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[HOT] Implications of USCIS allowing job-creation only within the underlying regional center geographic area

During the recent teleconference, USCIS stated the following in response to the below question:

Question: For regional center projects, do indirect jobs created outside the regional center's geographic area count? For example, a regional center may be approved for Los Angeles County. The regional center’s first project may be a bakery located in Los Angeles County, and direct jobs are created in that county. The economic model, however, may not specify where indirect jobs are created. The flour distributing company that has to hire an additional employee to transport flour to the Los Angeles bakery may be located in Riverside County, for example. We believe that an indirect job in such circumstances should count for EB-5 purposes. Please confirm.

USCIS' responded as follows. When you read their response carefully, it's sort of vague what USCIS is really saying.

USCIS Response: Section 610(a) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note), as amended states that: “A regional center shall have jurisdiction over a limited geographic area, which shall be described in the proposal and consistent with the purpose of concentrating pooled investment in defined economic zones.” While the regulation at 8 CFR 204.6(m)(3) provides that each regional center must describe “how the regional center focuses on a geographical region of the United States,” USCIS interprets the statutory and regulatory prescribed focus to mean that the economic analysis methodology used by regional centers should also be focused on job creation within the bounds of the regional center. [See also Matter of Izummi.] As a result, a regional center should file an amended proposal seeking an expansion of the geographic area of the regional center if it wishes to include job creation within its economic models in areas outside of the bounds of the regional center.

Note: Regional economic impact models have limitations; one of the biggest is that they ARE regional in nature, so if most of the direct inputs are not locally produced the user of the model must account for this in their calculations. Problems occur when people misuse models like RIMS II by using data that is not limited to the area that is the focus of the regional center, but then claim job creation within the bounds of a regional center. The BEA defines geographic region as the area that will supply the majority of the direct inputs of production (including labor). So, if in the above example, if the RIMS II data for Los Angeles County was used in the economic impact analysis it will not tell you about an indirect job in Riverside County or any other County. The use of economic data, such as RIMS II input/output tables for areas outside of the bounds of the regional center does not accurately assess the impact of economic activity within the regional center.

Basically, this means the creation of both direct and any specific, identifiable indirect jobs, to be counted towards the I-829 petition, must occur within the geographic region. Also, any identifiable direct and indirects jobs that can be counted must be limited to economic activities occurring within the underlying geographic area of the regional center itself.

Even though such position taken by USCIS does not encourage regional center based EB-5 projects, this position does not surprise us. Note that we do not believe USCIS is saying even non-specific, unidentifiable indirect jobs flowing from direct jobs created within the geographic region must be shown to be occurring within the geographic region: in fact, we do not believe it's possible to show this. We believe what must be shown is that all economic activity or inputs used in an economic methodology must be shown to occur within the region. For example, where a plant is being constructed in a Region A, if most of the spending is for equipment parts which are manufactured from outside the Region A, then that particular economic activity should not count as one of the spending activities that creates either direct or indirect jobs. Now, what are the implications?

First, any job-estimating methodology (we think this term is more apt than "job-calculation methodology") must be pretty tight and based on a set of economic assumptions that are likely to take place.

Second, there will be a movement towards trying to expand the underlying geographic area, so more jobs can be counted.

Third, it will make it tougher for regional center based EB-5 projects to create jobs in this economy.

What does not make any sense to us is USCIS' position that relocated jobs into the underlying regional center area from outside the regional center area do not count towards the I-829 petition. According to USCIS, if a company relocates let's say its office based in San Francisco into a Brooklyn County which is the underlying geographic area of a hypothetical regional center, due to a bona-fide business reason, such jobs would not count towards I-829 cases filed under the Brooklyn County Regional Center. That is an illogical position based on the same logic applied to reach a position that jobs outside the underlying region do not count towards the I-829 petition. If you are going to focus on the underlying geographic area of a regional center and just look at the job-creation taking place there, then even relocated jobs are NEW jobs to THAT particular region: plain and simple. [We plan to ask USCIS in future regarding this apparent inconsistency.]