USCIS Issues Third Draft of Adjudications Policy Memo

U.S. Citizenship and Immigration Services (USCIS) released the third draft (PDF) of its foundational EB-5 adjudications policy memorandum in February 2013. USCIS first released the memo in November 2011, and released a second draft in January 2012.

Several commenters recommended revisions. Robert C. Divine, Vice President of IIUSA: Association to Invest in the USA, noted that, among other things, the latest draft of the memo opposes a guaranteed right of an investor’s eventual ownership in a particular asset (to be subtracted from capital at risk). He said that USCIS has said this orally in stakeholder meetings and in some adjudications, but never publicly in writing. He also noted that the latest draft clarifies that payment to an investor of a return on an investment (i.e., profit versus redemption of capital) during or after conditional residency is acceptable. The draft also recognizes risk-spreading by a single investment enterprise among multiple projects, but Mr. Divine noted that USCIS has tended to state that the projects must be identified in the I-526 of each investor relying on them. Mr. Divine lamented that the latest draft “fails to provide desperately needed guidance and clarification on many topics,” which he listed in his comments. He said that 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.” He said the EB-5 program will not be attractive to developers and investors if they can only find out what the rules might be after they have spent “hundreds of thousands or even millions of dollars in project development and marketing and the investors file their I-526 petitions.”

IIUSA urged USCIS to implement the memo but recommended some revisions before finalizing it. IIUSA advocated:

• Including language from previous agency interpretation on crediting construction jobs and/or the resulting indirect/induced economic impact to EB-5 investors;
• Including language from previous agency interpretation on crediting indirect jobs created outside of a regional center’s boundaries; 
• Including language from previous agency interpretation on “tenant occupancy” economic model guidance; 
• Including language from previous agency interpretation on “visitors’ spending” economic input; 
• Establishing clear and commercially reasonable guidelines on the definition of material change/initial business plans; 
• Stating specifically that bridge financing can be an approvable use of EB-5 capital; Barring foreign ownership of regional centers; 
• Allowing North American Industry Classification System (NAICS) codes of two digits and/or longer to be approved for a regional center’s particular industry sector; 
• Specifically stating which existing administrative memoranda will be rescinded after the memo is implemented; Limiting the number of requests for evidence issued to one per regional center business plan and/or economic model; and 
• Issuing an I-797 approval notice for I-924 amendment applications for “actual” projects seeking pre-approval.