EB-5 Q&A
Note: The Q&A on this page are compiled from USCIS answers to stakeholder questions published in presentations and executive summaries from the quarterly EB-5 stakeholder meetings. This information can be quite technical; if you’re just looking for a basic introduction to EB-5 in question/answer form I recommend the FAQ published by Klasko Law.
Questions and Answers compiled from EB‐5 Stakeholder Meeting Presentations and Summaries since 12/14/2009
TOPICS:
- Adjudication
- Amendments/material change
- Business Type (“new”/”expanded”/”restructured” commercial enterprises)
- Business Type (“Troubled Business”)
- Dependent/derivative issues
- Diversified Investment
- E-2 to EB-5 conversion
- Economic Analysis
- Escrow
- Regional Center geographic area
- Hypothetical projects
- I-526
- I-829
- Investment Terms
- Job creation
- Marketing
- Regional Center applications
- Source of Funds
- Stand-alone EB-5
- TEA
- Use of EB-5 Capital
- Verifying Job Creation
- Visa Usage
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Meeting |
Subject |
Question |
Answer |
| Is it correct to say that petitions are adjudicated based on the order they are submitted; i.e., RC petitions submitted after EB-5 Basic petitions (I-526s) have been filed are not put ahead of them. | Basic I-526 petitions have a processing workflow that is separate from regional center-associated I-526 petitions. However, the target processing time for each workflow is currently the same. | ||
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Adjudication |
The instructions for Form I-526 do not cover the supporting documents required in connection with a regional center pilot program I-526 petition. Can you give us a list of the required supporting documents? | The required supporting documents will vary based on the Regional Center application. Upon approval of a Regional Center application, the approval notice will list the documents that should be submitted in support of the I-526 petitions. Additionally, the regulations at 8 CFR 204.6(j) describe the initial evidence which should accompany an I-526 petition. Lastly, please note that USCIS intends to revise the I-526 and I-829 instructions in the near future. | |
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Adjudication |
Will petitions arrive in the EB-5 unit with tabs cut off? Please clarify preferred filing format guidelines for practitioners on this issue. | The Texas Service Center does not currently adjudicate Form I-526 petitions. All EB-5 cases are adjudicated at the California Service Center. While USCIS encourages petitioners to use tab dividers with the tabs at the bottom of the page when assembling Form I-526 petitions, the practice of using colored paper dividers may also be effective in indexing petition exhibits to facilitate their review by Immigration Services Officers. | |
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Adjudication (feedback) |
Once a response to an RFE is received by the California Service Center and is pending more than 30 days, how should the petitioner follow up with USCIS? If there is no mailbox, is there any other recourse other than continuing to wait? Response to emails sent to the | The California Service Center is not aware of any cases that have been pending far beyond the 30 day normal processing time. However, please note that when a response to an RFE is received, there is a possibility that the information provided may open up a new line if questioning. If a response to an RFE is mailed and more than 30 days have passed since the information was received by the Agency, we encourage stakeholders to send an email to USCIS.ImmigrantInvestorProgram@dhs.gov to alert us. | |
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Adjudication (feedback) |
If a RC based EB-5 project has been pre-approved, and a RFE is issued (and no changes have been made to the pre-approved project) – can we bring this to the attention of the CSC Management? | The Form I-526 petitioner and/or the attorney or accredited representative of record on Form G-28, may bring to the attention of USCIS any EB-5 case decision or notice that appears to be in gross error by sending an inquiry if to the EB-5 general mailbox at USCIS.ImmigrantInvestorProgram@dhs.gov. Please see the EB-5 Inquiries page on the USCIS website at www.uscis.gov for further information regarding EB-5 inquiries. | |
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Adjudication (SEC) |
Is an EB-5 Regional Center subject to Securities Exchange Commission regulation? | The Security Exchange Commission (SEC) is the appropriate source to provide guidance regarding whether an entity and/or particular capital investment instrument is subject to SEC regulations. USCIS does not oversee EB-5 Regional Center compliance with SEC regulations. It is important to note that many other federal government agencies are involved in the oversight of business entities and capital investment instruments that are utilized for investments within the United States, to include the SEC. Unlike the Executive Order 12959 requirements regarding USCIS’s assistance with OFAC regulations, USCIS typically has no role in regulating aspects of EB-5 capital investment unrelated to immigration. | |
| If a business plan provides for investments in multiple job-creating businesses over time, and if the commercial enterprise moves the money from one job-creating business to another consistent with the business plan, does every such movement of funds require an amended I-526? | In Matter of Ho, the Administrative Appeals Office held that a “comprehensive business plan as contemplated by the regulations should contain, at a minimum, a description of the business, its products and/or services, and its objectives.” The business plan that is required for the Form I-526 petition is the road map to determining whether the capital investment has been made, that the proposed capital investment project is feasible, and that the requisite number of jobs have or can reasonably be expected to be created at the Form I-829 petition stage. A business plan that is submitted in support of a Form I-526 petition that is affiliated with a regional center must be in accordance with the USCIS-approved capital investment activities of the regional center. A Form I-526 petition business plan as contemplated above must have sufficient detail regarding the proposed multiple investment activities and must specifically provide for investment in multiple job-creating businesses over time in order for USCIS to determine that it is feasible. The business plan must also demonstrate that the requisite jobs will be created through the succession of capital investments through the commercial enterprise. Such a business plan may help to form the basis for the approval of the Form I-526 petition. In such an instance, an amended petition would not be required as long as the capital investment activities conducted by the EB-5 alien are in keeping with the approved business plan. | ||
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amendments/material change |
What are the consequences of variance between the business plan approved at the I-526 stage and the actual capital investment and job creating activities that are documented in the Form I-829 Petition? | One of the primary reasons investors encounter challenges at the I-829 stage is due to the variances between the business plan that was approved at the I-526 stage and the actual capital investment and job creating activities that are documented in the Form I-829 petition. Deviations from the business plan in an approved Form I-526 petition are material to the adjudication of Form I-829 when the evidence demonstrating compliance with the capital investment and/or job creation requirements is significantly different than what was proposed in the approved Form I-526 petition. Note that in Chang v. United States of America, 327 F.3d 911 (9th Cir. 2003), the court stated that although the adjudication of the I-829 is not a re-adjudication of the I-526, the Form I- 526 approval may not be “decoupled” from the I-829 approval. The court further stated that approval of Form I-829 is predicated by the approval of Form I-526 and the “successful execution of the approved plan.” |
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amendments/material change |
What is the relationship between an approved Form I-526 petition and the Form I-829 petition in establishing EB-5 eligibility? | Each alien investor must file a Form I-526 petition to establish his or her eligibility for classification as an EB-5 alien investor. If approved, the business plan (and the economic analysis in the case of an RC-affiliated new commercial enterprise) provided in support of the Form I-526 petition describes how the investor is going to satisfy the requirements of the EB-5 program, and, therefore, removal of conditions at the Form I-829 petition stage. Chang v. United States of America, 327 F. 3d 911(9th Cir. 2003). In Chang the court stated that although the adjudication of the I- 829 is not a re-adjudication of the I-526, the Form I-526 approval may not be “decoupled” from the I-829 approval. The court further stated that Form I-829 approval is predicated by the Form I-526 approval and the “successful execution of the approved plan.” | |
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amendments/material change |
When is a deviation from the business plan in an approved Form I- 526 petition material to the adjudication of the alien’s Form I-829 petition? | When the eligibility requirements at INA 216A(d) and 8 CFR 216.6(c) have not been met as provided in the approved plan in the Form I-526 petition. When the evidence demonstrating compliance with the capital investment and/or job creation requirements is significantly | |
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amendments/material change |
“What flexibility do Regional Centers have to utilize economic models for EB-5 projects that were not used as part of their original Regional Center proposal, which in many cases, was approved years ago? Both USCIS and the regulations have historically recognized models such as IMPLAN, RIMS II, and REDYNE as “reasonable methodologies,” but it’s unclear whether USCIS would accept a switch from the use of one of these to another. Clearly, switching economic models in the middle of a specific EB-5 project would be problematic and impractical, but there is nothing in the regulations that would prohibit the application of a different economic model on projects subsequent to the RC submission. Currently, the uncertainty has created the following concerns: (1) Ms. Atteberry indicated a preference for RIMS II during the June 2010 stakeholder meeting and many RCs had not previously adopted RIMS, (2) many RCs are now engaging more experienced economists, each of whom have their own personal preference for economic models, (3) the models themselves are improving and RCs would like flexibility to utilize advances, and finally (4) an amendment would impose a lengthy and expensive delay in getting much needed EB- 5 capital to projects that would create new jobs.” | Adjudicative Issues: Switching model after the RC was approved requires an amendment. See FormI-924 Application Instructions (http://www.uscis.gov/files/form/i-924instr.pdf). Economic Issues: USCIS does not prefer or endorse any particular model. RIMS II facilitates transparency . Model preferences. Remember your audience | |
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amendments/material change |
What documentation is required at the I-829 stage to prove indirect jobs with an expenditure model? What if some of the foundation facts on which the economic report was based have occurred and others have not? | The determination regarding whether the investor has met the job creation requirements will be established by a review of the required initial evidence at 8 CFR 216.6(a)(4) for the Form I-829 petition. Investors must show at the time of the removal of conditions that they performed the activities described in the approved Form I-526 petition, and the economic analysis of the activities must be based upon the associated approved regional center methodology for demonstrating job creation. An investor’s I-829 petition to remove the conditions which was based on such a project within an approved I-526 petition involving the crediting of jobs based on a capital expenditure econometric model needs to be supported by evidence showing that the funds were expended in the job-creating activities outlined within the Form I-526. The impacts on the ultimate outcome of a given I-829 in the event that some of the foundation facts on which the economic report was based have occurred and others have not are dependent on the specific fact pattern of the case. | |
