Immigration Insider

Part 3.5- Last 2 minutes of F-1 to Perm Residency Blog

PART 3 -Video: U.S. Permanent Residency for F-1 Students

Sigh...I did it AGAIN.  The third installment went over by a minute so look for 3.5, which is a quick two minutes.

I have to get a stopwatch.  I talk SOOOOOO much.

Have a great weekend and remember: in addition to the useful information I provide in these video blogs for F-1 students looking for a solution to their permanent residency, these videos are also invaluable to insomniacs...(-;  J

Video: U.S. Permanent Residency for F-1 Students- PART 2

This second part of the blog discusses the options available to graduating F-1 students with entrepreneurial ambitions.

Video: U.S. Permanent Residency for F-1 Students- PART 1

This first of three discusses the "traditional" paths to a green card for F-1 students

Expounding on EB5 Visas in China and H-1B Prospects for Next Year

Reporter Stella Chan recently interviewed me for China Media Net, here are the links to the Chinese articles.  This one discusses conflicts of interest in attorneys and agents marketing Regional Centers in China and what investors need to know:

http://www.dwnews.com/gb/MainNews/2010-02/2010-02-10-14-03-58-622-3.html

This one covers my thoughts on Comprehensive Immigration Reform (CIR) and prospects for H-1B numbers in the coming year.

http://www.dwnews.com/gb/MainNews/2010-02/2010-02-10-14-07-11-625.html

If Stella is being funny and I'm ordering Peking Duck or something, please let me know...(-;

Commercial Real Estate Financing And Why EB5 Investors Should Care

The Miami Herald published an article today by Elaine Walker regarding commercial real estate financing and what’s coming down the (Turn)pike.  You can read the article here but I wanted to point a couple of things out for those of you close to deciding on an EB5 Regional Center…not just in Florida but anywhere.

We’ve all been told that things are “getting better” in real estate; I personally don’t buy it, notwithstanding the statistics which, when viewed at just precisely the right angle and light, suggest we are “rebounding”.  Granted, that perception contradicts what is being said by every realtors association in the country, and it certainly isn’t like me to be pessimistic.  But Ms. Walker did a great job of telling the story objectively…and what can be extrapolated from can have MAJOR consequences on today’s EB5 Regional Center activities.

The problem, you see,  is that no matter how the numbers add up…the numbers just don’t add up!

The article reported on Urban Land Institute's South Florida Economic & Development Outlook gathering, which took place on Tuesday.  Consider these points made in the article:

-Delinquencies on Commercial Mortgage Backed Securities are expected to steadily increase from the current level of about 4 percent, hitting a peak in late 2012 at 12 percent.

- the abundance of ``extend and pretend'' loan rewrites, lenders to extend the term of a loan in order to avoid writing down the value of the asset, which could have seen as much as a 50 percent decline.

Only Dr. David Altig, senior vice president and director of research at the Atlanta Fed, was quoted in terms of linking the commercial real estate finance market with what I personally think is the big pink elephant in the room, ignored by almost everyone in the sector: ``If the unemployment rate doesn't come down significantly, the lifting of the fog is not going to happen,'' he said.

Bingo.  No jobs means no business expansion, which means now growth in commercial real estate…unless it continues to be speculative in nature, as it is right now in certain markets…and as it was right before this whole real estate nightmare began in the is country.

So here’s the point: last year, the number of USCIS-approved EB5 Regional Centers nearly doubled and our phones are ringing off the hook with developers who have “discovered” the EB-5 Regional Center mechanism and who are being told by some attorneys that, ahem, they will be glad to get them approved as a Regional Center.  Most of these are, of course, equity-based programs linked to commercial real estate projects…projects which had been shelved or, at least, slowed by the unavailability of construction lending.  Some are great programs with sound planning a first class management; others, frankly, have left me incredulous…honestly amazed that USCIS would grant Regional Center status to structures almost surely poised for doom.

 

And no, I will NOT tell which those are because I have no interest in getting sued.

