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EB-5 News: Philadelphia Convention Center Investment Plan Falls Through

According to the below news story, CanAm has signed up 150 Chinese seeking EB-5 visas to invest in a company that would loan money to the Philadelphia Convention Center. The investors already deposited their money–$500,000 each–in escrow, apparently as long as a year ago. The only problem is that the Convention Center doesn’t want to borrow the investors’ money. Now, the investors need to start over and identify new investment opportunities.

Clients often ask our firm what are the risks associated with a particular EB-5 investment. Here, as CanAm admits, there was a risk in raising the money before the Convention Center approved the deal. I wonder how many of the investors understood that risk.

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Philadelphia Inquirer
July 22, 2008

Chinese millionaires turned away: The Convention Center board says the money presents too many issues.
By Jennifer Lin and Marcia Gelbart

Close to 150 Chinese millionaires want to help Philadelphia expand its Convention Center, but the center’s board wants no part of their cash.

That has left the potential investors more than a little frustrated.

For the Chinese, the money represents a legal way to expedite access to U.S. “green cards” for permanent residency. Adhering to the requirements of a nearly 20-year-old federal immigration program, they have each plunked down $500,000 in an escrow account at a U.S. bank.

For the state, that money – $73.5 million – could be a cheap way for the Convention Center to borrow funds to cover some of the expansion’s construction costs, which are projected to surge over the $700 million budgeted. (Under the loan program, the money would be repaid, over five years, at a remarkably low interest rate of 2.5 percent.)

But for now the Convention Center, as cash-starved as it is, has no interest in the foreign funds.

“We considered it. We looked at it. But it was kind of a bridge too far . . . too complex for us to consider,” Buck Riley, chairman of the 15-member Convention Center Authority, said last week. “Right now, it is a dead issue.”

Another board member said the board was hesitant to get involved with what seemed like “immigration policy.”

Known in Philadelphia as the “Welcome Fund,” the little-known loan program has been administered jointly since 2003 by the Philadelphia Industrial Development Corp. (PIDC), a city-related nonprofit economic-development agency, and CanAm Enterprises, a New York firm that has structured immigrant investor deals since 1987, mostly in Canada.

PIDC identifies potential borrowers; CanAm seeks out investors. Approved investors receive conditional green cards.

Within two years, they become eligible for permanent green cards, if, among other things, their money spurred jobs. Under the Philadelphia program, 10 new jobs must be created for every $500,000 invested.

To date, the foreign funds have helped pay for 21 projects in Philadelphia totaling $148 million. Among those receiving investment dollars are Comcast Corp. ($26 million), Temple University Health System ($13 million), August Aerospace Corp. ($15 million), the law firm of Duane Morris ($6 million), and Stephen Starr’s Continental Mid-Town restaurant ($3 million).

“We owe $33 billion of debt on our balance sheet, so if we have an opportunity to borrow some money at 1 or 2 percent, yes, we’re going to do it,” said Comcast executive David L. Cohen.

With $73.5 million sitting in a bank account, the Convention Center project would have been the largest, by far.

“Investors like the Convention Center project. I feel very sad about this. Everybody is getting angry,” Dennis Chou said in an interview last week in Shanghai. Based in an office in a high-rise on Beijing Road, Chou works for CanAm, marketing the fund to would-be investors in the Asia-Pacific region.

Chou said he was told last February to begin marketing the Convention Center to investors, and he did – holding informational sessions about the center and Philadelphia throughout China.

Quickly, 147 investors were lined up, but with no movement since then, he said the fund’s credibility was under fire. “When people come in, I have to say, sorry, sorry. I don’t know how to explain to our customers.”

Indeed, CanAm’s president, Tom Rosenfeld, said that if the Convention Center deal collapsed, “it would hurt the whole program.”

In an interview from his New York office, Rosenfeld acknowledged there was a risk in raising the money before the Convention Center approved the deal.

But he said he did so after discussions with officials from the Rendell administration and PIDC. “The state is financing the construction. Clearly they have a say in it.”

Although the authority was not involved in those early conversations, Rosenfeld said, “the assumption was once they understood the program and the benefits, and that it was not harmful, they would vote for this thing.”

Michael Masch, Pennsylvania budget secretary until a few weeks ago, did not return calls last week.