| Also, must evidence of restructuring or expansion be submitted with the I-526, or should this evidence be submitted with the I-829? | The evidence must be submitted with the Form I-526 petition, and if the transaction is not yet completed at the time of the filing of the Form I-526 petition, then additional evidence must be provided in support of the Form I-829 petition to show that the commercial enterprise that was established prior to November 29, 1990 was expanded, or restructured/reorganized in accordance with 8 CFR 204.6(h)(2) and (3). | ||
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Business Type |
Q: 8 C.F.R. § 204.6(e) defines “new” as being established after November 29, 1990. Assume a company was created in 1991 and has been in existence ever since. An EB-5 investor plans to invest in the company now. Does the investor’s investment qualify under 8 C.F.R. § 204.6(h)(1) (creating an original business) without needing to meet the requirements of expansion of an existing business under 8 C.F.R. § 204.6(h)(3) or restructuring/reorganization under 8 C.F.R. § 204.6(h)(2)? | The alien investor does not have to have been involved in the creation of the commercial enterprise as noted above. Yes, the alien’s investment would qualify without the need to show that the “new” commercial enterprise was “expanded” or “restructured/reorganized” under 8 CFR 204.6(h)(2) and (3). | |
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Business Type |
Q: Is it correct that expansion of an existing business under 8 C.F.R. § 204.6(h)(3) or restructuring/reorganization under 8 C.F.R. § 204.6(h)(2) are only necessary to meet when the business entity was created after November 29, 1990? | The expansion of an existing business under 8 C.F.R. § 204.6(h)(3) or restructuring/reorganization under 8 C.F.R. § 204.6(h)(2) are only necessary to meet when the commercial enterprise was created before, not after, November 29, 1990? | |
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Business Type |
What factual scenarios have been approved as a “restructuring or reorganization” sufficient to create a new commercial enterprise under 8 C.F.R. § 204.6(h)(2)? For example, if an EB-5 investor buys a company that was created before Nov. 29, 1990 and then folds it into his own holding company as a subsidiary, is that a restructuring or reorganization? If not, what counts as a restructuring or reorganization? | USCIS does not maintain records independent of the individual EB-5 case files that document the factual scenarios that have been approved for a particular EB-5 eligibility requirement. However, it was held in Matter of Soffici, that the petitioner in that case did not show the degree of restructuring and reorganization required by 8 CFR 204.6(h)(2). In that case, the commercial enterprise was a hotel that had always been operated as a Howard Johnson and was still a Howard Johnson at the time of the issuance of the decision. Matter of Soffici also held that a few cosmetic changes to the decor and a new marketing strategy for success did not constitute the kind of restructuring contemplated by the regulations, nor did a simple change in ownership. It is not possible to state whether the abbreviated scenario outlined above would be qualifying. The question may not be answered in the abstract without a review of the specific evidence of record. | |
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Business Type |
What’s the difference between “reorganized or restructured business” and a “troubled business” for EB-5 purposes? | The “reorganized or restructured business” concept relates to the requirement that the commercial enterprise in which the EB-5 investor will invest must be “new”, which is defined in 8 CFR 204.6(e) as a commercial enterprise established after November 29, 1990. 8 CFR 204.6(h)(2) provides that a new commercial enterprise may consist of the purchase of an existing business and simultaneous or subsequent restructuring or reorganization such that a new commercial enterprise results. Note that the regulation at 8 CFR 204.6(h) has been superseded by a subsequent statutory amendment (Section 11036 of Public Law 107-273), which eliminated the requirement that the investor had to establish the new commercial enterprise. Presently, an investor only has to invest in a new commercial enterprise. Matter of Soffici, 22 I. & N. Dec. 158 (Assoc. Comm., 1998), is a binding precedent decision that provides a detailed discussion regarding the factors that must be established to demonstrate that a commercial enterprise is new by virtue of being reorganized or restructured. If an immigrant investor makes an investment in a business that is already operating which does not meet the “troubled business” requirements, then he or she may only be credited with jobs created as a result of their investment. Matter of Soffici, also provides in pertinent part that: A petitioner who acquires a pre-existing business must show that the investment has created, or at least has a reasonable prospect of creating, 10 full-time positions, in addition to those existing before acquisition. The petitioner must, therefore, present evidence concerning the pre- acquisition level of employment. Simply maintaining the pre-acquisition level of employment is not sufficient, unless the petitioner shows that the pre-existing business qualifies as a “troubled business.” The “troubled business” concept relates to the crediting of job creation through the preservation of jobs in an existing business that has incurred substantial net losses, and is defined in 8 CFR 204.6(e) as: [A] business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve or twenty- four month period prior to the priority date on the alien entrepreneur’s Form I-526, and the loss for such period is at least equal to twenty per cent of the troubled business’s net worth prior to such loss. For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded. 8 CFR 204.6(j)(4)(ii) provides that: To show that a new commercial enterprise which has been established through a capital investment in a troubled business meets the statutory employment creation requirement, the [I-526] petition must be accompanied by evidence that the number of existing employees is being or will be maintained at no less than the pre-investment level for a period of at least two years. Photocopies of tax records, Forms I-9, or other relevant documents for the qualifying employees and a comprehensive business plan shall be submitted in support of the petition. In the case of a regional center investment project context, an acceptable economic analysis may demonstrate the preservation of indirect as well as direct jobs in a “troubled business” through the EB-5 investment activity. In summary, the issue of whether a business has been “restructured or reorganized” is related to establishing if a business can be considered a new commercial enterprise. A “troubled business” only has to be shown to have been ‘reorganized or restructured” if the commercial enterprise was established on or before November 29, 1990. | |
| Please confirm that an investor in a troubled business in a regional center can count the indirect jobs associated with the preservation of the jobs that are preserved in the troubled business. | In theory, Yes. However, a determination as to whether a specific business plan and supporting economic analysis is compliant with the statutory and regulatory EB-5 requirements has to be made on a case-by-case basis. | ||
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Troubled Business |
May invested capital be used to increase the capital of a troubled bank or other financial institution, assuming the job creation or retention criteria is met? | USCIS reminds stakeholders that the investment of EB-5 capital into a “troubled” bank or financial institution may be a qualifying investment for EB-5 purposes. However, a determination regarding whether the investment will qualify either under the basic EB-5 program or through the Regional Center-affiliated program can only be made based upon the review of the record of proceeding in an actual EB-5 Form I-526 petition or Form I-924 Regional Center application. | |
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Troubled Business |
Will USCIS agree with the contention that a saved or preserved job under the ‘troubled business’ definition is equivalent to a direct created job? | Every EB-5 investor must create at least 10 jobs as a result of his or her capital investment. However, meeting the job creation requirements through job maintenance in a “troubled business” also involves demonstrating that the number of existing employees were maintained at no less than the pre-investment level during the EB-5 investor’s two year period of conditional permanent residence. [See 8 CFR 204.6(j)(4)(ii) & 8 CFR 216.6(c)(iv).] The concept of what qualifies as a “direct” job for EB-5 purposes can be complicated. 1. For non-RC affiliated capital investments, job creation may only be credited through the creation or preservation of jobs that are directly within the commercial enterprise in which the EB-5 Investor made his or her investment. 2. For RC-affiliated capital investments, job creation may be credited through the creation of jobs directly within the commercial enterprise in which the EB-5 investor made his or her investment, but can also be credited with indirect job creation through equity investments or loans to other organizations, or through indirect job creation based upon an econometric model supported by a detailed business plan and associated economic analysis.3. The concept of a what a direct job is within econometric modeling differs slightly from a direct job described in #1 or #2 above, as a direct job in this context is a job that can be directly attributed to the economic impact of the capital investment in order to derive estimates of indirect job creation. | |
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Troubled Business |
What’s the difference between “reorganized or restructured business” and a “troubled business” for EB-5 purposes? | The “reorganized or restructured business” concept relates to the requirement that the commercial enterprise in which the EB-5 investor will invest must be “new”, which is defined in 8 CFR 204.6(e) as a commercial enterprise established after November 29, 1990. 8 CFR 204.6(h)(2) provides that a new commercial enterprise may consist of the purchase of an existing business and simultaneous or subsequent restructuring or reorganization such that a new commercial enterprise results. Note that the regulation at 8 CFR 204.6(h) has been superseded by a subsequent statutory amendment (Section 11036 of Public Law 107-273), which eliminated the requirement that the investor had to establish the new commercial enterprise. Presently, an investor only has to invest in a new commercial enterprise. Matter of Soffici, 22 I. & N. Dec. 158 (Assoc. Comm., 1998), is a binding precedent decision that provides a detailed discussion regarding the factors that must be established to demonstrate that a commercial enterprise is new by virtue of being reorganized or restructured. If an immigrant investor makes an investment in a business that is already operating which does not meet the “troubled business” requirements, then he or she may only be credited with jobs created as a result of their investment. Matter of Soffici, also provides in pertinent part that: A petitioner who acquires a pre-existing business must show that the investment has created, or at least has a reasonable prospect of creating, 10 full-time positions, in addition to those existing before acquisition. The petitioner must, therefore, present evidence concerning the pre- acquisition level of employment. Simply maintaining the pre-acquisition level of employment is not sufficient, unless the petitioner shows that the pre-existing business qualifies as a “troubled business.” The “troubled business” concept relates to the crediting of job creation through the preservation of jobs in an existing business that has incurred substantial net losses, and is defined in 8 CFR 204.6(e) as: [A] business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve or twenty- four month period prior to the priority date on the alien entrepreneur’s Form I-526, and the loss for such period is at least equal to twenty per cent of the troubled business’s net worth prior to such loss. For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded. 8 CFR 204.6(j)(4)(ii) provides that: To show that a new commercial enterprise which has been established through a capital investment in a troubled business meets the statutory employment creation requirement, the [I-526] petition must be accompanied by evidence that the number of existing employees is being or will be maintained at no less than the pre-investment level for a period of at least two years. Photocopies of tax records, Forms I-9, or other relevant documents for the qualifying employees and a comprehensive business plan shall be submitted in support of the petition. In the case of a regional center investment project context, an acceptable economic analysis may demonstrate the preservation of indirect as well as direct jobs in a “troubled business” through the EB-5 investment activity. In summary, the issue of whether a business has been “restructured or reorganized” is related to establishing if a business can be considered a new commercial enterprise. A “troubled business” only has to be shown to have been ‘reorganized or restructured” if the commercial enterprise was established on or before November 29, 1990. | |
