Skip to main content

Senate hearing on EB-5 program December 7; Obama's jobs council recommends EB-5; USCIS issues draft memorandum consolidating EB-5 policy

The EB-5 Regional Center Investment Pilot Program--the main vehicle for immigrant investors seeking green cards--is due to expire in September 2012, unless Congress acts, and advocates and legislators are beginning to take a closer look.

The EB-5 program, which grants green cards to investors and their families who invest $500,000 (or $1 million if it's not in a Targeted Employment Area) to create ten jobs, initially required the investment itself to create the jobs directly.

But investments through regional centers--federally authorized private (or sometimes governmental) investment pools--make it much easier, as indirect jobs can be calculated via an economist's report. No wonder the number of regional centers has been skyrocketing, and developers (like Forest City Ratner) and others seeking cheap capital have glommed onto EB-5.

Hearing December 7

On December 7 at 10 am, the Senate Judiciary Committee will hold a hearing titled “Reauthorizing the EB-5 Regional Center Program: Promoting Job Creation and Economic Development in American Communities.” It will be webcast.

Based on the title, it sounds unlikely that criticism of the program will be highlighted. Previous hearings have, curiously enough, evinced bipartisan support for the program, (as I've written) especially from legislators with prominent EB-5 projects in their districts.

One witness is Bill Stenger, president and CEO of Jay Peak Resort, Jay, VT, a prominent beneficiary of the EB-5 program, who just happens to be from the home state of Judiciary Committee Chairman Sen. Pat Leahy (D-VT). (He testified at the last Congressional hearing, in September before the House of Representatives.)

Another is attorney Robert Divine, former Chief Counsel, Acting Director and Acting Deputy Director of United States Citizenship and Immigration Services (USCIS, who now helps entrepreneurs create, manage, and use Regional Centers. He is now Vice President of the national industry association of EB-5 Regional Centers, the Association to Invest in USA (IIUSA). 

A critic will be there

Still, the witness list includes the one prominent critic of the EB-5 program, David North of the Center for Immigration Studies, which advocates a "'low-immigration, pro-immigrant' vision of an America that admits fewer immigrants but affords a warmer welcome for those who are admitted."

North has criticized the United States Citizenship and Immigration Services for efforts to expedite EB-5 visas, pointed to elements of fraud, cited how the program lacks transparency, and suggested the cost to investors is quite low.

He has written:
When looking at the macro finances of overseas investment in the United States, it should be obvious that the immigrant investors’ program produces peanuts for the American economy.
A slight twitch of the American tax law, or that of China or the European Union, would have a much greater impact on the level of foreign investment than all the visas USCIS could grind out, so would a decision or two by, say, Goldman Sachs, opening up otherwise tightly controlled IPOs (initial public offerings) to foreign investors.
He has also pointed out:
  • The immigrants don't have important skills, close relatives in the U.S., or refugee status--they can buy their way in
  • The cost is much less than that demanded by most other English-speaking nations, subject of an upcoming USCIS report,
  • The cost has not kept pace with inflation over 20 years; the minimum investment should rise by 74 percent
  • The sum of half a million dollars is less than the average (mean) net worth of American families
  • This is not a program for entrepreneurs, it is a program for passive investors, and no other requirements, such as the ability to speak English, are required.
Support recruited

Meanwhile, the IIUSA, a trade group that includes not only Regional Centers but also other EB-5 service providers is recruiting "EB-5 Job Creators" to send letters to Congress in support of the renewal of the EB-5 program.

Support is sought from a wide array of Program stakeholders/beneficiaries, including regional centers;
local/state government officials and/or organizations; local/state chambers of commerce/economic development agencies; Members of Congress; and local unions who represent workers hired through the program.

Administration support

In its October interim report, President Obama’s Council on Jobs and Competitiveness expressed support for EB-5:
The administration is working to improve and leverage the EB-5 immigrant investor visa program, another Council recommendation. DHS’ Citizen and Immigration Services (USCIS) is enhancing the program by creating specialized review teams with business expertise, engaging re-engineering experts to streamline the process, launching a premium processing service and evaluating additional options for maximizing the program’s potential.
The Council also placed EB-5 immigration, which requires high net worth but not necessarily high skills, under the rubric of "High-skilled immigration":
First, we need to fully subscribe and radically expand the so-called EB-5 ‘entrepreneur’s visa’ for immigrant entrepreneurs who invest $500,000 to $1 million in a new commercial enterprise and create at least 10 full-time jobs (or preserve 10 jobs in a troubled business). If the EB-5 program reaches maximum capacity, it could result annually in the creation of approximately 4,000 new businesses $2 billion to $4 billion of foreign investment capital and create 40,000 jobs. But streamlining the application process and fully subscribing the program is just a start. Why have any cap on this kind of visa at all? Why not advertise it worldwide? Indeed, why not go further, as some have suggested, and set up a human resources offices in key countries around the world to recruit their most talented young people to come to America to realize their dreams while fueling the next generation of U.S. innovation?
Our second point is a plea: American can’t afford to let high-skilled immigration reform remain attached to the controversies that surround “comprehensive” immigration reform more broadly.
Well, talent has nothing to do with half a million dollars. These are two separate things. But they're lumped together, and the question of whether jobs are actually created--as opposed to developers gaining savings--is bypassed.

