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