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Troubled Business |
If 2 investors’ investments in a troubled business will save 15 jobs, and 5 will be added, do both qualify? | In order to meet the requirements of INA 203(b)(5)(A)(ii), each investor must create or maintain at least 10 jobs through the investment in a “troubled business”. The investor’s capital investment in a “troubled business” must maintain the number of existing employees at no less than the pre-investment level for the period following his or her admission as a conditional permanent resident. | |
| Our issue is whether on an I-90 application, a dependent beneficiary who never obtained Conditional Permanent Resident status is eligible to join as a Lawful Permanent Resident after the principal obtains Legal Permanent Resident status through an I-829. | Form I-90, Application to Replace Permanent Resident Card, cannot be used to obtain lawful permanent resident status in the United States. Rather, the application is used by individuals who are already lawful permanent residents to obtain a new Form I-551 card. | ||
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dependent/derivative issues |
What about “follow to join” within the EB-5 Context? | USCIS stated that USCIS has received and adjudicated solo-filed derivative I-485s based on the principal alien’s (PA) approved EB-5 related I-485/I-829. USCIS has also received Form I-824 applications, which have been approved and forwarded to the consulate. If the conditions have already been removed from the PA’s lawful permanent resident (LPR) status, then the derivative should be granted LPR status without conditions. USCIS noted that Form I-90, Application to Replace Permanent Resident Card, cannot be used to obtain lawful permanent resident status. As such, it is not the correct form to effectuate “follow to join” procedures. | |
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dependent/derivative issues |
Where the PA already obtained permanent green card through I-829 approval, can a dependent who has not yet obtained conditional permanent resident status (in other words, the dependent who has not obtained CPR status through either IV processing or I-485 adjustment at the time the PA obtains I-829 approval) do a follow-to-join (either via I-485 or IV processing) AFTER the PA has already obtained permanent green card status? If so, would such dependent follow-to-joining be accorded CPR or permanent resident status by American Embassy or USCIS? | USCIS has received and adjudicated solo-filed derivative I-485s based on the principal alien’s (PA) approved EB-5 related I-485/I- 829. USCIS has also received Form I-824 applications, which have been approved and forwarded to the consulate, if the relationship between the PA and the dependent has been established. If the conditions have already been removed from PA’s lawful permanent resident (LPR) status, then the derivative should be granted LPR status without conditions. | |
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dependent/derivative issues |
Can a foreign investor invest in a business which is included in a pending Regional Center petition, and propose taking credit in his I-526 only for direct jobs initially? However, if the Regional Center petition is approved, can he take credit for both direct and indirect/induced jobs when submitting his I-829? | No investor may file an I-526 petition seeking credit for indirect job creation prior to the approval and designation of the regional center entity that is associated with the capital investment project. I-526 petitions filed prior to the approval of the regional center application can only be credited with qualifying jobs created directly within the investor’s new commercial enterprise at the I-829 petition stage. The determination of whether or not an I-526 petition is a Regional Center-associated petition is determined at filing. If it is a regular petition it is governed by 8 CFR 204.6(j), if it is an RC petition, it is governed by 8 CFR 204.6(j) and (m). | |
| An EB-5 investor invests in a company that operates several retail outlets. The company’s headquarters office is in a designated TEA, but the retail stores directly owned and operated by the company are not in TEAs. Assume 5 jobs will be created in the headquarters location and 5 jobs will be created at retail stores that are not in TEAs. How much money must the investor invest: $500,000 or $1 million? | This question cannot be answered in the abstract without a clear presentation of the facts in the record of proceeding. Whether a particular case with this fact pattern can be approved is dependent upon a review of the specific evidence of record. | ||
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Diversified Investment |
If a business plan provides for investments in multiple job-creating businesses over time, and if the commercial enterprise moves the money from one job-creating business to another consistent with the business plan, does every such movement of funds require an amended I-526? | In Matter of Ho, the Administrative Appeals Office held that a “comprehensive business plan as contemplated by the regulations should contain, at a minimum, a description of the business, its products and/or services, and its objectives.” The business plan that is required for the Form I-526 petition is the road map to determining whether the capital investment has been made, that the proposed capital investment project is feasible, and that the requisite number of jobs have or can reasonably be expected to be created at the Form I-829 petition stage. A business plan that is submitted in support of a Form I-526 petition that is affiliated with a regional center must be in accordance with the USCIS-approved capital investment activities of the regional center. A Form I-526 petition business plan as contemplated above must have sufficient detail regarding the proposed multiple investment activities and must specifically provide for investment in multiple job-creating businesses over time in order for USCIS to determine that it is feasible. The business plan must also demonstrate that the requisite jobs will be created through the succession of capital investments through the commercial enterprise. Such a business plan may help to form the basis for the approval of the Form I-526 petition. In such an instance, an amended petition would not be required as long as the capital investment activities conducted by the EB-5 alien are in keeping with the approved business plan. | |
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Diversified Investment |
Please explain your current thinking and practice concerning evaluation of petitions that involve investments in enterprises that pool multiple investors’ money and allocate the capital to multiple job-creating projects/entities at the same time. In the past USCIS has reacted with ambivalence to these notions, and some adjudications of the past have reflected opposition to them. Investors would like to spread their risk of loss among multiple projects, and it seems reasonable to allow them to spread their risk of any one project’s ability to create the target number of jobs by letting the investors allocate the job creation from the total of the jobs created by multiple projects (using some method of allocation agreed to among the investors, such as “first to invest, first jobs allocated,” though other methods might work). | A regional center may opt to structure EB-5 capital investment projects that involve multiple investment vehicles. However, USCIS has consistently maintained that a regional center must transparently show at the Form I-526 stage the specific job creating entities/projects in which the investor’s capital will be invested, supported by comprehensive business plans and an economic analysis that provides a reasonable methodology for estimating the job creation that will occur as a result of these complex investments. Some recently-reviewed RC applications have put forth capital investment structures that seem to presume that the EB-5 immigration process allows for a Regional Center to recruit EB-5 investors, who then file Form I-526 petitions in order to invest in an enterprise without identifying the specific capital investment projects that will receive the immigrant investor’s capital. This same presumption is reflected in some of the questions regarding capital investment structures as follows: 1. Our Regional Center is approved to include Florida businesses in many RIMS II “sectors”. If in a I-526, we submit a generic business plan (and legal documents) for a business that falls within one of the sectors, then, after the I-526 is approved, the business affiliate gets the investor’s funds and selects the specific business. Is that permissible? 2. I would like the Service to comment on the desired legal structure for multiple asset investments. How must an RC structure the limited partnership investments when there are sub-assets to a project? 3. The push for fund of funds regulations is significant—will the USCIS allow all Regional Centers the same flexibility to not specifically identify the jobs creation project at the I-526 and allow them to let the USCIS know what we did sometime before the I-829? I-526 petitions may not be approved for investments (or loans) to businesses that will not be identified or selected until after the approval of the petition. Such a strategy is not EB-5 compliant as the EB-5 program is not an attestation-based program. Prospective job creation must be demonstrated at the Form I-526 petition through USCIS review and approval of the business plan and associated economic analysis for the actual capital investment projects that will receive the immigrant investor’s capital. This documentation provides the foundation for the adjudication of the I-829 petition to determine if the investor has met the requirements for removal of conditions pursuant to INA 216A and 8 CFR 216.6. The Ninth Circuit has held that USCIS may not “de-couple” I-526 petition approval from I-829 approval. See Chang v. U.S., 327 F.3d 911, 927 (9th Cir. 2003). This means that, using Form I-829, alien investors must demonstrate compliance with the EB-5 program rules by confirming the fulfillment of the investment scheme and business plan that USCIS approved at the I-526 petition stage. See id. Most if not all RCs generally seek to limit their capital investment offerings to those that may qualify for the reduced capital investment threshold of $500,000 through investments in a TEA. Additionally, a large percentage of RC-affiliated capital investment vehicles involve investments in NCEs which ultimately loan capital to third parties who use the capital in the ultimate job-creating project. There are other requirements for eligibility for the approval of EB-5 petitions which prohibit an I-526 attestation-based process, to include: INA 203(b)(5)(B)(i) which provides that a certain number of visas made available under the EB-5 category “be reserved for qualified immigrants who invest in a new commercial enterprise …which will create employment ina targeted employment area”(emphasis added). Matter of Izumii, 22 I&N Dec. 169(Comm. 1998) provides significant guidance in making TEA determinations and RC capital investment projects, to include the following: Regardless of its location, a new commercial enterprise that is engaged directly or indirectly in lending money to job-creating businesses may only lend money to businesses located within targeted areas in order for a petitioner to be eligible for the reduced minimum capital requirement. Under the Immigrant Investor Pilot Program, if a new commercial enterprise is engaged directly or indirectly in lending money to job- creating businesses, such job-creating businesses must all be located within the geographic limits of the regional center. The location of the new commercial enterprise is not controlling. Other facets regarding I-526 eligibility are predicated on a review and analysis of the actual capital investment project, to include the identification of the ultimate recipient of capital investment funds, such as: 1. Determining job creation, generally: In order to demonstrate that the new commercial enterprise will create not fewer than 10 full-time positions, the petitioner must either provide evidence that the new commercial enterprise has created such positions or furnish a comprehensive, detailed,and credible business plan…See Matter of Ho, 22 I&N Dec. 206 (Comm. 1998), 206. 2. Determining job creation as a result of investments into pre-existing business..SeeMatter of Soffici, 22 I&N Dec. 158 (Comm. 1998), 158. See also Matter of Hsiung, 22 I&N Dec. 206 (Comm.. 1998), 201. 3. Determining whether the job creation may be met through the preservations of jobs in a “troubled business”. See INA section 203(b)(5)(A)(ii) and 8 CFR 204.6(j)(4)(ii). | |
