New Life For The Immigrant Investor Program
What a difference a year makes. I had written about one year ago that the future of the Immigrant Investor Pilot Program -- which revolves around "regional centers" that promote economic development in prescribed zones -- would depend on USCIS taking bold steps to approve more regional centers, aggressively promote the investor program, train its adjudicators to recognize the benefits of immigrant investment, and establish mechanisms to ensure integrity in the investor program. USCIS clearly has been striding boldly. In the past 12 months, USCIS has reorganized the administration of the investor program; approved five new regional centers; expanded and/or clarified the authority of three existing regional center entities; significantly overhauled and re-charged two long-dormant regional centers; and has reaffirmed yet another regional center's operating authority by way of extensive adjudication in individual cases. In the process, USCIS has begun to introduce standards for measuring the merits of regional center applications, as well as detailed management obligations for already-approved regional center entities. USCIS adjudicators, meanwhile, have received intensive training and have approved hundreds of individual investor petitions at both the Texas and California Service Centers, representing more than $250 million in capital invested and an estimated 5,000 jobs created as a result of the investor program.
USCIS had established the Investor and Regional Center Unit ("IRCU") in the headquarters office in January 2005. IRCU was tasked with oversight for policy and regulation development, field guidance, form design, case auditing, and training concerning regional centers and the investor program. Whereas a year ago it was not evident that IRCU had set in motion any initiatives designed to meet its lofty goals, it is now manifestly clear that USCIS is progressing well toward institutionalizing the investor program and the regional center model in particular.
The former IRCU has evolved into the USCIS Foreign Trader, Investor and Regional Center Program ("FTIRCP") situated within the Service Center Operations, Business and Trade Services branch (SCOPS/BATS). Within this organizational structure, FTIRCP reports through BATS to the Chief of Service Center Operations. FTIRCP has much of the same responsibility as the former IRCU, with the added responsibility for traders and investors in the E treaty visa and APEC programs. More specifically, FTIRCP has authority for approval, amendment, and termination of regional centers; establishing parameters for oversight and evaluation of regional centers; detecting fraud and abuse, as well as illicit transactions; training of adjudicators at the Texas and California Service Centers; coordinating USCIS efforts regarding investor litigation; website development; and setting criteria for audits of cases and quality assurance.
In order to meet the challenges presented by its comprehensive mandate, FTIRCP has sought approval for more resources including additional adjudication officers and clerical/administrative support. FTIRCP presently consists of one chief adjudications officer (Maurice Berez) and two senior adjudication officers. At the field level, only two officers at each of the two Service Centers are qualified to adjudicate immigrant investor petitions.
A YEAR OF ACCOMPLISHMENTS
The recent year has been marked by substantial progress in the Immigrant Investor Pilot Program. FTIRCP has approved new regional centers for Whatcom County, Washington; Houston's Chinatown district; 23 counties in western Pennsylvania; 21 counties in southwestern Kansas; and 7 counties in southeastern Wisconsin. FTIRCP also approved expansion or clarification of existing regional centers for South Dakota, central California, and former military base redevelopment areas in California. FTIRCP showed it can be proactive as it gave new life to the inactive regional centers for New Orleans and the state of Vermont. FTIRCP is in the process of substantially reorganizing the regional center for the state of Hawaii. As a consequence of the tremendous progress this past year, regional centers exist and are active throughout the country -- in the East (Pennsylvania and Vermont), in the South (New Orleans and Houston), in the Midwest (South Dakota, Iowa, southeast Wisconsin, southwest Kansas), in the Northwest (Washington), and in the West (California and Hawaii). The immigrant investor program truly has achieved a national reach.
CHARACTERISTICS OF REGIONAL CENTER ACTIVITY
The experience of the past year proves that the immigrant investor program can be an engine of investment activity and economic development. Both public and private entities are involved. Regional centers are directed by free-standing private entities (e.g., California Consortium for Agricultural Export), public agencies contracting with private entities for regional center activities (e.g., City of New Orleans MOU with NobleReach LLC; Philadelphia Investment Development Corporation MOU with CanAm Enterprises LLC), and private, nonprofit entities (e.g., Metropolitan Milwaukee Association for Commerce).