 

I will leave you with the question you, as a potential EB5 Regional Center investor, should be asking him or herself:

 

“Does it make sense for me to invest in an EB5 Regional Center when:

 

a) I will be holding an equity stake in commercial real estate in this market

 

b) I will be investing as a limited partner in a commercial-real-estate-driven, equity-structured Regional Center precisely when commercial lenders deem such investments as risky AND

 

c) Even if all goes well, I have no clear exit strategy through which to retire my investment funds?? "

BTW: if you are being promised a “buyback” (such as what many Chinese brokers are telling their clients), RUN for the hills: no risk equals no green card, period.

Choose wisely, my friends.  Choose wisely.

PART 2: Understanding the Potential Impact of EB5 Job Creation Methodologies

Here you go!

New EB5 Regional Center Memo: Reading Between the Lines

A few weeks ago I told you that Donald Neufeld, Acting Associate Director of Domestic Operations for USCIS, had published a field comprehensive field memo regarding EB5 Regional Center Adjudications, and that the memo rescinded "in its entirety" the January 19, 2005 memo which we've all been relying upon since then.

Mr. Neufeld's memo was published on December 11 and only now have I been able to make my way carefully through the 23 pages to bring you what I perceive to be the primary points.  I'm surethat some of you will disagree as to what I consider "primary" and note other elements which I do not touch upon; I invite you to write me if that is the case as this is all about improving our collective understanding of what we can expect henceforth in Regional Center adjudications.

I will begin by telling you that whenever the USCIS publishes a memorandum -- especially a big one -- my stomach turns over.  Historically, at least from my point of view, "clarifications" more often than not are euphemisms for "we're making things tougher for you immigration attorneys once again".  I am please to report that Mr. Neufeld's memo is a deviation from that norm, and that it actually contains a number of well-considered and prudent changes which will, I believe, further permit the USCIS to uniformly adjudicate the continuing number of EB5 Regional Center prospects seeking certification.

To make this as painless as possible, and to permit you to refer to the memo, I am citing the page and paragraph of each point of comment:

Cover page: the memo's purpose provides various points of guidance, including "the procedures to be used when there appears to be a material change in circumstances relating to an eligibility issue following the the issue's prior adjudicative resolution". My thoughts: remember that there are two levels of EB5 investor adjudication- the initial I-526 and the subsequent I-829, making residency permanent.  We'll look at this more closely below but I believe this guidance is the result of a number of Regional Centers changing tack, if you will, mid-process.

Top of page 2- Reiteration of the concept of "indirect jobs". 

My thoughts:  while most of us in the EB5 biz use the term "indirect jobs" to refer to the non-direct traceable employment resulting from economic investment, the memo reminds me of something I'd forgotten.  "Indirect", as far as EB-5 purposes, means those who work for the producers, suppliers, and service providers which are used by the RC, e.g., the Fedex guy.  "Induced jobs", in contrast, are defined in the memo as "those jobs created when direct and indirect employees go out and spend their increased incomes..."  Why is this important?  Because of econometric modeling and the potential implications for adjudication.  Provable job modeling acceptable to USCIS is a critical component at the I-829 level.  

Middle of page 2- examples regarding "at-risk" requirement.

My thoughts: those of you who have been reading me for a LONG while need not be reminded of my repeated tirades of the late 1990s to the vein of "It's about the RISK, Stupid!"  While the "smoke and mirrors" nonsense of that era does not seem to be around, there continues to be a subtle linguistic ballet in a number of Regional Center prospecti I have read, essentially suggesting that their investment was somehow "safer" than others.  In some cases, the statements appear valid: carefully secured investments with proven job creation methodologies already accepted by the USCIS as fulfilling EB-5 requirements are certainly "safer" then high risk ventures which rely on projected direct job creation; that's hardly news.  After all, in any investment portfolio there are riskier, high-yield investments and safer, low-yield bonds and the like...it is up to the investor to define his or her risk-aversiveness. 

IMHO, the best regional centers understand that an EB-5 is different than a conventional investment in that the primary objective is to secure the residency for the investor while making darn sure the methodologies and numbers will hold up at the I-829 level.  If that is correct, then the formula is safe: create the most fiscally prudent and conservative investment and job creation model you can with risk, but the least possible risk.

Page 4, middle (and my personal favorite paragraph in the memo): “Streamlining EB-5 Case Processing”. 