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Diversified Investment |
Can an EB-5 Investor in a Regional Center divide his money into 2 or more businesses so long as each business satisfies EB-5 requirements? Can he do this in EB-5 Direct? | Yes, according to 204.6(e): Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to, a sole proprietorship, partnership (whether limited or general), holding company, joint venture, corporation, business trust, or other entity which may be publicly or privately owned. This definition includes a commercial enterprise consisting of a holding company and its wholly-owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. This definition shall not include a noncommercial activity such as owning and operating a personal residence. | |
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Diversified Investment |
Is it correct to say that investors may diversify their funds into one or more businesses either directly or through an investment company. | The original EB-5 program did not allow for indirect investment through an investment company that relies on the crediting of jobs in businesses that are not wholly owned by the new commercial enterprise. This is due to the fact that job creation can only be credited through the creation or preservation of jobs that are directly within the commercial enterprise in which the EB-5 Investor made his or her investment. Any such diversification of EB-5 investments must occur within the new commercial enterprise but the structure of the new commercial enterprise may consist of a holding company and its wholly-owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. See 8 CFR 204.6(e) and 8 CFR 204.6(j)(4). | |
| May an E-2 investor grow his business and eventually qualify as an EB-5, as the business increases in value enough to meet the EB-5 Investment Threshold? | The reinvestment of a commercial enterprise’s revenues cannot be considered part of a qualifying investment. See generally De Jong v. INS, Case No. 6:94 CV 850 (E.D. Texas January 17, 1997); Kenkhuis v. INS, No. 3:Ol-CV-2224-N (N.D. Tex. Mar. 7,2003). In response to inquiries about the possibility of converting from an E-2 to an EB-5, USCIS stated that an E-2 investor, whose business increases in value as a result of reinvested revenues into the commercial enterprise, does not meet EB-5 requirements. Reinvesting revenues into the commercial enterprise is not an infusion of capital, but are considered to be “retained earnings.” Further, the legislative history twice refers to EB-5 investments as “new capital” that will promote job growth. Additionally, the reinvestment of a commercial enterprise’s revenues cannot be considered part of a qualifying investment. |
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| Based on the USCIS June 17, 2009 memo regarding EB-5 job creation, it is our understanding that USCIS has accepted the use of economic models that are based on infusion of capital into a particular industry. Please confirm that if such a model is used to calculate job projections at the I-526 stage, an investor would receive credit for job creation at the I-829 stage simply by establishing that he/she invested the requisite amount into the new commercial enterprise, and that the new commercial enterprise spent that capital, regardless of any data about actual job creation. | This form of capital investment involves more than simply investing a certain amount of investment dollars into a particular industry. An important aspect to any economic analysis model is the feasibility and quality of the business plan that is the basis for determining the appropriate inputs into an economic model, such as RIMS II, IMPLAN, etc. If the infusion of capital occurs according to the approved business plan and economic analysis, and the capital investment scheme comes to fruition in the manner outlined in the business plan, then the economic data provided in support of the Form I-526 petition regarding indirect job creation may be sufficient to demonstrate the creation of the indirect jobs without the submission of further data about job creation at the Form I-829 petition stage. | ||
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Economic Analysis |
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. | 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. | |
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Economic Analysis |
Please share tips for creating a successful economic analysis. | USCIS’ economist discussed issues related to: • Input-Output models used to demonstrate job creation in Regional Center cases and the nature and source of the information used in these models. • Helpful hints for reducing the number of Requests for Evidence (RFE) o A sound economic analysis should include a properly defined geographic scope of the region in which the investment will be made, and where inputs originate. o A quality business plan provides reasoned and defensible estimates for the inputs that are used in the economic analysis, which is fundamental to creating a quality job creation analysis of a given capital investment project. o There must be a well-reasoned basis for the initial changes in output employment and earning that are used to predict job growth (economic growth). The estimates provided in the economic analysis and business plan must make sense. o To calculate the average number of jobs per industry or average wages per industry or occupation, stakeholders were advised, that to the extent possible, publicly available data should be used. |
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Economic Analysis |
Please share tips for creating a successful economic analysis. | The USCIS economist shared tips to assist customers to better prepare their filings: o Multipliers require detailed information. Bear in mind that the analysis depends on the quality of the information; o Ensure you have a well-reasoned basis for all the numbers, especially when using multipliers; o It is best to use publicly available sources of information. For example, data obtained from the U.S. Bureau of Labor Statistics; o Check the economic analysis and business plan numbers to ensure they make sense; o If using data from a private consulting firm, please provide the methodology; and o If using Rims II, please include the multiplier tables, to facilitate checking the analysis. In addition, the USCIS economist highlighted the following points: o RIMS II and IMPLAN are examples of backward-linked models; meaning the data in the model represents suppliers to the industry rather than customers. o There should be a balance between competing geographic definitions. For example, sometimes an investor may narrowly define geographic boundaries to maximize the benefit of a targeted employment area and broadly define geographic boundaries for multiplier analysis. o USCIS does not require that the person preparing the analysis have a degree, e.g. MBA, CPA. The important thing to remember is to provide well-reasoned, reproducible information. Common pitfalls to be wary of are: o Use the appropriate geographic region for multipliers; for instance, avoid using state multipliers for county region; o Ensure you compare similar data elements and offer a reasoned explanation; o The data needs to make sense; o Time periods must be level / comparable; o When making seasonal and non-seasonal adjustments for unemployment, please be specific; o If using RIMS II, become familiar with the handbook to deal with initial impacts and the backwards linkage model. Ensure to include “induced” as well as direct hire employees and indirect hired employees, as in those hired elsewhere due to an increased demand in a different area, which then go to another industry. |
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Economic Analysis |
“An EB5 investor invests in a company which then invests in businesses; are the jobs created in the businesses which receive funds “direct” and/or can they be multiplied by the appropriate RIMS II multipliers to get credit for “indirect” and/or “induced jobs”? EXAMPLE: EB5 investor invests in company A which is a pooled fund; the pooled fund then invests in company B. Company A only has 2 FT employees, but Company B has 6 FT employees. Can both the 2 and 6 employees be direct employees so that they can be multiplied by the RIMS II multipliers? It appears that the Bureau of Economic Analysis considers them “direct”. An EB5 investor invests in a retail commercial center and leases to new businesses. Are the jobs created by those tenants “direct” jobs, which can be multiplied by the appropriate RIMS II multipliers to get credit for “indirect” and/or “induced jobs”? Again, BEA appears to consider them direct.” | What is the business of the RC?Commercial lending, commercial development, leasing, or retail sales Direct jobs occur in the new commercial enterprise that is created with EB-5 dollars. Problematic analyses estimating direct job creation. Solution—Capital expenditure | |
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Economic Analysis |
“What flexibility do Regional Centers have to utilize economic models for EB-5 projects that were not used as part of their original Regional Center proposal, which in many cases, was approved years ago? Both USCIS and the regulations have historically recognized models such as IMPLAN, RIMS II, and REDYNE as “reasonable methodologies,” but it’s unclear whether USCIS would accept a switch from the use of one of these to another. Clearly, switching economic models in the middle of a specific EB-5 project would be problematic and impractical, but there is nothing in the regulations that would prohibit the application of a different economic model on projects subsequent to the RC submission. Currently, the uncertainty has created the following concerns: (1) Ms. Atteberry indicated a preference for RIMS II during the June 2010 stakeholder meeting and many RCs had not previously adopted RIMS, (2) many RCs are now engaging more experienced economists, each of whom have their own personal preference for economic models, (3) the models themselves are improving and RCs would like flexibility to utilize advances, and finally (4) an amendment would impose a lengthy and expensive delay in getting much needed EB- 5 capital to projects that would create new jobs.” | Adjudicative Issues: Switching model after the RC was approved requires an amendment. See FormI-924 Application Instructions (http://www.uscis.gov/files/form/i-924instr.pdf). Economic Issues: USCIS does not prefer or endorse any particular model. RIMS II facilitates transparency . Model preferences. Remember your audience | |
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Economic Analysis |
Can we multiply direct jobs projected by the appropriate RIMs II Direct Effects multiplier to get credit for indirect and/or induced jobs for purposes of satisfying the 10 job projection in an I-526, and, again to get credit for indirect and/or induced jobs for purposes of satisfying the 10 job requirement at the time of the I-829? If our Economic Analysis concludes that the expenditure of an amount of money creates a certain number of direct, induced and indirect jobs for each business category, then proof that the money was indeed expended into a business in that business category is proof enough, with no need to show W2s. Correct? Also, can we multiply the number of millions expended by the “Final Demand Multiplier” to get credit for projected jobs in the I-526 and actual jobs in the I-829? BEA indicates yes.” | In the Regional Center context, showing projected and actual job creation is similar because the same model is used. At the I-829 stage, you need to show what actually happened:If you based job creation projections on direct jobs, you need to show that the direct jobs were created. If you based job creation on expenditures, then you need to showthat the money was expended as specified in the business plan in the approved Form I-526 petition. | |
