During a recent EB-5 stakeholder teleconference USCIS Director Mayorkas cautioned “Be careful what you wish for.” Regional centers and regional center applicants have long questioned the USCIS’ ability to evaluate and interpret the complex economic and business plans forming the basis of regional center operations, especially regarding indirect and induced job creation. As a result, many applicants for regional center designation and applicants for green cards based on investment in regional centers have seen their applicants pending well beyond designated processing times only to be told that their cases are “pending review” at USCIS headquarters. To combat this problem, USCIS has hired several new economists and business analysts who are reviewing current interpretations of job-creation methodologies. Speculation about the potential results of this review have been rife within the EB-5 community and the rumor mill has produced considerable anxiety as regional centers, developers and businesses have hundreds of millions of dollars at stake in this immigrant visa program. The number of EB-5 regional center applications has increased over 100% this year alone, indicating that the 10,000 annual EB-5 visa quota may actually be reached for the first time this fiscal year resulting in a waiting line for the prized EB-5 green card.
It is rumored there will be dramatic changes to the job creation methodologies for the econometric models currently used to evaluate indirect job creation for regional centers. Presently, developers may count numerous inputs in their econometric models and business analyses to determine indirect job creation, including tenants’ employees and hotels visitors’ spending. It appears USCIS is in the process of drawing new restrictive lines between investments and job creation to prevent so-called “attenuated jobs” from being counted. While the details of these new interpretations have not yet been released, they may result in a sea change in the EB-5 regional center program that could pour cold water on what has been a “red-hot” program. It is estimated that over $250 million a month comes into the U.S. economy from this program, creating thousands of jobs.
It appears we are at a critical point, much like in the mid-1990s when the AAO released its four precedent decisions, starting with Matter of Izummi. It is possible that these new interpretations of the input-output econometric models based on the recommendations of USCIS’ recently hired economists and business analysts will result in pandemonium throughout the entire EB-5 program, leaving investors, regional centers and visa applicants in a state of confusion and chaos. It is not yet clear what will happen to existing programs or partially completed projects that have relied on well-established econometric models, but some guesstimates are that as many as 70% of existing projects and regional centers will be directly impacted by these new “restrictive” interpretations. So while new regional centers and applicants may be able to change direction to adapt to new standards, many will be ensnared in this new web of change.
It is hoped that USCIS will pursue transparency and provide reasonable notice to stakeholders and the public when making changes in long-established policy and interpretations, particularly where so much is at stake and where the public have relied on well-developed job creation econometric models for years. Hold on tight, we may be about to embark on a very scary roller-coaster ride.