But he voiced support for the loan program as recently as June 3 in a letter to the authority. By his estimates, he wrote, the low-cost loan could save the authority $6 million to $8 million on interest payments.

Peter Longstreth, president of PIDC, said, “Some of the investors may have gotten a little bit ahead of the deal. . . . The fact there are funds in an escrow for a period of time is quite typical.”

The Convention Center has taken no formal vote on the program and has more or less shelved it for the foreseeable future.

“It did not go over well. It seemed something outside our realm,” said board member David Woods, chief of staff to Senate Majority Leader Domenic Pileggi (R., Delaware).

“People were concerned they were dealing with immigration policy while they should really be focused on financing for the Convention Center.”

Still, Rosenfeld maintains hope that the investors’ efforts will not be futile, particularly since final construction costs remain unknown. “I’m not taking this to be a dead issue,” he said. “This is a great program that doesn’t cost the city or state any money, so shouldn’t Philadelphia benefit from it in a way that can complete construction of the Convention
Center?”

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Do Chinese Want to Live the Australian Dream?

Australia is the best destination for emigrants, according to a recent poll by the Pew Research Center of 3,200 adults in China.

The question posed was, “Suppose a young person who wanted to leave this country asked you to recommend where to go to lead a good life–what country would you recommend”? While there is no consensus, the most frequently cited countries are Australia (22%), Canada (17%), the United States (15%), France (8%), and Britain (8%). Few recommended Asian neighbors, such as Japan (3%), South Korea (1%), or Singapore (1%).

The limited interest in the U.S. as a destination for emigration is, I would guess, linked to current U.S. economic woes and America’s plummeting international popularity due to the Iraq war.

On the economy, strikingly large majorities of Chinese respondents are content with their country’s direction (86%) and economy (82%). This is the greatest level of satisfaction among the 24 nations included in the Pew survey. Despite satisfaction with national issues, Chinese respondents showed merely modest satisfaction with their personal job (64%) and household income (58%).

Chinese views of America’s intentions are mixed. The survey asked, “Overall, do you think of the U.S. as more of a partner of China, more of an enemy of China, or neither?” 13% said more of a partner, 34% said more of an enemy, and 41% said neither.

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Update: Consular Recommendations to Revoke Visa Petitions

Our law firm is often retained to represent clients where a U.S. Consulate has returned the visa petition to USCIS to consider revocation. This process is slower and less transparent than it should be. Still, this update explains that recently there have been some minor improvements in the process. These improvements were mentioned by Jonathan R. Scharfen, Acting Director of USCIS, in a recent response[1] to the USCIS Ombudsman’s recommendations for reform.[2]

Background

Generally, USCIS approval of a visa petition is a prerequisite for the issuance of a visa by a U.S. consulate abroad. For example, USCIS must approve an employer’s H-1B petition before the worker applies for a visa at a U.S. consulate. Similarly, USCIS must approve a U.S. husband’s immigrant visa petition before the wife can apply for an immigrant visa at a U.S. consulate.

Even after a petition has been approved, USCIS can revoke it for good cause.[3] And consular officers have instructions to return petitions to USCIS[4] for revocation where fraud, misrepresentation, or ineligibility is likely to lead to revocation.[5]

If USCIS concurs with the consular officer’s reasoning, USCIS issues a “Notice of Intent to Revoke” to give the petitioner an opportunity to respond.[6] Once the response from the petitioner is received, USCIS will either reaffirm the petition and send it back to the consulate for processing, or revoke the petition. A petitioner may appeal revocation to the Administrative Appeals Unit.

Ombudsman’s Recommendations Accepted by USCIS

* USCIS Receipt Notice: The Ombudsman recommended that USCIS issue a receipt notice to the petitioner upon receipt from the Consulate of a returned petition. Happily, USCIS has implemented this recommendation. It can take 6-12 months or more between from when a Consulate returns a petition to when USCIS to issue a Notice of Intent to Revoke a returned petition. Previously USCIS didn’t issue receipt notices to acknowledge they had received the returned petitions. Clients were left clueless about the status of their cases.

* USCIS Website Improvements: USCIS has agreed to improve its website’s information related to revocation of petitions, but it appears that the update has not yet been posted.

