of of r success of (as of growth s of its pool ing numbe Recognizes by the .■ to be 5,887risk spreading notified Mayorka backlogged I-526 Maintains that material change be- tionwide for petitions singel investment among It now enterprise after filing I-526 up through adRegional 500 WAC#s 2-13).projects ry from our multiple (100% subsidiaries for Janua |7 mission as a conditional resident require iiusa.org petitions collectedall over the country, non-RC sponsored) [ but note USCIS s new I-526 (and any approved I-526 will Center member has tended to state that the projects be revoked), and cites as “material” (a) must be identified in the I-526 of each cure of a deficiency and (b) change of investor relying on them]; industry group claimed [note: it is not May 2013 Issue #1, 8 | iiusa.org
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clear whether “another industry group” refers to real change of business plan vs. simple change of NAICS codes claimed to meet USCIS ever-changing perspectives on this];
14
Recognizes that changes after admission as CPR can be significant without preventing I-829 approval as long as capital remained at risk (including being “expeditiously” shifted from one plan to another) in a job creating enterprise within scope of industry approval of the same RC, and as long as there was not a preconceived intent to make the switch;
15
Repeats some policies already articulated in other memos, such as the requirement that jobs last at least two years to be sufficiently “permanent” to be counted (12-11-2009 memo), the requirement at I-526 to show that jobs will be created within 2.5 years of I-526 creation (12-11-2009 memo), that different investors/projects cannot count the same jobs (most recent TO memo). The February 2013 draft fails to provide desperately needed guidance and clarification on many topics, which I list here from a first reading in hope that readers will share with IIUSA or AILA any other topics they believe need coverage, so that the most effective comments can be provided to USCIS. Such omissions include the following:
1
Whether the new commercial enterprise (NCE) can have the option to buy back an investor’s interest after the end of the investor’s conditional residence.
2
Whether sale or refinance of the job creating enterprise (JCE), ostensibly because of its success, may occur before the end of conditional residence and generate return of capital to the NCE, even if the NCE does not distribute the capital to investors until after the end of conditional residence. Issue #1, May 2013
3
Whether and under what conditions a NCE may identify a business plan to generate jobs in and remove capital from an initial job creating enterprise and move the capital into subsequent enterprises during the investors’ conditional residence (particularly, must all future such JCEs be fully documented in I-526, must they be principally doing business in RC or TEA, and must they create any new jobs if the original JCE maintains the jobs).
Whether investors in entities other than limited partnerships having very limited control similar to limited partners may be considered to be sufficiently “engaged in management” [Note: current USCIS’ training manuals have clarified this, but the draft memo omits reference].
19
A host of questions USCIS addressed orally in recent stakeholder meetings but has not written down anywhere, such as to what extent part-time jobs and jobs employed by the JCE outside the U.S. are factored in.
20
Under what circumstances can the jobs of a tenant of the JCE, or jobs arising from visitor spending, be counted. [Note: USCIS has written only indecipherable memos on tenant occupancy, and no known decisions in contested cases].
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4
Whether a NCE may condition release of funds from escrow until a certain number of investors’ I-526 petitions are approved (as opposed to only the approval of the respective investor’s I-526).
5
Whether direct jobs created outside the RC area or TEA may be counted even when most jobs are created within the area (“principally doing business, and creates jobs in”), and whether indirect jobs arising from such direct jobs can be counted.
6
Whether investment across a portfolio of businesses must provide in I-526 a Matter of Ho compliant business plan for all of the businesses in the portfolio.
13.
Whether “verifiable detail” and “detailed statement” is consistent with the amended law concerning regional centers that requires only “general proposal” and “general predictions.”
Whether regional centers must be involved in developing, promoting/ marketing, managing specific projects to foreign investors, as opposed to merely promoting the economy of the region including seeking, monitoring, and reporting to USCIS about qualifying projects whose developers can market and manage the projects themselves [generally accepted, but the memo omits].
15
Whether a RC amendment MUST (vs. MAY, per I-924 instructions) be filed and approved in order for I-526s to be filed by investors in projects using different job prediction methodology [stated in the negative twice in stakeholder meetings but nothing written down], or under sponsorship of RC that has undergone administrative change (ownership or management) [USCIS has stated in stakeholder meetings and I-924 instructions that only email notification is necessary, but some emails from the Immigrant Investor Program suggest otherwise].
When direct vs. indirect construction jobs can be counted, as a practical matter, how “hard” and “soft” costs must be analyzed separately.
22.
What USCIS means when in requests for evidence it requires “verifiable detail” about various items.