My thoughts: This is where Mr. Neufeld cuts to the chase of a core problem in traditional INS/USCIS/State adjudication deficiencies: that irrepressible desire to readjudicate what has already been approved and remains unchanged.  To this effect, he says”

“If USCIS evaluates and approves certain aspects of an EB-5 Investment, that favorable determination should generally be given deference at a subsequent stage in the EB-5 process.”

  Mr. Neufeld points out that this is not the case where there are “material changes”, fraud, etc., but he really hammers the point home: don’t fix it if it isn’t broken!  He acknowledges the USCIS’ own adjudicatory issues with this, saying at the bottom of the page that:

 “the adjudication of EB-5 petitions has been prolonged due to the issuance of requests for evidence (RFEs) that inappropriately seek to revalidate previously favorable determinations.”

(Oh, if we could ONLY get this memo directed at business visa adjudications….sigh).  This recognition and its specific mention in this important memorandum bids well for those Regional Centers whose navigation has been smooth and steady…and poorly for those who have had to recraft and restructure their original models.  The latter’s cases have been – and, he points out, have no CHOICE but to be:

 “…delayed due to the material alteration of documentation vetted during the Regional Center Proposal Process, requiring that previously decided issues be re-adjudicated within the EB-5 petitioning processes.”

So what exactly does that mean for prospective investors?  It means that dynamic changes occurring within the Regional Center subsequent to its INITIAL approval (unless, of course, the RC has sought confirmation subsequently on whatever issues have changed) can mean delays and even petition denial.  Consider Mr. Neufeld’s concluding point on this:

“Information provided in support of EB-5 petitions may also prompt USCIS to reopen a Regional Center Proposal and ultimately terminate the regional center designation…”[emphasis added]

 Folks, that  is pretty scary stuff if you are invested in a Regional Center with a history of reinventing itself; it is comforting if you are invested in a proven center with no alterations in investment structure, job creation methodology, etc.

Page 5, middle: “Changes in Form -526 Business Plans”. 

My thoughts:  I could go on at length here but it wouldn’t add much to Mr. Neufeld’s clear comments, which boil down to this:

“The business plan in the Form I-526 petition may not be materially changed after the investment has been filed.”

Not to be an alarmist, but given the number of Regional Centers advertising new and improved programs, that caveat – based solidly on 8CFR 103.2(b)(1) and the Katigbak and Izummi I&N decisions – rings loud and clear. And it is then when the memo delves into an interesting concept Mr. Neufeld calls “re-adjustment of status”, i.e., the de novo adjudication of permanent residency for an investor when the underlying capital investment and job creation scheme previously filed in the I-526 changes!

Page 7, top, regarding “external stakeholders”:

My thoughts:  when the initial regs came out, the ability for those not directly included in (but affected BY) the EB-5 visa process to get involved was part and parcel of the “transparency” envisioned, much as U.S. workers get to review the ETA9035 of an H-1B professional employed by their employer.  Because of the massive public interest in the EB-5 visa, however, the USCIS team of adjudicators has been essentially bombarded with outside inquiries, many of them (I am told) consisting of essentially “fishing expeditions” by prospective regional center wannabes or simply investors…stuff that should be directed either at appropriate counsel OR at the Regional Centers peddling their programs.  As a result of this, the memo directs ALL “external stakeholders” to use a single email account – uscis.immigrantinvestorprogram@dhs.gov – through which the USCIS will separate the wheat from the chaff, in order to cull the more relevant and important questions and bring those issues to light.

Given the doubling of existing EB5 Regional Centers in the past year – it took almost two decades to get to almost 40 then a SINGLE year to get to almost 80 – Mr. Neufeld’s decision to channel inquiries makes sense.  While I suspect that many of my colleagues in the immigration bar will take issue with this “single conduit” system, as a former consular officer who received at least one monthly phone call from a U.S. citizen wanting to know what visa they “needed to go to New Mexico”, I certainly understand the practical purpose of this change.  My suggestion to the Service: create a specific email channel for accredited and licensed attorneys with pending RC, I-526, and I-829 petitions, permitting them to go straight to the EB-5 team and circumvent the often-frustrating AILA liaison process.

Page 8 forward represents the actual regulatory language changes implemented to give effect to the memorandum.  I will touch upon a few points therein:

-Page 11 includes some very specific adjudicatory language regarding amendments to Regional Center proposals.  If you represent a Regional Center or a client contemplating an investment, read this stuff CAREFULLY.