Ombudsman’s Recommendations Rejected by USCIS

* Uncertain Processing Times: The Ombudsman recommended that USCIS create standard processing times for consideration of revocation of returned petitions, and report current processing times online. USCIS responded that it would not be practical to establish standard processing times because some cases require lengthy fraud investigations, whereas others do not. USCIS’ response is, in my opinion, disappointing. Setting standard processing times are helpful for USCIS service centers to set work priorities and for stakeholders to set reasonable expectations as to how long their cases will take. Moreover, as for other types of cases that USCIS handles, if a fraud investigation is needed, then an exception can be made to the standard processing time.[7] Standard processing times would also, hopefully, reduce the current processing times for consular return cases. Currently, with consular return cases taking a year or more, clients must consider the faster option of filing a new petition. This creates extra work for USCIS, even though USCIS or the Consulate may refuse to act on the new case before USCIS completes decided whether or not to revoke the old petition.

Other Problems with the Consular Return Process

* Readjudication by Consulate: The State Department’s Visa Office has reminded Consulates that they “should not attempt to readjudicate petitions” already decided by USCIS. “Rather, a consular officer should only seek revocation of the petition if the officer knows, or has reason to believe, that the petition approval was obtained through fraud, misrepresentation or other unlawful means, or that the beneficiary is not entitled to the status conferred by the petition. Petitions generally should not be returned unless the post uncovers new information not known to [USCIS] at the time of petition approval.”[8] Despite this reminder, some consular officers seem to return petitions to USCIS when it is not warranted, thereby inconveniencing applicants and creating additional work for USCIS.

* Consular Notice of Intent to Return Petition to USCIS: Currently, a consular officer who decides to return a petition to USCIS needs only to provide notice of this fact to the visa applicant. The officer need not explain the reason why the petition is being returned.[9] Our recommendation is that the officer should provide notice to the visa applicant of the reason why and give the applicant a chance to provide additional evidence that the petition should not be revoked. In some cases, this will be more efficient than waiting a year or more for USCIS to decide whether to revoke the petition.

Conclusion

Despite recent improvements, this legal process remains slower and less transparent than it should be. Counsel should help the visa applicant to be prepared at the time of the consular interview to answer all relevant questions by the consular officer in order to minimize the risk that the officer will return the petition to USCIS with a recommendation for revocation. If there are problems at the interview, it may be wise to contact the Consulate to try to resolve the problems before the petition is returned to USCIS. If the petition is returned, it may be best to both respond to the Notice of Intent to Revoke and consider filing a new petition.

[1] Memo by Jonathan R. Scharfen, USCIS Acting Director, Response to Recommendation #33, Recommendation on the Processing of Petitions That Are Returned by the U.S. Department of State for Revocation/Revalidation (May 23, 2008).

[2] Memo by Prakash Khatri, USCIS Ombudsman, Recommendation on the Processing of Petitions That Are Returned by the U.S. Department of State for Revocation/Revalidation (Aug. 24, 2007).

[3] INA § 205; 8 C.F.R. § 214.2(l)(9).

[4] Consulates return immigrant petitions (including Ks and Vs) to the National Visa Center and nonimmigrant petitions to the Kentucky Consular Center. In either case, petitions are then routed to the appropriate USCIS offices. Forms I-130, Petitions for Alien Relatives, initially filed with an overseas USCIS office are returned directly to that office by the Consulate. Minutes of AILA-DOS Liaison Meeting (Oct. 2007).

[5] Cable, DOS, 01-State-121801 (July 13, 2001).

[6] 8 C.F.R. § 205.2(b); 8 CFR 214.2(l)(9)(iii).

[7] For example, according to USCIS regulations, L-1 petitions should be adjudicated within 30 days. However, where a fraud investigation is needed, USCIS makes an exception to this time limit. 8 C.F.R. § 214.2(l)(7).

[8] Cable, DOS, 01-State-121801 (July 13, 2001).

[9] Minutes of AILA-DOS Liaison Meeting (Oct. 2007).

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USCIS Beijing Office Refuses to Accept Fathers’ Visa Petitions

Today was the fourth time in four years that U.S. citizen fathers have told me that the Beijing office of U.S. Citizenship and Immigration Services (USCIS) has refused to accept immigrant visa petitions (Forms I-130) on behalf of their children.

