On May 1, 2012, the USCIS held their quarterly stakeholders meeting at the California Service Center.  Yesterday, the USCIS issued anUSCIS EB-5 May Summaryof that meeting, in which they attempt to address questions that were asked during the meeting but which could not be commented on during that time.  The following is an overview of important clarifications:

• Although the USCIS adheres to a first in, first our process for adjudicating cases some I-924 filings including regional center designation applications, amendments and requests for project pre-approval are given to adjudicating officers familiar with the regional center applicant if possible.  This presumably explains the inconsistency in processing times between certain I-924 applicants.  USCIS requests that applications for cases that are similar to previous adjudications be identified at the outset to assist them with the assignment of cases.

• Questions related to economic analysis can be posed directly to the USCIS economists on staff through use of the dedicated EB-5 email box.

• Target time for processing I-924 request for evidence (RFE) responses is 30 days.

• USCIS confirms that the welcomed proposed changes contained in the November and January draft memorandum are not considered formal policy guidance at this time.  However, they advised that a third iteration of the draft memorandum will be posted for public comment in the next few weeks.  (The same promise was made back in May at the meeting).

• USCIS confirmed that an immigrant investor who is not associated with a regional center may deploy capital into a portfolio of businesses, so long as all capital is deployed through a single commercial enterprise and all jobs are created within that commercial enterprise.

• Tenant Occupancy- USCIS outlined the following scenarios to illustrate their new policy:

• The tenant business is a new business which did not merely move from another location .  This is not acceptable. None of the EB-5 capital would be flowing to the jobs created by the tenant.

• The tenant business received cash from the development for tenant improvements This is not acceptable. The tenants would still be responsible for creating the jobs. The EB-5 capital would simply be improving/outfitting/customizing the structure already owned by EB-5 capital.

• The tenant business received a loan from the development .  This is acceptable with caveats. This effectively represents the co-mingling of capital. Similar to the quid pro quo expenditure agreement referenced above, however, this will render the agency vulnerable to fraud because the tenants could form an agreement beyond the adjudicative scope of USCIS to funnel the funds back to the developer. In addition, USCIS would need to define the constraints of the loan amounts and duration. Otherwise, the developer could loan $0.01 to a tenant to take credit for any jobs created. Finally, the tenant business must verify that the jobs are new jobs not transferred from elsewhere.

• The tenant received free rent or rent reductions.  This is acceptable with caveats. Similar to (b) above, this effectively represents the co-mingling of capital as the free rent/rent reductions acts as a loan. The same caveats apply here as in (b) above. In addition, this will cause a significant decrease in rental income for the EB-5 NCE, which should be an investment at-risk, not at-loss. USCIS would still need to define the constraints of the rental discount required, which effectively serves as a loan. It is highly unlikely, however, that the free rent or rent reduction over a 2.5-year period would sum to a total amount that could be considered a substantial investment in the tenant business.

• The tenant received an equity investment from the development.  This is acceptable with caveats. Again, this effectively represents the co-mingling of capital as in (b) above. The same caveats apply here.

• USCIS confirmed that bridge financing is acceptable – in the form of either debt or equity.  If the project commences based on the bridge financing prior to the receipt of the EB-5 capital and subsequently replaces it with EB-5 capital, USCIS will give the new commercial enterprise credit for the job creation under the regulations.  This guidance will be formalized in a forthcoming USCIS policy memorandum.