-Page 12 creates the following specific language regarding the issue of “re-adjudication”:

“Note: if the Regional Center requirements are met and a determination of eligibility is made, then the favorable determination regarding regional center eligibility requirements for the capital investment structure and job creation sould generally be given deference and not revisited in the adjudication of individual EB-5 petitions, as long as the underlying facts upon which the favorable decision was made remain unchanged.”

CRITICAL stuff, guys, really.

-Page 13, the regulations remain oddly uncorrected: the requirement that the alien be “engaged in the management of the new commercial enterprise” remains as it was, without be corrected to clarify that this does not apply to Regional Center investors.

-Page 14, the meaning of “full time position” and mention of econometric models:  this is interesting stuff here.  RIMS and IMPLAN – the two most utilized job creation modeling tools seen in EB-5 RC planning – are mentioned by name, as is the issue which has been a bit of the “pink elephant in the EB5 room” for awhile…job modeling as it relates to job COUNTING.  The new guidance acknowledges that respected economic measurement tools “do not distinguish between full-time and part-time jobs”.  The big deal: to those rare and few Regional Centers who have done their job econometrics with painstaking care from day one, this is a serious “Hi Five” moment.  Why?  Read on…

“Therefore, the number of indirect jobs quantified through the O/O model analysis will be considered full-time and qualifying for EB-5 purposes.´[Emphasis added]

Now that, for a few of us, brings a huge collective sigh of relief, and the big pink elephant HAS LEFT THE ROOM!  Another nice touch: while asserting that seasonal and temp jobs do NOT count, the new regs interpret direct construction jobs as permanent for EB-5 counting purposes if they are 1) created by the investment and 2) expected to last at least 2 years. 

-Page 15, in an uncharacteristically pragmatic USCIS bow to business reality:

“…it is the position that is critical to the direct employment criterion, not the employee.  Accordingly, the fact that the position may be filled by more than one employee does not exclude a position from consideration as full time employment.”

-Page 17, another tasty morsel for existing Regional Centers:

“…the area where the new commercial enterprise is located may qualify as a TEA at the time the capital investment is made or the I-526 is filed, (whichever occurs first), but may cease to qualify by the time the form I-829 petition is filed.  Changes in population size or unemployment rates within the area during the alien investor’s period of conditional permanent resident are acceptable as increased job creation is the primary goal of the EB-5 Program” [Emphasis and more Hi Fives added]

-Pp. 18-19, in brief:  the USCIS, the memo confirms, will “have no substantive authority to question or challenge [a] high unemployment designation” made at a state level.” Put simply, this codification means that this potential (and past) adjudicatory detour, so reminiscent of the NIV adjudications of late, is now preempted.

There is more stuff but, frankly, that’s what I see as most important.  Hope it helps!  Jose

Audio Solution to Miata Cam...

It's the weekend and I don't often blog but had to share this with you, especially those of you who actually suffered through the horrible audio quality the other morning...check this out: I found a USB lapel mic in England on eBay...

USB Lapel Mic for Future Video Blogs

Brace yourselves for more EB-5 Investor Visa stories and musings via my terrifying morning commute.  Now that the weather is starting to get really nice in South Florida, I'm working on rigging up the Lambretta...

The Immigration Insider Scooter-Cam - coming soon!

Have a great weekend and GOOOOOOO Gators!

Econometrics, EB-5 Regional Centers, and Job Creation[VERY POOR AUDIO]

Folks, this second attempt at a video blog was shot in my Miata on the morning commute.  While I'm okay with the video (having come to terms with what I actually look like at 48 as opposed to what I THINK I look like) the audio is horrific.  I still posted it because there are a few points who some might want to hear but trust me, the audio is absolutely horrific and annoying due to the little car's vibration, so skip it unless today's topic is of serious interest.

BTW, thanks to all of you who gave me positive feedback regarding the concept (and not the execution) of the first video blog.  The numbers on the blog tripled yesterday, although it could simply be the result of people emailing links to each other and saying "you have to see how gray Jose has gotten".  Whatever...thanks for the feedback regardless.

Footnote: the Miata overheated (again) as I was waiting for a train to pass in Miami Shores and Melissa rescued me.  More soon and I'm working on the audio as well.