On all four occassions, USCIS stated reason for the refusal was that the fathers failed to submit photos and Forms G-325A (biographic information) with the petitions. Each time, I’ve contacted USCIS to explain that such materials aren’t required by the official instructions. (A spouse’s immigrant petition does need these materials). And each time, USCIS has agreed to follow the official instructions, accepting the re-submitted petitions.

These four fathers must only be a drop in the bucket. Many others have undoubtedly been refused for the same erroneous reason. If these fathers are able to follow USCIS official instructions, USCIS Beijing should train its staff to do so too.

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U.S. Visa Information Call Center Unable to Book Appointments

To book an appointment at the U.S. Consulates in China to apply for a visa, normally the applicant must purchase a card with a PIN number at CITIC Bank and then call the Visa Information Call Center. PIN cards cost 54 RMB for 12 minutes of phone time or 36 RMB for 8 minutes.

From May 5 through May 15, our law firm called the Visa Information Call Center daily, using up a number of PIN cards, but each time we were told that no appointment was available at all for any future date.

This problem is not new. It was listed as a matter of concern in the American Chamber of Commerce in China’s 2008 White Paper covering visa issues.

This month’s 10-day freeze on booking appointments in Beijing was explained by one visa section official as follows:

The Embassy has scaled down its workload considerably this week. Originally, it was because of crisis management training for our staff ahead for the Olympics. Then a real crisis occurred with the earthquake [in Sichuan], so we have fewer people available to interview.

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Don’t Be Misled by the USCIS Instructions for Form I-130, Petition for Alien Relative

From: Gary Chodorow
Sent: Tuesday, April 01, 2008 8:06 PM
To: uscis.webmaster@dhs.gov
Subject: Message from a Nitpicky Lawyer

Dear USCIS Communications Office:

I’ve read your recent announcement that “[e]ffective immediately, all petitioners filing stand-alone Form I-130s [Petitions for Alien Relatives] must file their petitions with the Chicago Lockbox (emphasis added). USCIS Press Room, USCIS Revising Filing Instructions for Petition for Alien Relative: Form I-130s to Be Filed with the Chicago Lockbox (Mar. 21, 2008); USCIS Immigration Forms, Petition for Alien Relative (Feb. 19, 2008).

I am concerned that your announcement may mislead petitioners residing abroad. The Form I-130 instructions at page 4 continue to allow such petitioners to file their petitions abroad: “Petitioners residing abroad: If you live in Canada, file your petition at the Vermont Service Center. Exception: If you are a U.S. citizen residing in Canada, and you are petitioning for your spouse, child, or parent, you may file the petition at the nearest U.S. Embassy or consulate, except for those in Quebec City. If you reside elsewhere outside the United States file, [sic] your relative petition at the USCIS office overseas or the U.S. Embassy or consulate having jurisdiction over the area where you live. For further information, contact the nearest U.S. Embassy or consulate.”

This is a small detail, but amending your announcement may save numerous petitioners the cost and delay associated with filing their petitions in the wrong place.

Very truly yours,

Gary Chodorow
Attorney at Law

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Tourism Agreement Should Be Applauded, But Does It Create an Unfair Monopoly?

On Dec. 11, 2007, the U.S. and China signed a memorandum of understanding on group leisure travel from China to the United States. This MOU should be applauded because it lifts prior Chinese rules restricting the travel industry. Still, a question remains whether travel agencies designated by the China National Tourism Agency (CNTA) will receive an unfair monopoly under the MOU.