USCIS engagement

According to EB-5 writer and watcher Suzanne Lazicki, USCIS Director Alejandro Mayorkas introduced the document “A Work in Progress: Towards A New Draft Policy Memorandum Guiding EB-5 Adjudications” and fielded stakeholder questions during an 11/9/11 teleconference.

She offered a few items of interest:
Premium Processing for EB-5: Director Mayorkas reported that the goal is to have premium processing available for initial I-924 applications only by Spring of next year. He also reiterated that the service is working hard to speed up processing times across the board for all petitions, independent of premium processing.

...Oversight: Director Mayorkas said that the agency is concerned about fraud and misrepresentation in EB-5 marketing and practices, and that examples should be brought to the agency’s attention.
The agency is concerned about fraud? Evidence has been right in their face for nearly a year.

The new policy

The proposed new policy document (also embedded below) aims to consolidate all policies into a single document. Here's the guidance on job creation:
It is not enough that the immigrant invest funds into the U.S. economy; the investment must
result in the creation of jobs for qualifying employees. As discussed fully below, the EB-5
Program provides that each investment of the required amount of capital in a new commercial enterprise must result in the creation of at least ten jobs.
It is important to recognize that while the immigrant’s investment must result in the creation of jobs for qualifying employees, it is the new commercial enterprise that creates the jobs. This distinction is best illustrated by an example:
Ten immigrant investors seek to establish a hotel as their new commercial enterprise. The establishment of the new hotel requires capital to pay financing costs, purchasing the land, developing the plans, obtaining the licenses, building the structure, taking care of the grounds, staffing the hotel, and the many other types of expenses involved in the development and operation of a new hotel. The immigrant’s investments can go to pay part or all of any of these expenses. Each immigrant’s investment of the required amount of capital helps the new commercial enterprise – the new hotel – create ten jobs. The ten
immigrants’ investments must result in the new hotel’s creation of 100 jobs for qualifying employees (ten jobs resulting from each of the ten immigrant’s investment).
See 8 C.F.R. §204.6(j) (it is the new commercial enterprise that will create the ten jobs).
Jobs connected with a regional center

The document states:
For a new commercial enterprise that is not a troubled business and is located within a regional center, the EB-5 Program provides that the full-time positions can be created either directly or indirectly by the new commercial enterprise.  8 C.F.R. § 204.6((j)(4)(iii).  Indirect jobs are those that are held outside of the new commercial enterprise but are created  as a result of the new commercial enterprise.  For indirect jobs, the new full-time employees would not be employed directly by the new commercial enterprise.  For example, indirect jobs can include those held by employees of the producers of materials, equipment, or services used by the new commercial enterprise.
September update

In a 9/14/11 small group engagement regarding EB-5, Mayorkas offered several updates, according to the official summary:
Director Mayorkas provided an update on the proposal to revise the EB-5 process. On September 13, 2011, USCIS launched the first in a series of enhancements to the EB-5 program whereby Form I-924 applicants will be able to communicate directly with USCIS adjudicators via e-mail. This enhancement will streamline the adjudication process by providing applicants and adjudicators the ability to quickly raise and resolve issues and questions that arise during the adjudication process.
Director Mayorkas also noted that the agency is eager to implement all of the proposed enhancements to the EB-5 program. Premium processing will be introduced through revisions to the Form I-924 and we are currently exploring how to expedite this process which can take several months. Additionally, USCIS is in the process of hiring economists and other experts that will enhance and accelerate the adjudication process and also help constitute the Decision Board that was first described in the EB-5 proposal.

...Stakeholders expressed an overall lack of confidence in the adjudications of EB-5 petitions. In particular, they are concerned about a lack of consistency. Stakeholders would like increased predictability in the processing of EB-5 petitions. Stakeholders seek a more efficient EB-5 adjudication process. Some participants commented that EB-5 processing times are lengthy and requested enhancements to shorten approval times and keep investors informed. Stakeholders further requested transparency through the availability of accurate EB-5 processing times on the USCIS website. Processing times for both the I-526 and I-829 are now available on

Stakeholders also commented that the business community should be given trust and that the agency should not presume fraud exists in any particular case. Director Mayorkas stressed that there is no presumption of fraud in any case and that all cases are adjudicated on their merits. He further noted that USCIS was considering how to embed the perspective of the business community in the adjudication process such as through additional training.


Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…