Regional center economic development covers a full range of for-profit economic activity. Approved regional center activities include assisted living facilities for the elderly (Bellingham Whatcom Economic Development Council), dairy farm, heifer ranch, animal feedlot, and meat processing/packing (South Dakota International Business Institute), resort hotel operations (Vermont Agency of Commerce and Community Development/Jay Peak Resort), scissor lift/platform manufacturing (CCAE/California Manufacturing and Engineering Company), fuel grade ethanol production facilities (Kansas Biofuel), improvement of infrastructure in former military base redevelopment areas (CMB Export), mixed use real estate development (Global Century Development Group), renovation of under-utilized commercial/industrial buildings (American Life, Inc.), leasehold improvements (CanAm Enterprises, LLC), and a broad range of other economic activities in varied clusters of the economy.
Of particular note is the vigorous effort by FTIRCP to amend the regional center designation for the area of New Orleans. Citing the devastation wrought by Hurricane Katrina and the need for massive post-Katrina development, FTIRCP approved the expansion of the regional center to the entire Parish of Orleans, Louisiana, approved the regional center to engage in a broad array of infrastructure development and basic construction activities, and approved the City's plan to enter into a MOU with a private entity, NobleReach LLC, to carry out the regional center activities.
OVERSIGHT AND COMPLIANCE
USCIS also acted on a promise to vigorously police the immigrant investor program. In letters dated July 14, 2006, USCIS (then acting through IRCU) asked every existing regional center entity for documentation that would demonstrate compliance with the obligation to promote economic growth. The IRCU letter ("Compliance Letter") referenced 8 CFR 204.6(m) and the authority of USCIS to terminate any regional center not in compliance with its obligations. The Compliance Letter sought information for each year the regional center has existed, including identification of all investor-petitioners, and statistics for the total capital invested through the regional center and the total jobs created as a result of regional center investment activity. In the event there was no investment activity within the previous two years, then the regional center entity could provide documentation indicating promotion plans, including a budget and timeline for raising capital, as well as documentation concerning the particular business clusters in which the regional center is active in terms of investment activity. The Compliance Letter also offered the regional center entity the opportunity to request an amendment of the regional center designation, if appropriate.
As of the date of the Compliance Letter, approximately 31 regional centers had been designated by USCIS or its predecessor, legacy INS. Of that number, six of the regional centers had been designated by USCIS following the resumption of any significant regional center activity during the year 2003. Of the estimated 25 regional centers that had been designated earlier in the 1990s, only a handful of the regional center entities appear to be active at this time. Similarly, only a few of the earlier-designed regional center entities appear to have responded to the Compliance Letter with an indication that they wish to continue with their regional center activities. An estimated 20 regional centers that were designated in the 1990s, therefore, are likely to be de-listed from the Immigrant Investor Pilot Program once FTIRCP finishes the work of reviewing the responses to the Compliance Letter. This process stands as an extraordinarily significant measure in terms of exerting control over the regional centers in the immigrant investor program.
Further efforts toward achieving program integrity include FTIRCP decisions to deny at least two applications to establish new regional centers where there was insufficient documentation in support of the applications to merit further FTIRCP review. FTIRCP noted the lack of reliable documentation concerning the likely future business activity of the regional center and the absence of evidence concerning the feasibility of the projects referenced in the proposals.
Also, with regard to several of the regional centers that were designated in the past year, FTIRCP issued multiple, detailed RFEs indicating further documentation would be required prior to issuing approvals. This further documentation - - consisting of more detailed project feasibility studies, more convincing analysis of the application of a credible job-creation methodology to a particular project, sample limited partnership agreements and subscription agreements, and business plans detailing the administration of the regional center - - is deemed necessary by USCIS to ensure program integrity and more reliable evidence of likely job creation.
In order to impose further accountability on already-designated regional centers, FTIRCP has launched program initiatives to impose more administrative structure within certain regional center entities. For example, with respect to the City of New Orleans regional center, which had been inactive for nearly a decade, FTIRCP was instrumental in forging a relationship between the City's economic development office and a private entity that would be responsible for implementing processes designed to ensure integrity, close monitoring, regular reporting, project due diligence, promotion, and investor vetting.
