The Pre-Approved EB-5 Project
Exemplar EB-5 projects are also known as “pre-approved” projects. When an investor makes the decision to invest in a Regional Center EB-5 project, she files an I-526 petition. If the Regional Center project is raising $20 million dollars in a TEA (and they are almost always in a TEA), 40 investors will each file an I-526 petition. The I-526 petitions consists of two parts: one involving specific project information and the other part pertaining to the individual investor’s source of funds (SOF). This means that the 40 petitions have (nearly) identical project information. As nobody really knows the inner workings of the USCIS, we can’t be sure, but recently it seems like the same adjudicator (or team of adjudicators) review a single project. A few years ago, however, when the EB-5 program started growing at a very rapid rate, it wasn’t unusual for two investors investing in the same project to receive different RFEs (Request of Evidence) asking for different things. To alleviate this confusion, the AILA EB-5 Committee started to push for an “exemplar” procedure.
An exemplar I-526 is filed by the Regional Center, not the individual investor. It is sort of a “sample” I-526 where the investor’s SOF information is left out, but all the project information would be put in as if the project were going ahead tomorrow. Once the USCIS approves the exemplar petition, the project is deemed “pre-approved” by the USCIS. Sounds pretty straightforward, doesn’t it? But if you’ve spent a bit of time in the EB-5 world, you should know by now that nothing is simple when it comes to EB-5 :).
1. While the USCIS agreed to only look at investor SOF once investors started to file I-526s for an exemplar approved project, maddeningly they didn’t keep their promise to not review the project portion of the I-526s. So Regional Centers would end up waiting an extra 6 months or so to get their exemplar designation approved, go out to market and tout that their project was “pre-approved” and individual investors would sometimes still receive RFEs for the project information. In addition, with all the “extra” time on their hands, the SOF portion of the I-526s started to receive more stringent reviews. (Everyone remembers “that moment” when during a Stakeholder’s Call with the USCIS, someone asked Director Mayorkas why the USCIS bothered introducing the exemplar procedure if they weren’t going to honor it and the Director obviously had no idea that was going on.)
2. To make matters worse, as I-526 reviews became more and more delayed, the time it took for a Regional Center to get an I-526 exemplar (which is filed on an I-924A) approved became prohibitively long. It was already taking almost a year for the investor I-526s to get approved. So to tack on another year for the exemplar I-526 to get approved just didn’t make sense in terms of timing. And even if the Regional Centers took all this time, there was the issue that the exemplar wouldn’t even be honored (see 1 above). So more attorneys started to advise their clients not to do it.
Then, what is the status of the exemplar I-526 today?
Interestingly, it seems as if the USCIS has now gotten around to honoring exemplar I-526 projects. Recently a client got her I-526 approved in a ridiculously short period of time by investing in an exemplar approved project. Unfortunately, however, there are virtually no exemplar approved projects in the market anymore as most Regional Centers stopped applying for exemplar approvals (see 2 above). The few exemplar approved projects on the market today usually fall into one of two categories:
1. Regional Centers filing for exemplar approval at the same time as they start marketing. By doing this, Regional Centers are foregoing the marketing benefit of having an exemplar approved project to market (because by the time the approval is received, all the EB-5 slots would be sold out anyway); but the idea is to speed up the overall I-526 approval process by starting the clock for the review. (In fact, that was the case of my client who was the replacement investor in a project that had sold out and then received exemplar approval. So she was able to file her I-526 after the exemplar was approved.)
2. First projects for brand new Regional Centers. When someone files for a Regional Center, they can choose between filing for a Hypothetical Project and an Exemplar Project. (It used to be that there was also a third category of Actual Projects, but I think they have been subsumed into the Hypothetical category, though there is room for debate about this which I won’t address here.) Because getting an approval for your Regional Center takes a year or more anyway, it could make sense for a developer who is applying for a Regional Center designation to, if feasible, put in the application as an exemplar and get approved for an exemplar project off the bat. That said, even this is not that common anymore as during the multiple round of RFEs, people realize that if they “downgrade” their application to a hypothetical project the Regional Center will be approved more quickly as the standard for an Exemplar approval seems to get higher and higher.
All that said, I would like to point out, sometimes when people say a project is “pre-approved” these days, they might not be talking about an exemplar approved project. Rather, if I-526s for earlier investors have been approved, you might hear people referring to that project as a Pre-approved Project. In the eyes of the investor, I suppose that really is the same thing.