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Economic Analysis |
Our Economic Analysis used State-wide RIMS II data to project FT direct, indirect and induced jobs when $1million is invested. We accepted lower State-wide predictions of job creation in order to be able to apply our analysis to any business which was included in the business categories included in our Analysis anywhere in the State, even though an analysis based on the exact location of the business may result in higher job projections. So, to confirm, if a business is selected that is in one business category and the State wide economic analysis predicts more than enough jobs created for the number of EB5 investors involved, is there any need for a separate economic analysis? EXAMPLE: An investor invests $1million in a restaurant and the economic analysis concludes that a restaurant in Florida will, with a $1million investment, create more than 10 direct, indirect and induced jobs, no further economic analysis is needed to be submitted with the I-526, correct?” | If this is a state-wide chain it would have state-wide impacts. An individual establishment would only have local impacts. To choose the proper multipliers, you look at the area supplying the majority of inputs—restaurant is mainly labor. Note—state-wide impacts are usually larger than any single county or group of counties. | |
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Economic Analysis |
All economists agree that the following are direct jobs for purposes of EB-5 Program, and they are not indirect or induced, and therefore, they can be multiplied by the Direct Effects Multipliers to get credit for combined direct, indirect, induced jobs. Please confirm this: An investor or group of investors invest in a company which then invests in one or more other businesses. The employees hired by the business or businesses which ultimately receives the money from the company are direct jobs. An investor or group of investors invest in a building, which leases to qualifying new, expanding or troubled businesses. These tenants’ employees are direct jobs. | : First, it is incorrect to suggest that all economists could agree on anything. In EB-5 we have a special use for multipliers because the goal of the analysis is to show a connection between the investment and the job creation. There are other applications of multipliers that are not confined by these requirements. Generally, the answer to this question lies in the business plan. What is the new commercial enterprise? What is its business? | |
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Economic Analysis |
Objective rules as to how to use RIMS II would remove uncertainty and reduce the costs of Economic Analyses in support of an RC petition. Therefore, is this true: An appropriately applicable area RIMS II Direct Effects Multiplier can be multiplied by the number of direct jobs and the resulting combination of direct, indirect and induced jobs can satisfy the EB-5 requirements if they create 10 total FT jobs. An appropriately applicable area RIMS II Final Demand Multiplier can be multiplied by the number of millions of dollars invested and the resulting combination of direct, indirect and induced jobs can satisfy the EB-5 requirements of 10 FT jobs. | The question seems to ask how to use RIMS II multipliers (Type II). If you are using direct job data, which should be fully justified and supported by the business plan, you multiply the number of direct jobs by the direct effects employment multiplier. This yields the total number of direct, indirect, and induced jobs. Similarly, if you are using a capital expenditure model, you divide the investment amount by $1,000,000. Next, you multiply the result by the final demand employment multiplier. The result encompasses direct, indirect, and induced jobs. | |
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Economic Analysis |
The 12/9/2009 memo clarified that direct construction job must be shown to have been positions lasting at least two years and through the filing of I-829. It would seem that neither of those requirements not apply to indirect and induced jobs arising from construction, but is that true? Is there any temporal element required to count jobs indirectly arising from construction per typical economic methodologies? | No, there is no way to determine this information from widely-available models, so it is not possible to split out temporary construction in indirect jobs. | |
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Economic Analysis |
This question relates to a planned apartment complex to be financed in part by immigrant investors through an EB-5 Regional Center. The immigrant investors will invest in a separate entity that will develop and lease the apartments. The EB-5 RC application will submit an economic report showing expected job creation. Under EB-5 program rules, can the RC application claim, as indirect jobs, those positions at the development/leasing entity associated with the rental payments by occupants of the apartments? Can the application also claim, as indirect jobs, those jobs within the same RC boundaries that result from those same apartment occupants spending money for other goods and services (i.e., other than rent)? Note that the number of such jobs would be estimated, both for the rental payments and for the other expenditures of the apartment occupants, by putting the amount of these expenditures into an input-output model, noting the direct, indirect, and induced jobs the model predicts for those expenditures | This is a very case-specific question. The author should be cautious when attempting to count spending by apartment residents. This is not new spending within the economy like a tourist coming to town. This spending already exists. Moving into a new apartment doesn’t generate new rounds of economic activity. There is also little job-creation related to leasing apartments. | |
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Economic Analysis |
What documentation is required at the I-829 stage to prove indirect jobs with an expenditure model? What if some of the foundation facts on which the economic report was based have occurred and others have not? | The determination regarding whether the investor has met the job creation requirements will be established by a review of the required initial evidence at 8 CFR 216.6(a)(4) for the Form I-829 petition. Investors must show at the time of the removal of conditions that they performed the activities described in the approved Form I-526 petition, and the economic analysis of the activities must be based upon the associated approved regional center methodology for demonstrating job creation. An investor’s I-829 petition to remove the conditions which was based on such a project within an approved I-526 petition involving the crediting of jobs based on a capital expenditure econometric model needs to be supported by evidence showing that the funds were expended in the job-creating activities outlined within the Form I-526. The impacts on the ultimate outcome of a given I-829 in the event that some of the foundation facts on which the economic report was based have occurred and others have not are dependent on the specific fact pattern of the case. | |
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Economic Analysis |
Where a regional center based EB-5 project involves building a shopping center to be leased to retail tenants, will new jobs created by these tenants be considered “direct” jobs for the purpose of I-829 conditions removal? | Again, the business plan contains the answer. What is the business? Building shopping centers or building/leasing/operating shopping centers? Obviously, this is fairly case-specific and would require the details to give a complete opinion. | |
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Economic Analysis |
Where an RC is approved for a State-wide area and uses State-wide RIMS II information and subsequently adds a business which is not a business with State-wide presence, can a supplemental Economic Analysis be submitted that substitutes the RIMS II information which applies to the location of the business without the necessity of doing an entirely new economic analysis. | To determine the appropriate geographic area for the multipliers (RIMS or others) one must look to the nature of the industry. Auto manufacturing has wide-reaching impacts, while a local deli has a more restricted impact. Much depends on where the inputs of production are located. If a regional center seeks to offer a capital investment project in a previously approved industry category in the regional center designation, then any I 526 petitions associated with that project should include a Matter of Ho compliant business plan, supported by an economic analysis that demonstrates the estimated job creation that will be realized through the project. The multipliers used in the economic analysis should be appropriate to the impacts of the project. | |
| Setting up an escrow account is a standard way for RCs to receive investors’ funds. Please confirm that for cases which are not affiliated with an RC that putting funds in an escrow account is permissible if all funds are committed to be released to the new commercial enterprise upon the approval of the individual’s I-526. | USCIS does not require the use of escrow agreements. However, such agreements are permissible if the terms of the escrow agreement comports with 8 CFR 204.6(j)(2), which requires that the I-526 petition must be accompanied by evidence that the required amount of capital has been placed at risk. | ||
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Escrow |
When a Regional Center (RC) uses an escrow account for investors’ investments, can the money be held in escrow until the investor’s conditional immigrant visa is issued or only until the I-526 is approved? | USCIS does not require the use of escrow agreements. However, such agreements are permissible if the terms of the escrow agreement comports with 8 CFR 204.6(j)(2), which requires that the I-526 petition must be accompanied by evidence that the required amount of capital has been placed at risk (actual commitment of the required amount of capital). Acceptable escrow agreements may allow for the withholding of funds in escrow until the investor’s EB-5 visa is issued if the agreement is otherwise EB-5 compliant. | |
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geographic area |
How to credit job creation outside the RC? | USCIS has interpreted that a regional center should focus its EB-5 capital investment activities on a single, contiguous area which is within the bounds of the limited geographic area for which a regional center requests jurisdiction. Beyond these statutory and regulatory directives there are no specific mandates that indirect jobs be created in any particular location. There is an exception pertaining to Targeted Employment Areas (TEAs). INA 203(b)(5)(B)(i) provides that a certain number of visas made available under the EB-5 category “be reserved for qualified immigrants who invest in a new commercial enterprise … which will create employment in a targeted employment area” (emphasis added). 8 CFR 204.6(e) define a TEA as “an area which, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 percent of the national average rate.” A reduced capital investment amount of $500,000 is permitted for a TEA. If a proposed RC business plan in the Form I-526 includes a TEA and the petitioner is relying on a capital investment of $500,000 in a new commercial enterprise rather than $1,000,000, the predicted jobs created must be within the TEA. This interpretation of the statutory and regulatory language does not justify job creation data methodologies that are not reasonable. While the RC’s EB-5 capital investment activity may produce a legitimate economic benefit outside its formal jurisdictional RC boundaries, the data set used to estimate job creation should fit within the intended impact of the capital investment project. Where appropriate, regional data should be used as the basis for a regional center’s job creation analysis in keeping with 8 CFR 204.6(m)(3)(i). USCIS may not accept statewide data or data from a broader area outside a regional center as suitable for the job creation analysis when regional data is readily available that focuses solely on an RC’s geographic area. The scope and nature of industries present in an entire state or in an area outside the geographic boundaries of an RC may not be comparable to the more limited scope and nature of the industries within the RC’s jurisdictional area and included in the data for the region. However, if the prospective impacts of the capital investment project provided in the project’s business plan and associated economic analysis indicate that a broader geographic area should be considered, USCIS will do so. | |