FTIRCP followed a similar approach with respect to the state of Vermont regional center. In response to the Compliance Letter, the state of Vermont had indicated that it had not generated any investor capital at all since receiving its 1990s designation as a regional center, and was most interested in pursuing an amendment and updating of the regional center activities it desired to support. Subsequently, the state of Vermont entered into a MOU with a private entity to carry out regional center activities at the Jay Peak resort, and FTIRCP promptly approved an amendment of the Vermont regional center to benefit the specific resort project. This arduous effort was almost immediately rewarded with new investors and seven petition approvals by the Texas Service Center.
Along the same lines, FTIRCP is seeking to impose further structure within the Hawaii regional center which had been designated by legacy INS as a regional center during the 1990s. In particular, by suspending adjudication of individual investor petitions based on the Hawaii regional center, FTIRCP is insisting that the state of Hawaii more closely evaluates the feasibility of development projects that are offered within the scope of the regional center, and implements a process for monitoring the petitions that are filed based on the regional center. It is anticipated that these efforts between FTIRCP and the state of Hawaii Department of Business and Economic Development and Tourism will eventually result in a reaffirmation of the DBEDT regional center, and in more specificity concerning the types of investment and business activities that will be regarded by USCIS as legitimate regional center activity.
TAKING THE IMMIGRANT INVESTOR PROGRAM TO THE NEXT LEVEL
USCIS is making progress with the immigrant investor program like never before. But very formidable challenges remain. As a panelist at a recent seminar organized by a cross-border trade organization, I was awestruck by the contrast in the administration of the respective Canadian and U.S. immigration investor programs. In particular, the Canadian immigrant investor program is significantly more transparent, predictable and institutionalized. The two programs, of course, have almost nothing in common in terms of substance; one can loan money to the government and obtain residence in Canada, whereas the U.S. program requires the petitioner to invest equity in a risk-taking private venture. The Canadian program is far cheaper and less risky financially. But recent results confirm that thousands of foreign investors are willing to come to the United States on the comparatively more demanding economic terms required by the U.S. program.
There should be little doubt that even more investors would participate in the U.S. immigrant investor program if the immigration risk could be appreciably reduced. The eligibility standards are not sufficiently transparent to make them readily intelligible to the average business person let alone the average immigration attorney. Moreover, the prospect of being stuck in conditional residence status for the long term (due to difficulties with obtaining approval of the I-829 petition to remove the conditions) is especially daunting. By shepherding the approval of certain I-829 petitions, FTIRCP has led the initial efforts to eliminate the cloud that seems to hang over adjudication of I-829 petitions. FTIRCP needs to do more. It must be committed to setting forth standards that are readily accessible and are not changeable midstream. Standards for adjudication of I-829 petitions should not be punitive but should reward good faith investment.
The commitment of USCIS as an agency to the success of the immigrant investor program is an open question. It remains to be seen whether FTIRCP will succeed in working through the many issues that must be tackled if the program is to be brought to the next level of success. Among the challenges is sufficient staffing. The program for the most part is a focus of just three officers at the headquarters level and probably no more than four officers split between the Texas and California Service Centers. Lack of appropriate staffing impacts the timing of adjudications and perhaps the quality of the work product. Already, with the press of more I-526 petitions this year, processing times seem to be getting longer. With more regional centers on line promoting the investment opportunity, the delays will increase unless USCIS dedicates more staff to adjudications. Will the program remain the province of just a few USCIS employees? Will so few people at USCIS have a vested interest in the future of the program that it is something that can be easily cast aside by larger interests when members of Congress are trading horses in the bargaining that is essential to any future comprehensive immigration reform? The long-term success of the U.S. immigrant investor program appears to be dependent on becoming more like the Canada investor program - at least in terms of becoming more transparent, predictable and institutionalized.
1AILA Occupational Guidebook: Immigration Options for Investors and Entrepreneurs, "Policy Considerations in the Immigrant Investor Pilot Program," p. 89 (L. Stone ed. 2006).
Editor's note: Lincoln Stone will be the discussion leader for the upcoming "Investors Visas Workshop", Orlando, FL.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.