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How NAICS codes are required, and on what legal basis.
When capital is considered “invested” for purposes of TEA designation, troubled business assessments, etc.
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What constitutes the location of a job for purposes of such determinations as whether the enterprise is principally doing business in a RC or TEA. (Note questions of where the employee is physically and how often, where facilities are located, whether the employee reports to a remote location, etc.)
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only the language of the regulation that preceded RCs].
12.
Advocacy
letter to USCIS
well over 500 has collected month, IIUSA Regional Cent“In just the last for I-526 petitions from g times range receipt numbers country. The processin of the total ers all over themonths. This small sample$250 million from 5 to 20+ petitions represents over backlog of backlog of I-526 formation. The complete of USCIS capital analysis in pure EB-5 petitions, based on an – representing pending I-526 statistics, is nearly 4,000 will result in the that filing to FY2012 in capital formation – all at no cost potentially $2.B 40,000 American jobs creation of over the U.S. taxpayer.”
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(or numbers g receipt them in is collectin of us know IIUSA Lead- IIUSA of 4th at the ton, WAC#’s, as most that are outside n March in Washing info@ d) for I-526’s times. Email ership Meeting of Directors for- shorthan numbers, processing DC the Board n to undertake normal your receipt a resolutio table iiusa.org to submitin confidence by IIUSA. mally adopted breaking the unaccep This be kept By Robert C. Divine of which will ot from processing. IIUSA Vice President the mission is a screensh I-526 petition on tial input from applicati Donelson, Bearman, Caldwell & backlog of image below Baker,web after substan s who The Status times that decision came l Center member peti- USCIS’ Case Berkowitz, processingP.C. s have the current IIUSA Regiona time for I-526 member ing of showing IIUSA . process n February 14,re-2013, USCIS distable length are not have seen below they are reporting to an unaccep it a draft policy publicly that the times seminated tions grind of time that indicated real amount adjudimemo be concerning the employprocessing. IIUSA flective of the petitions to situation, other for I-526ment-based fifth (EB-5). This andpreference remedy the in terms is taking show USCIS In order to the delays (1) notes theslow relatively few noteHelp us article just how unarticulate agencies that is being In cated. d federalworthy intends to changes to the prior dissemiimpact ic intereste to these delays.data of the econom has gotten. nated draft from November 2011 and halted due processing the reprompt necessarily we are going to use terms (2) identifies some critical topics not adfor your in in advance other words, describe the delays dressed by the■memo. U.S. Thank you request. to the above and resulting we collect . sponse to formation The new draft clarifies a disappointingly of lost capital to the taxpayer all at no cost small number of issues and continues job creation to many important issues of significant uncertainty. Nevertheless, every effort at clarification should be appreciated so I list them here: Members:
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Whether a TEA investment may span multiple TEAs in multiple states.
Whether an area other than a county or MSA may be considered a TEA even without state designation, such as a single census tract, if publicly available data demonstrates the area has 150% of the national average unemployment.
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Whether an NCE making loans to nonprofit entities may qualify.
Whether the investor may take credit for job creation arising from other funds not only invested in the NCE (the subject of the pre-RC regulation about “multiple investors”) but also from other funds invested in or loaned to the JCE [Note: this seems generally accepted in practice, but the memo mentions
Issue #1, May 2013
16
Exactly which types of expenses of a project may or may not be paid with EB-5 capital (interest on loan of EB-5 capital, broker dealer fees, project development fees, etc.)
17
Whether a worker authorized to work in the U.S. under TPS, deferred action, pending application for suspension of deportation or cancellation of removal, may be considered a qualified employee [Note: what is “an alien remaining in the U.S. under suspension of deportation”?]
18
What is the legal basis for USCIS application of a policy requiring that RC-sponsored jobs be created before the end of conditional residence.
25
Whether the point to which an investor must maintain investment and show jobs is the filing of I-829, the expiration of conditional residence (shown on card), or the adjudication of I-829.
26
Whether and under what circumstances EB-5 capital may be used to repay bridge financing (debt or equity).
27
Whether jobs count if they were created on an indefinite basis during conditional residence but were lost before I-829 filed. USCIS simply is not keeping up with the number of questions that reasonably arise for well intentioned developers and investors-- questions that need predictable answers for prospective planning of major enterprises and projects. The government is not making EB-5 Program attractive to developers and investors when they can only find out what the rules might be until after they spend hundreds of thousands or even millions of dollars in project development and marketing and the investors file their I-526 petitions. ■
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VOL. 3, ISSUE #2, JULY 2015