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geographic area |
What criteria is used in determining the appropriate geographical boundary for a regional center that has one initial “shovel ready” project but is planning future projects in a larger geographical area; but the details and location of the future projects are unknown? | A Regional Center may be granted jurisdiction over a limited geographic area for the purpose of concentrating pooled investment in defined economic zones. A Regional Center must demonstrate in the Form I-924 that its activities will focus on the requested geographic region, and not simply on isolated and unrelated areas within the region. It may be more appropriate for the Regional Center to initially request a geographic area that is in keeping with the economic impacts of the existing project, and then subsequently file an amendment request for an expanded geographic area as the details and location of future projects become known | |
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hypothetical project |
Does USCIS ever approve a proposal for Regional Center designation when an actual investment project does not yet exist? | In some cases, USCIS may approve a proposal for Regional Center designation when an actual investment project does not yet exist. The approval is therefore based upon a hypothetical investment project. If this is the case, when the immigrant investor files Form I-526 Immigrant Petition by Immigrant Entrepreneur, an analysis will be done to determine if the actual business plan provided in support of the Form I-526 comports with the hypothetical business plan provided in support of the Regional Center application. For example, a Regional Center may have a hypothetical plan to build assisted living facilities. Although the geographic location of these assisted living facilities has not been identified, the hypothetical business plan demonstrates the logistics and feasibility of building the facilities within the geographic area of the Regional Center. Since the business plan does not relate to an actual project, it is considered a hypothetical investment project. | |
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hypothetical project |
Is it acceptable to submit a regional center application in which a private equity strategy was used, no specific project was identified, and the investment was made in a targeted employment area, after a regional center approval? | The UCSIS economist shared that in this scenario, the process allows for filing an exemplar project that is supported by a business plan and an economic analysis. At this stage, a generic project can be accepted because the actual determination of a TEA will take place at the filing of Form I-526 Immigrant Petition by Alien Entrepreneur, not within the adjudication of the regional center proposal. Also, a private equity strategy is an acceptable fund structure, but advised that the level of complexity needs to be well documented to include easily recognizable job creation estimates. | |
| In what sense does the business plan in the Form I-526 provide the framework for the eligibility analysis in the Form I-829 Petition? | There is a significant link between the Form I-526 petition and the Form I-829 Petition by Entrepreneur to Remove Conditions. In the course of processing the investor’s Form I-829 petition, USCIS must compare the supporting evidence for the I-829 to the business plan that was submitted in support of the approved Form I-526. Each immigrant investor must file the Form I-526 petition, with initial supporting evidence to establish his or her eligibility for classification as an EB-5 immigrant investor. Initial supporting evidence includes a business plan and in the case of a petition filed by an immigrant investor whose commercial enterprise is affiliated with a Regional Center, an economic analysis. These items describe how the investor is going to satisfy the requirements of the EB-5 program. If the immigrant investor fulfilled the EB-5 requirements as outlined in the business plan that accompanied the Form I-526 petition, then USCIS can generally remove the conditions and the immigrant investor can live and work permanently in the United States. | ||
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I-526 |
Can a foreign investor invest in a business which is included in a pending Regional Center petition, and propose taking credit in his I-526 only for direct jobs initially? However, if the Regional Center petition is approved, can he take credit for both direct and indirect/induced jobs when submitting his I-829? | No investor may file an I-526 petition seeking credit for indirect job creation prior to the approval and designation of the regional center entity that is associated with the capital investment project. I-526 petitions filed prior to the approval of the regional center application can only be credited with qualifying jobs created directly within the investor’s new commercial enterprise at the I-829 petition stage. The determination of whether or not an I-526 petition is a Regional Center-associated petition is determined at filing. If it is a regular petition it is governed by 8 CFR 204.6(j), if it is an RC petition, it is governed by 8 CFR 204.6(j) and (m). | |
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I-526 |
The instructions for Form I-526 do not cover the supporting documents required in connection with a regional center pilot program I-526 petition. Can you give us a list of the required supporting documents? | The required supporting documents will vary based on the Regional Center application. Upon approval of a Regional Center application, the approval notice will list the documents that should be submitted in support of the I-526 petitions. Additionally, the regulations at 8 CFR 204.6(j) describe the initial evidence which should accompany an I-526 petition. Lastly, please note that USCIS intends to revise the I-526 and I-829 instructions in the near future. | |
| If an EB-5 investor/petitioner uses a professional employer organization (PEO) to administer payroll for his employees, does this meet EB-5 job creation requirements? | The PEO concept may possibly be acceptable within the EB-5 context in certain instances. However, as the scope and nature of PEO contractual relationships vary greatly, the approvability of such an arrangement for EB-5 purposes would have to be decided on a case-by-case basis through a review of the specific evidence of record. | ||
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I-829 |
Please consider accepting a declaration from the employer of the created jobs concerning the number of full-time positions employed and an attestation that the employer has properly completed Forms I-9 concerning such employees. USCIS can coordinate with ICE to perform any desired audits of I-9s to discover and sanction any violations or any identity theft by workers who may turn out to be unauthorized | The initial evidence to provide in support of EB-5 petitions regarding whether the jobs were created is identified in 8 CFR 204.6(j)(4) and 8 CFR 216.6(a)(4)(iv). 8 CFR 103.2(b)(2) provides the regulatory framework for the submission of secondary evidence and affidavits. Note that the EB-5 statutory requirement at INA §203(b)(5)(A)(ii) clearly requires that the EB-5 investment must create full time employment for “not fewer than 10 United States citizens or alien lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States.” With respect to direct jobs, it is the EB-5 investor’s burden to demonstrate that the jobs created by the investment qualify under this statutory provision. | |
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I-829 |
To the extent USCIS will require individual I-9 forms, will an I-526 or I-829 be denied where the requisite 10 full-time positions have been created but, unbeknownst to the investor, one or more of the employees occupying those positions at any given time may not in fact be a permanent resident or citizen? Will the investor be given an opportunity to replace any such worker before final adjudication of the petition? Is it sufficient that the full-time positions are created? | As noted, above, it is not sufficient that the EB-5 alien simply create at least 10 full-time jobs. Congress through enacting INA §203(b)(5)(A)(ii) clearly requires that the EB-5 investment must create full time employment for “not fewer than 10 United States citizens or alien lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States.” With respect to direct jobs, it is the EB-5 investor’s burden to demonstrate that the jobs created by the investment qualify under this statutory provision. EB-5 investors’ should determine whether the jobs that they have created are EB-5 compliant before filing the Form I-829 petition. | |
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I-829 |
What steps, if any, must an investor take to ascertain the citizenship or permanent residence of a direct employee beyond the proper completion of an I-9 form? | The burden is on the EB-5 investor to demonstrate that the incumbents in the direct jobs to be credited for EB-5 purpose have been created for qualifying employees, e.g. United States citizens, LPRs, refugees or asylees. As noted above, EB-5 investors’ should determine whether the jobs that they have created are EB-5 compliant before filing the Form I-829 petition. | |
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I-829 |
In what sense does the business plan in the Form I-526 provide the framework for the eligibility analysis in the Form I-829 Petition? | There is a significant link between the Form I-526 petition and the Form I-829 Petition by Entrepreneur to Remove Conditions. In the course of processing the investor’s Form I-829 petition, USCIS must compare the supporting evidence for the I-829 to the business plan that was submitted in support of the approved Form I-526. Each immigrant investor must file the Form I-526 petition, with initial supporting evidence to establish his or her eligibility for classification as an EB-5 immigrant investor. Initial supporting evidence includes a business plan and in the case of a petition filed by an immigrant investor whose commercial enterprise is affiliated with a Regional Center, an economic analysis. These items describe how the investor is going to satisfy the requirements of the EB-5 program. If the immigrant investor fulfilled the EB-5 requirements as outlined in the business plan that accompanied the Form I-526 petition, then USCIS can generally remove the conditions and the immigrant investor can live and work permanently in the United States. | |
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I-829 |
What are the consequences of variance between the business plan approved at the I-526 stage and the actual capital investment and job creating activities that are documented in the Form I-829 Petition? | One of the primary reasons investors encounter challenges at the I-829 stage is due to the variances between the business plan that was approved at the I-526 stage and the actual capital investment and job creating activities that are documented in the Form I-829 petition. Deviations from the business plan in an approved Form I-526 petition are material to the adjudication of Form I-829 when the evidence demonstrating compliance with the capital investment and/or job creation requirements is significantly different than what was proposed in the approved Form I-526 petition. Note that in Chang v. United States of America, 327 F.3d 911 (9th Cir. 2003), the court stated that although the adjudication of the I-829 is not a re-adjudication of the I-526, the Form I- 526 approval may not be “decoupled” from the I-829 approval. The court further stated that approval of Form I-829 is predicated by the approval of Form I-526 and the “successful execution of the approved plan.” |
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I-829 |
