Something Old, Something New, Something Borrowed, Something Blue? (a/k/a How To Kill Deal Flow.)

Something New
Generally, quarterly EB-5 Stakeholder Meetings are a regurgitation of most things old. The real benefit often lies in the USCIS’s response to the questions. Still, every once in a while, something new is thrown into the mix. In my opinion, the most shocking thing we learned from last week’s quarterly engagement was the USCIS telling the EB-5 community that they have had a policy of suspending I-526 petitions of any Regional Center that has a pending I-924 amendment application.
When do Regional Centers apply for an amendment to their designation?
Some background: I-924 is the form on which new Regional Center designation applications are made. It is also the form on which amendments are made. I-924 amendment applications can be made for a number of reasons, including:
A. An amendment request may be filed to seek approval of changes to the Regional Center’s:
  1. Geographic area;
  2. Organizational structure or administration;
  3. Affiliated commercial enterprise investment opportunities, to include changes in the economic analysis and underlying business plan used to estimate job creation for previously approved investment opportunities and industrial clusters;
  4. Affiliated commercial enterprise’s organizational structure and/or capital investment instruments or offering memoranda.
B. An amendment may also be filed to seek a preliminary determination of EB-5 compliance for documentation provided as an exemplar Form I-526, Immigrant Petition by Alien Entrepreneur, prior to the filing of Form I-526 petitions by individual alien entrepreneurs.
However, in practice, the line between A and B is fuzzy. When a Regional Center seeks to change its geographic area or other items under A, it usually is put in as part of the exemplar I-526 application:
Example: Acme Regional Center currently has coverage in Northern California and wants to expand into Southern California. And/or it wants an industry category that Acme currently does not have a designation for. To achieve this, the Regional Center will either put in an actual or hypothetical project with all the required documentation showing why it’s a good idea for the USCIS to let them do that OR the Regional Center will put in an exemplar I-526 petition with all the required documentation showing, again, why it’s a good idea. In this latter case, reasons A and B related to amendments above are merged together.
Or, a Regional Center will put in an exemplar I-526 for its next project even if there is no change in the regional or industry coverage.
What is an exemplar I-526?
An exemplar I-526 is an application that a Regional Center will make (through an I-924 amendment) to “pre-approve” a project before it goes out to market, or if the project has already been marketed, to qualify a project before any investor I-526s are filed.
The I-526 petition is comprised of two parts. Part I pertaining to the business that is receiving investment (what is it, how are the jobs approved, what are the offering documents provided to the investor, how are the business entities involved structured, etc.) and Part II pertaining to the investor’s source of funds. Therefore, if  a Regional Center’s project has, for example, 90 investors, Part I of the I-526 petitions for all 90 investors will be identical. However, the USCIS did not have a formal procedure in place for streamlining its operations and as a result, all 90 investor petitions were reviewed 90 times. So it was not unusual for some investors to get an RFE (Request for Evidence) on Part I while other investors did not. Painfully inefficient, needless to say.
So a few years ago, at the urging of the EB-5 community, the USCIS implemented a new process called an “exemplar I-526”.  The Regional Center would submit to the USCIS a sample I-526 with only Part I. Then the USCIS could RFE (yes, loyal readers, RFE is used as a verb among my cohorts) Part I to death (or at least until they were satisfied it was a good project). Once the Regional Center received the exemplar I-526 approval, the idea was that any investor I-526 petitions that were filed based on the exemplar approval would only have Part II pertaining to the investor’s fund sources reviewed. And this, the idea was, would dramatically speed up the I-526 review process.
(At this juncture I will not discuss how the USCIS took the opportunity to spend all the time they saved on not having to review Part I on scrutinizing Part II with a level of specificity never before encountered by any immigration lawyer; or how some adjudicators flatly ignored the exemplar approval and RFE-ed Part I anyway; and how many seasoned immigration lawyers took to advising clients to not even bother with the exemplar process, etc. But I think the exemplar I-526s are now coming into their own. To our credit, I think the tide turned when someone asked the USCIS Director in one of the quarterly engagements why the exemplar process was even introduced if the adjudicators were not going to honor it and the Director answered something to the effect of, this is the first time I’m hearing of this, is this true people? But I digress.)
What does this all mean?
ANYWAY, back to the topic at hand. Therefore what does it mean, if the USCIS is really going to stick to their policy (which we had never heard of before) that any I-924 amendments will automatically halt existing I-526 adjudications? It means that a Regional Center that has just closed an offering and has a dozens of I-526 applications pending cannot move ahead and prepare for its next offering (i.e. It will kill deal flow).
Example: A Regional Center has just successfully closed an assisted-living facility offering to foreign investors. There are currently 30 I-526 petitions pending approval. Currently I-526 approvals are taking something like 9 months on a good day (with the rare exception of a couple of older centers). The Regional Center would now like to launch its next offering which involves, say, a hotel. They would also like to put in an exemplar I-526 application for the said hotel project to save time and aggravation. But, if what the USCIS said at last week’s conference is true, they cannot do this for fear of holding up I-526 adjudications on the assisted-living facility project.
Unfortunately, a number of Regional Centers whose I-526 petitions have been pending for a while realized after last week’s call that it was their new project documents that were holding up the adjudications. But then again, this year was an unusual year in many respects for EB-5, especially with the extension of the Regional Center program that was hanging over everyone’s head and the controversy surrounding the tenant-occupancy model. So it is hard to say what exactly has been holding up all these petitions.
But as an EB-5 attorney representing individual clients, I am wondering if I need to add to my checklist of questions to ask Regional Centers that my clients are considering investing in, “Do you have any I-924 amendments pending that can potentially delay the approval of my client’s I-526?”
UPDATE: December 4, 2012
There was a Conversation with the Director engagement call yesterday and someone managed to squeeze in the question whether there was an USCIS policy of holding I-526s adjudications when an I-924 amendment was made because he was experiencing a sudden halt to his projects I-526 approvals since he put in an I-924 amendment; to which Mayorkas answered he wasn’t aware of such a policy. (Apparently, nobody told Mr. Mayorkas that the new operations person from the USCIS said that was happening during the October call.) I have heard from a handful of RCs that this was happening. Also, a friend who was in the audience at the DC meeting said that after the meeting he spoke to some RC reps that were noticing the same thing.)