A Regional Center Designation with an Actual Project and an I-526 Exemplar Approved After Two RFEs
By the end of July 2015, Zhang & Associates received a notice of approval from USCIS for the designation of one of our clients’ new regional centers based on an actual project with an I-526 exemplar. The case was filed in July 2014 and was approved after responding to USCIS’s requests for evidence. Three attorneys including Attorney Jerry Zhang, Attorney Fei Bao, and Attorney Victor Bush worked on this case.
When our firm was retained in 2014, the client had already decided to invest in a specific project and it was in the process of entering related agreements with other parties.
In general, there are two types of regional center designations under the law, one with a “hypothetical project” and the other with an actual project.An “actual project” is a project proposal that is supported by a Matter of Ho compliant business plan. In 1998, the Administrative Appeals Office (AAO) standardizedEB-5 business plan requirements in Matter of Ho. A Matter of Ho compliant business plan generally means a credible comprehensive business plan“sufficiently detailed to permit the Service to draw reasonable inferences about the job-creation potential.” Matter of Ho, 22I&N Dec. at 213. AnI-924 regional center application based on actual project can be submitted with an I-526 exemplar, which contains the sample organizational and transactional documents of the subsequent I-526 petition. In essence, the I-526 exemplar provides an example of the organizational and transactional structure of a project to USCIS. Once USCIS pre-approves that example, it can be used as evidence in a given investor’s later I-526 filing, saving time and energy preparing that petition. There are also other commercial benefits for the regional center as described below.
The advantage of filing a regional center designation with an actual project and an I-526 exemplar is thatwhen USCIS approves a regional center it will grant deference to the investors’ later I-526 applications based on this project as long as there is no material change, fraud, or willful misrepresentation, and the initial approval of the actual project and I-526 exemplar in the regional center designation application is not a legally deficient determination. 1This reduces the risk of denial and processing time of an investor’sI-526 application as the project and the organizational and transactional documents of the project are pre-approved by USCIS during the processing of the initial I-924 regional center application. The approval of the actual project and I-526 exemplar may also help the regional center recruiting investors.However, in order to obtain thisdeference for the later I-526 filings, USCIS requires more detailed documentationfor the project and the venture’s organizational and transactional structure to besubmitted with the I-526 exemplar. This could mean longer processing time and increased risks of RFEs.
On the other hand, typically, newly established regional centers do not have specific projects underway at the time of filing their regional center proposals and those applicants can file regional center designation applications with only a hypothetical project. Compared to the regional center designation application with an actual project, USCIS requires fewer details for the application with hypothetical project which often means the less required documentation, a shorter processing time, and a higher approval rate in the regional center designation application process. In exchange for initial convenience however, USCIS will require more specific project details and organizational and transactional documentsin subsequent I-526 petitions. In other words, filing an I-526 exemplar based on a hypothetical projectshifts the risks and time invested in the regional center designation application processto the first I-526 filing.
After discussion, the client decided to establish a regional center with an actual project and an I-526 exemplar. Based on our discussions with the client, we determined to use a loan model for the project. This is a popular choice of many existing regional centers as it tends to better protect the regional center and its potential clients. The client established a New Commercial Enterprise (NCE) as a subsidiary of the regional center to receive capital investments from EB-5 investors and loan funds to the project operating company (Job Creating Company). We helped the client prepare the initial filing documents including the comprehensive business plan and the economic analysis report of the actual project, regional center operation plan, related transactional agreement, the organizational documents of entities involved, the offering document package and the I-526 sample form and petition letter.
After several months pending, USCIS issued a request for evidence notice for 3 issues. First, USCIS questioned the capital “at risk” issue in the agreement between NCE and the EB-5 investors.The USCIS officer believed thata redemption provision in the agreement, even if it is only an option for an NCE management entity, violated the capital at-risk requirement for EB-5 petition. Second, USCIS questioned the project operating company’s financial ability to repay the loan from the NCE since a loan model was used in the client’s project. Third, USCIS requested an explanation of the projective revenue data used in the business plan and the economic analysis which were not exactly the same in face. We provided advice and helped the client to prepare the documentation to answer the questions. About a couple of months after the first RFE response was received by USCIS, it issued a Notice of Intent to Deny focusing on the project operating company’s financial ability of repay the loan again. In responseto USCIS, we provided advice and helped the client prepare additional evidence proving the project operating company’s financial ability to repay the loan including a professional letter from a CPA and additional clarifications of project joint venture agreement. About one month after USCIS received our response to Notice of Intent to Deny, the regional center designation application including the actual project and the I-526 exemplar was approved. Comparedto our previous experience regarding regional center applications with hypothetical projects, the processing time of this application was about 4 months longer.
USCIS looks an I-924 application based on an actual project with I-526 exemplar in much greater detail than an I-924 with only a hypothetical project. It is true that an approved I-924 application with an actual project attached with an I-526 exemplar provides advantages for subsequent EB-5 petitions and the marketing strategies of the regional center to recruit EB-5 investors, compared to an I-924 approved with only a hypothetical project. However, there are also some disadvantages, such as longer processing times in the I-924 stage and a higher risk of requestsfor evidence. It is best to consult with an experienced attorney to determine if you should file an I-924 application with hypothetical project or an actual project.
1, Information are from the Policy Memorandum dated May 30, 2013, PM-602-0083
The laws and policies mentioned in the article are from the following sources:
The Policy Memorandum dated May 30, 2013, PM-602-0083
Matter of Ho, 221&N Dec. 206-214 (AAO 1998)
“A comprehensive business plan as contemplated by the regulations should contain, at a minimum, a description of the business, its products and/or services, and its objectives. The plan should contain a market analysis, including the names of competing businesses and their relative strengths and weaknesses, a comparison of the competition’s products and pricing structures, and a description of the target market/prospective customers of the new commercial enterprise. The plan should list the required permits and licenses obtained. If applicable, it should describe the manufacturing or production process, the materials required, and the supply sources. The plan should detail any contracts executed for the supply of materials and/or the distribution of products. It should discuss the marketing strategy of the business, including pricing, advertising, and servicing. The plan should set forth the business’s organizational structure and its personnel’s experience. It should explain the business’s staffing requirements and contain a timetable for hiring, as well as job descriptions for all positions. It should contain sales, cost, and income projections and detail the bases therefor. Most importantly, the business plan must be credible.” Matter of Ho, 22I&N Dec. at 213
Founded in 1996, Zhang & Associates, P.C. offers legal services to clients nationwide in all aspects of U.S immigration law. We have successfully handled thousands of immigration cases.
At Zhang & Associates, P.C., our attorneys and supporting professionals are committed to providing high-quality immigration and non-immigration visa services. We specialize in NIW, EB-1, PERM, and I-485 cases. In the past nineteen years, we have successfully helped thousands of clients get green cards. If you plan to apply for a green card, please send your CV to Attorney Jerry Zhang (email@example.com) for a free evaluation.
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