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Prior Chinese restrictions prevented travel agencies advertising and organizing group leisure travel to the United States. These restrictions were in place because China and the U.S. hadn’t negotiated an approved destination status (ADS) agreement. Under a typical ADS agreement, China eases these restrictions for CNTA-designated travel agencies that post a bond with the Chinese government. In turn, the agencies collect “insurance” from their clients, the amount of which varies. And the destination country agrees to ease visa application requirements by waiving interview and fingerprinting requirements.
An ADS with the U.S. agreement isn’t possible given post-911 U.S. laws requiring interviews and fingerprints. Still, the MOU essentially provides the benefits of an ADS agreement without requiring the U.S. to change its laws. Under the MOU, CNTA-designated travel agencies may advertise and organize group leisure travel to the U.S. In return, among other things, the U.S. agrees that CNTA-designated agencies may make “exclusive” group interview appointments with the U.S. consular posts in China.
This is a step in the right direction. Chinese tourist dollars benefit the U.S. economy. Also, in the past, there has been a great deal of disembling as Chinese travel agencies sought to avoid market restrictions by organizing leisure travel under the guise of “business” travel. The agencies would then encourage applicants to misrepresent their travel purpose in U.S. visa applications. And U.S. consular posts would often deny such applications for failure to prove the business purpose or for misrepresentation. The MOU should alleviate this problem.
Still, the U.S. may be giving an unfair monopoly to CNTA-designated travel agencies by allowing them “exclusive” group interview appointment rights. It’s not clear what these “exclusive” rights are. Earlier in the negotiations over the MOU, the Commerce Department objected to giving exclusive rights to CNTA-designated agencies. A 2006 Washington Post editorial explained:

Needless to say, the United States cannot give preferential treatment to selected travel companies and grant them the profits from all inbound Chinese travel business. It would violate our laws and our most basic ideas of fairness.

But it’s not clear precisely what “exclusive” rights CNTA-designated agencies get under the MOU. The U.S. consular posts already allow group appointments to be booked if six or more are traveling together at the same time and for the same purpose.The MOU is expected to be implemented in the Spring of 2008. We may find out what “exclusive” rights CNTA-designated agencies have at that point.

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Visa Statistics from the U.S. Embassy in Beijing

U.S. visa-issuing posts in China include the U.S. Embassy in Beijing and the Consulates in Shanghai, Guanghzou, Shenyang, and Chengdu.

In calendar year 2007, the U.S. Embassy and Consulates in china issued 417,146 nonimmigrant visas, a 17% increase over 2006. The vast majority, 417,146 or 69%, were B1/B2 visas (visitors for business and pleasure). Student and exchange visitor visas (presumably, F, M, J, and Q) made up 43,467 or 13% of the visas issued.

The U.S. Embassy alone issued 185,275 visas (44% of the China-wide total) in 2007, a 13% increase over 2006. Again, the majority, 185,275 or 70%, were B1/B2 and 24,137 or 13% were student and exchange visitor visas.

Source: U.S. Embassy in Beijing, NIV Issuances Workload Report.

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U.S. Visa Application Fee Increase

NONIMMIGRANT VISA APPLICATION FEE WILL INCREASE TO $131

Effective January 1, 2008, the application fee for a U.S. nonimmigrant visa will increase from $100 to $131. Those applicants who paid the prior $100 application fee before January 1, 2008 will be processed without further payment only if they appear for a visa interview before January 31, 2008.

Applicants who paid the prior $100 application fee and appear for visa interviews after January 31, 2008 must pay the difference – $31 – at CITIC Bank and obtain a receipt before they will be interviewed.

Any payments made after January 1, 2008, regardless of the interview date, must be for the full $131 fee.

IMMIGRANT VISA APPLICATION FEE WILL INCREASE TO $355

Effective January 1, 2008, the application fee for a U.S. immigrant visa will increase from $335 to $355. Those applicants who paid the prior $335 application fee before January 1, 2008 will be processed without further payment even if they appear for an immigrant visa interview after January 1, 2008.

Most IV applicants pay their fees through the Department of State’s National Visa Center (NVC) in the United States. Fee bills sent by NVC will reflect this change effective January 1, 2008. Applicants who make their payment after January 1, 2008 will be required to pay the increase even if their original fee bill sent prior to January 1, 2008 displays the fee of $335.

Source: U.S. Embassy

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How to Improve America’s Image in the World

In a recent article in Slate, Fred Kaplan summarizes readers’ ideas of how to improve America’s image in the world:

Many readers [point out] the rudeness and paranoia on display at U.S. embassies and customs desks. Americans living in Europe say that some of their friends, even those who studied in American universities, refuse to come here anymore because they’ve been treated so horribly at the airports.

Eric Henry, a doctoral student at Cornell who has spent much time in Shenyang, China, recalls that the U.S. Consulate used to open its libraries, film screenings, and Fourth of July celebrations. Now, he says, the consulate is a “razor-wired compound”; an American friend of his was recently arrested for taking pictures of the front gate. “Expats and Chinese who used to visit the consulate quite regularly now only grouse about the things that used to go on there,” he writes.

