EB5 Investors Magazine Volume 2 Issue 1 | Page 36

Hypothetical , Actual or

Exemplar ?

Choosing which regional center project proposal is right for you

by Lauren Cohen
In order to secure designation as a USCISapproved EB-5 Regional Center that is authorized to accept EB-5 investments , applicants must first file Form I-924 with USCIS . The regulations governing the EB-5 program stipulate that the proposal submitted to obtain such designation must demonstrate : ( 1 ) that the center will promote economic growth in that region ; ( 2 ) that direct or indirect job creation will be made through capital investments ; ( 3 ) the amount and source of capital investment and promotional efforts ; and ( 4 ) a positive impact on the regional or national economy . The proposal must be supported by economically or statistically valid forecasting tools . 1
To fulfill these requirements , applicants submit a proposal for a hypothetical , actual , or exemplar project . The amount of verifiable detail required depends on the type of project proposed at the time of submission . Actual and exemplar project proposals require the submission of a Matter of Ho-compliant business plan .
A Matter of Ho business plan must include the following components : ( 1 ) a description of the business ; ( 2 ) business structure and objectives ; ( 3 ) a marketing plan with target market analysis ; ( 4 ) personnel experience ; ( 5 ) competitive analysis ; ( 6 ) required licenses and permits ; ( 7 ) a staffing timetable for hiring ; ( 8 ) job descriptions ; and ( 9 ) budget and financial projections . Additionally , the overriding requirement of Matter of Ho is that the business plan must be credible .
Each of the possible project options is detailed below , and the options are also compared in the accompanying table .
1
8 C . F . R . § 204.6 ( m )( 3 )
2
This is the language of USCIS in the May 30th Policy Memorandum . In subsequent decisions the AAO interpreted this to mean that hypothetical projects only need to include general proposals and predictions . http :// www . uscis . gov / sites / default / files / err / K1 % 20- % 20Request % 20for % 20 Participation % 20as % 20Regional % 20Center / Decisions _ Issued _ in _ 2013 / JUN122013 _ 01K1610 . pdf
Hypothetical projects
A hypothetical project proposal is best if you are not ready to move forward with a specific project , but want to obtain overall approval for your regional center so that you will be able to accept investments when you are ready to move forward with a project .
Hypothetical projects may only need to include general proposals and predictions to show that the center will “ more likely than not promote economic growth , improved regional productivity , job creation , and increased domestic capital investment .” 2
Notably , a hypothetical project proposal does not demand that the business plan be Matter of Ho-compliant . Nonetheless , although a hypothetical project requires only a business plan with general proposals and predictions , it is strongly recommended that the business plan meet most , if not all , of the Matter of Ho criteria to ensure a smooth and pain-free approval .
Additionally , in a recent non-precedent decision , the Administrative Appeals Office ( AAO ) clarified that submitting a hypothetical project does not require the applicant to include letters of intent or commitment from prospective sources of matching funds .
Although the hypothetical path requires less initial planning and documentation , it may cause more work and worry at later stages . Unlike for actual and exemplar projects , USCIS determinations based on a hypothetical project will not be given deference in a subsequent filing . This means that when an applicant files either an I-526 investor petition or an amended I-924 , USCIS will treat the petition as a new case rather than relying on the previous decision as authority , creating the possibility that new investors will be rejected even if past investors had been approved . Additionally , if organizational and transactional documents are submitted with a hypothetical project , they will not be reviewed , even if the applicant specifically requests a compliance review . Compliance reviews are only available to exemplar projects .
34 EB5 Investors Magazine