What is the relationship between an approved Form I-526 petition and the Form I-829 petition in establishing EB-5 eligibility? | Each alien investor must file a Form I-526 petition to establish his or her eligibility for classification as an EB-5 alien investor. If approved, the business plan (and the economic analysis in the case of an RC-affiliated new commercial enterprise) provided in support of the Form I-526 petition describes how the investor is going to satisfy the requirements of the EB-5 program, and, therefore, removal of conditions at the Form I-829 petition stage. Chang v. United States of America, 327 F. 3d 911(9th Cir. 2003). In Chang the court stated that although the adjudication of the I- 829 is not a re-adjudication of the I-526, the Form I-526 approval may not be “decoupled” from the I-829 approval. The court further stated that Form I-829 approval is predicated by the Form I-526 approval and the “successful execution of the approved plan.” | |
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I-829 |
What must be established at the Form I-829 petition stage? | INA 216A(d) and 8 CFR 216.6(c) require in general that an I-829 petition must demonstrate that the: Alien invested the requisite capital; That the capital investment has been sustained, and; That the requisite jobs have been created/preserved. | |
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I-829 |
When is a deviation from the business plan in an approved Form I- 526 petition material to the adjudication of the alien’s Form I-829 petition? | When the eligibility requirements at INA 216A(d) and 8 CFR 216.6(c) have not been met as provided in the approved plan in the Form I-526 petition. When the evidence demonstrating compliance with the capital investment and/or job creation requirements is significantly | |
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I-829 |
What is the relationship between an approved Form I-526 petition and the Form I-829 petition in establishing EB-5 eligibility? | Each alien investor must file a Form I-526 petition to establish his or her eligibility for classification as an EB-5 alien investor. If approved, the business plan (and the economic analysis in the case of an RC-affiliated new commercial enterprise) provided in support of the Form I-526 petition describes how the investor is going to satisfy the requirements of the EB-5 program, and, therefore, removal of conditions at the Form I-829 petition stageChang v. United States of America, 327 F. 3d 911(9th Cir. 2003). In Chang the court stated that although the adjudication of the I- 829 is not a re-adjudication of the I-526, the Form I-526 approval may not be “decoupled” from the I-829 approval. The court further stated that Form I-829 approval is predicated by the Form I-526 approval and the “successful execution of the approved plan.” | |
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I-829 |
Our issue is whether on an I-90 application, a dependent beneficiary who never obtained Conditional Permanent Resident status is eligible to join as a Lawful Permanent Resident after the principal obtains Legal Permanent Resident status through an I-829. | Form I-90, Application to Replace Permanent Resident Card, cannot be used to obtain lawful permanent resident status in the United States. Rather, the application is used by individuals who are already lawful permanent residents to obtain a new Form I-551 card. | |
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I-829 |
Where the PA already obtained permanent green card through I-829 approval, can a dependent who has not yet obtained conditional permanent resident status (in other words, the dependent who has not obtained CPR status through either IV processing or I-485 adjustment at the time the PA obtains I-829 approval) do a follow-to-join (either via I-485 or IV processing) AFTER the PA has already obtained permanent green card status? If so, would such dependent follow-to-joining be accorded CPR or permanent resident status by American Embassy or USCIS? | USCIS has received and adjudicated solo-filed derivative I-485s based on the principal alien’s (PA) approved EB-5 related I-485/I- 829. USCIS has also received Form I-824 applications, which have been approved and forwarded to the consulate, if the relationship between the PA and the dependent has been established. If the conditions have already been removed from PA’s lawful permanent resident (LPR) status, then the derivative should be granted LPR status without conditions. | |
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I-829 denial |
If an I-829 petition is denied because of a determination that the jobs will not be created within a reasonable time or because the investor was not aware of the need to file an amended I-526 petition, will the investor be placed into removal proceedings in order to renew the I-829 before an immigration judge? What are USCIS’ procedures to place an EB-5 investor in removal proceedings? We have heard stories of EB-5 investors waiting months before a notice to appear is issued. During that time, what is the investor’s status until the removal proceedings are initiated? If the investor or a family member is outside the United States, what document will be issued to enable the investor or family member to be reunited with the remainder of the family or to appear in the removal proceeding? | In accordance with 8 CFR 216.6(d)(2), if after review of the petition, the director denies the petition, he or she shall place the investor in removal proceeding by issuing a Notice to Appear (NTA). The investor may seek review of the petition during removal proceedings. Petitions are sent to CSC’s NTA unit after the denial of the petition. The NTA unit prepares the NTA and issues it to the investor via mail. The investor’s lawful permanent resident status and that of his or her dependent spouse and children are terminated as of the date of the director’s written decision. Generally an NTA is not issued if USCIS determines that an investor or a family member is out of the United States and their status is terminated. If an investor or a family member is out of the United States at the time that their status is terminated, then he or she will be put into removal proceedings at the time of their application for admission. An alien investor retains conditional resident status and is entitled to proof of that status while he or she obtains review of the USCIS termination in removal proceedings. | |
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I-829 denial |
I understand that even after I-829 is denied, the petitioner and dependent family members can obtain temporary I-551 stamp at a local USCIS Field Office. What is the immigration status of the PA and dependent family members whose I-829 have been denied but who still have I-551 temporary stamps in their passports? For example, can they travel outside the US and return; and can they work? | 8 CFR 216.6(d)(2) states in regard to a denied I-829 that “the alien’s lawful permanent resident status and that of his or her spouse and any children shall be terminated as of the date of the director’s written decision.” However, if the I-829 has been denied and an NTA has been issued, but no final order of removal has been entered, then USCIS must collect the expired conditional permanent resident card and follow established procedures for providing a temporary extension of the alien’s conditional resident status upon request at a local USCIS Field Office. If the temporary extension is granted, then the aliens will be authorized to work and may travel outside the United States. | |
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I-829 denial |
In some cases the USCIS has put investors whose I-829s have been denied into removal proceedings even though the investor has already left the US and in some cases re-entered on a new temporary visa (e.g., H- 1B). It doesn’t appear as though the USCIS is checking status before issuing the NTAs. Can USCIS do a better job checking its databases before issuing NTAs to EB-5 investors? It is inefficient for all parties (USCIS, ICE and the investors) to have to file a motion to terminate removal proceedings in such situations. | USCIS does not issue a Notice to Appear (NTA) to an EB-5 investor whose Form I-829 petition has been denied if systems checks and file review reveal that the individual has left the United States. However, if the individual has re-entered the country pursuant to a new temporary visa and there are are applicable grounds for removal, an NTA may be issued as appropriate. | |
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I-829 denial |
What is the immigration status of an investor whose I-829 has been denied, but whose passport has an I-551 temporary stamp? | USCIS states that the lawful permanent resident status of an immigrant investor is terminated as of the date of the director’s written decision. However, in cases where the I-829 has been denied and an NTA has been issued, but no final order of removal has been entered, USCIS collects the expired conditional permanent resident card. If a temporary I-551 stamp is desired, a request may be made at a local USCIS Field Office. If the temporary extension is granted, the alien will be authorized to work and may travel outside the United States. | |
| At the October 19, 2009, AILA EB-5 conference in San Francisco, CSC officials indicated that an acceptable EB-5 investment in a regional center context may consist of an equity investment in a commercial enterprise that in turn makes a loan with the invested capital to a borrower. CSC officials also appeared to state at the conference that the commercial enterprise could receive a guarantee from a third party that the borrower would repay the borrowed funds to the commercial enterprise. Please confirm that this is acceptable. It should be, since even a third party may not be able to pay the guarantee (e.g., AIG). Similarly, the borrower may not be able to repay the commercial enterprise, even if it receives money from the third party (e.g., General Motors). Also, does it matter whether the third party guarantor is a private insurer, bonding company, or a government entity? | Yes, there is currently nothing in the statute or regulations to preclude the guarantee from the third party as long as the alien investor’s capital is still “at risk”, and the arrangement does not constitute a redemption agreement or a guaranteed buy-back arrangement for the alien investor’s investment in the commercial enterprise. A determination as to whether a specific third party guarantee is contrary to the statutory and regulatory requirements has to be made on a case-by-case basis. | ||
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investment terms |
Please confirm that by contrast, as long as all of the EB-5 money is invested into a single job-creating project, it is permissible for investment funds to be invested into a holding company, which then invests into a non-wholly owned subsidiary formed to operate and develop the job-creating project, notwithstanding 8 C.F.R. § 204.6(e), which provides that the definition of “commercial enterprise” includes “a commercial enterprise consisting of a holding company and its wholly-owned subsidiaries.” | Yes. However, a scheme such as this may not be feasible unless the regional center properly documents the scheme at the regional center proposal stage. If a regional center wishes to build such complexity into its capital investment scheme, then any such initial or amended regional center proposal should contain sufficient documentation and analysis for each category of projects in order to demonstrate EB-5 compliance with the required capital investment and job creation. The scheme must be designed in a manner that is sufficiently transparent to enable USCIS to track each individual EB-5 investor’s capital investment into the commercial enterprise and into the job-creating investment projects to enable USCIS to make a determination as to whether each alien’s investment was sustained and to determine the allocation of jobs amongst the multiple EB-5 investors. | |
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investment terms |
May EB-5 capital be used to replace an existing loan? | An immigrant investor must show how jobs will be created as a result of his or her capital investment. Simply replacing funds to improve a business’ debt position does not meet EB-5 requirements unless there was a clear explanation accompanied by an analysis that depicts how, prospectively, jobs would result from an infusion of funds. | |
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Investment Terms |