Aren’t diplomatic personnel trained to be diplomatic? Of course. In my opinion, the problem isn’t so much rude or paranoid visa officers but instead budgetary, legal, and security concerns that compete with customer-friendliness:

  • BUDGET: On one hand, there’s huge demand for U.S. visas. On the other, there’s a shortage of consular personnel and insufficient facilities. It can take a month or more to book an appointment. Visa sections can be overcrowded. So, harried visa officers need to make decisions based on very brief interviews.
  • LAW: For most temporary visas, U.S. law requires the officer to presume that the applicant is guilty of intending to the U.S. permanently until the applicant proves otherwise. In fact, a significant percentage of the applicants give false information and use fraudulent documents. Still, how would you like a government official to tell you that you’re presumed guilty and that you get only a one-minute interview to prove your innocence?
  • SECURITY: Does it strike you as a fun experience to go through a metal detector, be fingerprinted, be interrogated, and be photographed? All mandatory for visa applicants. I’m not saying that these budgetary, legal, and security concerns aren’t valid. I’m just saying that the visa officers shouldn’t shoulder all the blame for the lack of customer-friendliness in consulates. It’s not enough for Condoleezza Rice to remind the officers to smile and say, “have a nice day.” Not to mention that the 20 to 25% of applicants who are denied temporary visas will probably not recommend the experience to their friends. Seriously, I would be interested in learning more about the Bureau of Consular Affairs’ efforts to improve customer-friendliness if anybody can point me in the right direction.
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GAO Report: Growing Visa Demand a Challenge for State Department

A new report from the U.S. Government Accountability Office highlights several challenges the State Department faces in keeping up with growing visa demand at consular posts in China. GAO, Border Security: Long-Term Strategy Needed to Keep Pace with Increasing Demand for Visas, GAO-07-847 (July 2007).

INACCURATE ESTIMATES OF VISA APPOINTMENT WAIT TIMES

One challenge is that the State Department in Washington, DC, doesn’t currently have accurate estimates of visa appointment wait times at consular posts. Posts use different methods–not one standard–for making these estimates. Most disturbing, “some posts artificially limit wait times by tightly controlling the availability of future appointment slots—such as by not making appointments available beyond a certain date, which can make appointment scheduling burdensome for the applicant who must continually check for new openings.”

[The State Department website today reports B visa wait times in China as follows: Beijing 30 days, Shanghai 20 days, Guangzhou 36 days.]

TEN-PRINT FINGERSCANS MAY INCREASE WAIT TIMES

By September 2007, State plans to have equipment in place at all posts to do 10-print fingerscans. This new security measure may slow down appointments and increase wait times. London has already begun using 10-point fingerscans, leading to “about a 13 percent reduction in the number of applicants processed in a day. However, as each post faces slightly different circumstances, it is unclear whether this reduction would take place at all posts.” Id. 22.

CONTINUED GROWTH IN VISA APPLICATION VOLUME

Consualr posts in China reported that their visa adjudication volumes increased between 18 and 21 percent last year alone, and growth is expected to continue. Id. at 10. According to a State Department study, visa applications in China are projected to grow 232% from 2005 to 2020. This represents the highest growth rate of any of the countries studied and the growth in the number of applications (behind Mexico).

STRAINED CONSULAR FACILITIES

Consular facilities are having a tough time keeping up with demand. Beijing is planning to open a new Embassy just in time for the 2008 Olympics. The new facility will meet consular section needs when it first opens, but the post expects to quickly outgrow the new space as workload will soon require an additional six interview windows. Id. at 22.

In Shanghai, even though the consular section was moved to an offsite location to process visa applications, the post has indicated that it already has reached visa-adjudicating capacity because it cannot add any more interviewing windows in the current space, and construction on a new consulate will not begin until 2009.

STATE DEPARTMENT’S TWO-YEAR PLAN

The State Department has adopted a Two-Year Plan to meet growing visa demand by the deployment of a worldwide appointment system; use of the Kentucky Consular Center to verify information on visa petitions; revalidation of fingerprints for applicants who have already completed the 10-fingerprint scan; the implementation of an entirely paperless visa application process by the end of 2007; and remote or off-site interviewing of visa applicants.

The full GAO report is available at the GAO website.