Written by Brooke Edwards Staggs, City Editor Victorville Daily Press
VICTORVILLE • A federal appeals office upheld the termination of Victorville’s EB-5 visa investor center, leaving the city with no option but to pursue a pricey lawsuit or say goodbye to millions in funding they’d hoped to borrow through the program.
City officials got the news Thursday afternoon, with plans to discuss next steps during the Jan. 17 city council meeting.
U.S. Citizenship and Immigration Services approved Victorville’s Regional Center in 2009, allowing foreign nationals to supply at-risk loans to the city so long as that money helped create 10 local jobs. Investors would then be granted U.S. visas and the loans would have to be paid back five years later with interest.
Nineteen people gave Victorville $500,000 each under the program, and the city intended to use that money to pay back restricted funds borrowed from its water department to build the struggling wastewater plant at Southern California Logistics Airport.
Then, in a precedent-setting move, USCIS terminated Victorville’s program in October 2010 due to “material factual discrepancies” in related financial reports.
Victorville sent USCIS additional information and appealed to that office to overturn the decision, but was turned down in May. The city then filed a lawsuit in Washington, D.C. District Court against USCIS, the Department of Homeland Security and several top officials with those agencies, but agreed to pause that civil case as it waited on word from USCIS’s Administrative Appeals Office.
In a letter dated Dec. 21, the AAO affirmed the decision to terminate Victorville’s program.
The appeals office pointed out several fatal flaws in the EB-5 center here, including apparent contradictions between information provided by Councilman Mike Rothschild and the city’s attorneys, conflicts in the timeline of when the city loaned funds versus when it told USCIS they were needed and more.
However, the primary reason for upholding the termination was because Victorville couldn’t prove it had met the EB-5 program’s strict job requirements.
“At issue is whether the alien investors can be credited with job creation when, in actuality, they are merely preserving jobs,” the letter states, pointing out that Victorville said it never spent the loan money but its wastewater plant is already operating.
The city built its wastewater treatment plant primarily using interfund loans, pledging to pay them back in part with EB-5 funds. Now the city has refunded all $9.5 million in loans it had collected and is hoping the regional Victor Valley Wastewater Reclamation Authority will buy its plant so it can replenish reserves.
The City Council will discuss whether to move forward with its lawsuit against the federal government during closed session beginning 5 p.m. Jan. 17 in City Hall. The meeting on Jan. 3 has been canceled due to the holidays.
Brooke Edwards Staggs may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.