What is the relationship between a commercial enterprise and capital investment project? Please clarify what investment structures are acceptable. | A capital investment project can be the same as a commercial enterprise because a commercial enterprise can be directly involved in the capital investment project. For example, a group of immigrant investors buy a hotel and refurbish and start operating the hotel. All of the jobs are created for the employment of U.S. workers at the hotel that is owned by the commercial enterprise. The same group of immigrant investors may alternatively form a commercial enterprise that is affiliated with a Regional Center and might make an investment in another company that is refurbishing the hotel, making renovations, and is thus indirectly creating jobs. A Regional Center is not prohibited from using different investment schemes, including both equity investment and loan structures, in different capital investment projects. However, the investment schemes to be used in the capital investment project must be articulated in the Regional Center application. |
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investment terms |
If someone establishes their own RC project, how long would they have to stay involved with it after they are granted an unconditional green card (e.g. Could they sell the project at that point if they wished to?) | The requirement that an EB-5 investor must sustain the capital investment is the same for RC-affiliated investments and non-RC- affiliated investments. The EB-5 investor must sustain the capital investment throughout the two year period of conditional permanent residence. This is the timeframe that is examined during the adjudication of the Form I-829 petition. [See INA 216A(d)(ii) and 8 CFR 216.6(C)(iii).] An EB-5 investor may sell the investment after the removal of the conditional status. | |
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investment terms |
Is it permissible to utilize EB-5 funds to pay off a loan on a capital investment project as long as it is clearly described in the business plan and will result in job creation? | USCIS shared that there have been some instances where the plan presented has been approvable, and there have also been other instances where timing is a factor. If the project has essentially concluded and EB-5 capital is simply going to replace debt in which the jobs are already created through non EB-5 capital, this does not make a compelling argument that jobs were created as a result of the investment. Also in all instances whether it’s an equity position or a loan instrument into a project, the agency is looking for EB-5 job creation. Therefore, like in all EB-5 cases, the evidence must demonstrate that the loan is EB-5 compliant and that jobs would be created within a reasonable period of time. | |
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Investment Terms |
Is an EB-5 Regional Center subject to Securities Exchange Commission regulation? | The Security Exchange Commission (SEC) is the appropriate source to provide guidance regarding whether an entity and/or particular capital investment instrument is subject to SEC regulations. USCIS does not oversee EB-5 Regional Center compliance with SEC regulations. It is important to note that many other federal government agencies are involved in the oversight of business entities and capital investment instruments that are utilized for investments within the United States, to include the SEC. Unlike the Executive Order 12959 requirements regarding USCIS’s assistance with OFAC regulations, USCIS typically has no role in regulating aspects of EB-5 capital investment unrelated to immigration. | |
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investment terms |
Is it permissible to agree to purchase an EB5 investor’s shares in a business, so long as it is at a price determined by an appraisal at time of purchase? OPTIONS TO BUY: Is it permissible for a business to have the right to buy back the investor’s shares, so long as the business is not obligated to buy them back? | In no event may the alien enter into a redemption agreement prior to the end of the two-year period of conditional residence. Any purchase of shares subsequent to the two-year period of conditional residence must be made based upon the fair market value of the shares. | |
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investment terms |
May an investor who is active in the business be paid a reasonable salary during the period of conditional residence without the payment disqualifying the EB-5 arrangement (such as being treated by USCIS as some kind of redemption)? Have you developed any parameters of what is reasonable for such a salary? | Any salary paid to the investor by the NCE may not erode the capital investment contribution during the period of conditional permanent residence, and must be commensurate with the time expended by the investor in the performance of the duties and at a level of compensation typically provided to persons performing similar duties in the location of employment. | |
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investment terms |
PREFERRED RETURNS: Is a provision that agrees to pay the investor a 5% annual return on investment, but only if the profits are available to pay it, permissible? | Such an arrangement must comport with the holdings in Izummi in that in no case can a preferred return on investment be guaranteed. Note that any return on investment whether guaranteed or not may not be made to an investor from EB-5 capital investment funds during the period of conditional permanent residence. In such an event the I-829 petition may not be approvable as the investor has not then sustained his capital investment. | |
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investment terms |
Is it correct to say that investors may pool their funds and jointly invest with other EB-5 investors (as with RC petitions), so long as they are “actively involved” e.g., shareholders of a business in which they have voting rights as to management and policy | 8 CFR 204.6(g) specifically allows immigrant investors to pool their investments with others seeking EB-5 status. Each investor must invest the statutorily required amount ($500,000 or $1 million) and the jobs created by the new commercial enterprise will be allocated among those within the pool seeking lawful permanent residence status. 8 CFR 204.6(j)(5) requires an investor to be “engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, as opposed to maintaining a purely passive role in regard to the investment…” | |
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investment terms |
It is our understanding that when EB-5 investor money provides some of the funds for a business, the EB-5 investors get credit for all the jobs saved or created. Is this true? | Yes. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur by more than one investor, provided each petitioning investor has invested or is actively in the process of investing the required amount for the area in which the new commercial enterprise is principally doing business, and provided each individual investment results in the creation of at least 10 full-time positions for qualifying employees. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur even though there are several owners of the enterprise, including persons who are not seeking classification under section 203(b)(5) of the Act and non-natural persons, both foreign and domestic, provided that the source(s) of all capital invested is identified and all invested capital has been derived by lawful means. See 8 CFR 204.6(g). | |
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Investment Terms |
At the October 19, 2009, AILA EB-5 conference in San Francisco, CSC officials indicated that an acceptable EB-5 investment in a regional center context may consist of an equity investment in a commercial enterprise that in turn makes a loan with the invested capital to a borrower. CSC officials also appeared to state at the conference that the commercial enterprise could receive a guarantee from a third party that the borrower would repay the borrowed funds to the commercial enterprise. Please confirm that this is acceptable. It should be, since even a third party may not be able to pay the guarantee (e.g., AIG). Similarly, the borrower may not be able to repay the commercial enterprise, even if it receives money from the third party (e.g., General Motors). Also, does it matter whether the third party guarantor is a private insurer, bonding company, or a government entity? | Yes, there is currently nothing in the statute or regulations to preclude the guarantee from the third party as long as the alien investor’s capital is still “at risk”, and the arrangement does not constitute a redemption agreement or a guaranteed buy-back arrangement for the alien investor’s investment in the commercial enterprise. A determination as to whether a specific third party guarantee is contrary to the statutory and regulatory requirements has to be made on a case-by-case basis. | |
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Investment Terms |
Can an EB-5 investor use funds unrelated to the EB-5 investment to purchase insurance from a third party (e.g., Lloyd’s of London) in which insurance proceeds would be paid to the investor if the commercial enterprise fails to repay the investor? Assume the third party is unrelated to the commercial enterprise or a regional center. | Yes, as long as the alien investor’s capital is “at risk”, and the indemnity policy does not constitute a redemption agreement or a guaranteed buy-back arrangement for the alien investor’s investment in the commercial enterprise. A determination as to whether a specific indemnity policy is contrary to the statutory and regulatory requirements has to be made on a case-by-case basis. | |
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Investment Terms |
PREFERRED RETURNS: Is a provision that agrees to pay the investor a 5% annual return on investment, but only if the profits are available to pay it, permissible? | Such an arrangement must comport with the holdings in Izummi in that in no case can a preferred return on investment be guaranteed. Note that any return on investment whether guaranteed or not may not be made to an investor from EB-5 capital investment funds during the period of conditional permanent residence. In such an event the I-829 petition may not be approvable as the investor has not then sustained his capital investment. | |
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Investment Terms |
WHAT CONSTITUTES [Capital Investment] “AT RISK”? | The EB-5 precedent decision, Matter of Izumii, 22 I&N Dec. 169 (Comm. 1998) provides significant guidance in what constitutes immigrant investor capital “at risk”, to include the following: 1. An alien may not receive guaranteed payments from a new commercial enterprise while he owes money to the new commercial enterprise. 2. To enter into a redemption agreement at the time of making an “investment”evidences a preconceived intent to unburden oneself of the investment as soon as possible after unconditional permanent resident status is attained. This is conceptually no different from a situation in which an alien marries a U.S. citizen and states, in writing, that he will divorce her in two years. 3. For the alien’s money truly to be at risk, the alien cannot enter into a partnership knowing that he already has a willing buyer in a certain number of years, nor can he be assured that he will receive a certain price. Otherwise, the arrangement is nothing more than aloan, albeit an unsecured one. 4.An alien may not enter into a redemption agreement with the new commercial enterprise at any time prior to completing all of his cash payments under a promissory note. In no event may the alien enter into a redemption agreement prior to the end of the two-year period of conditional residence. 5. A redemption agreement between an alien investor and the new commercial enterprise constitutes a debt arrangement and is prohibited under 8 C.F.R. §204.6(e). | |
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Investment terms |
8 C.F.R. § 204.6(j)(1) states that an I-526 petition must be accompanied by evidence that the EB-5 investor has invested “or is actively in the process of investing” the required money. Similarly, 8 C.F.R. § 216.6(a)(4)(ii) requires an investor at the I-829 stage to show that he has invested or “was actively in the process of investing” the required capital. The quoted langue would seem to indicate that an investment of $100,000 cash before filing the I-526 petition, plus a promise to pay another $400,000 (payable before the I-829 must be filed) would satisfy the EB-5 regulations. What is the USCIS’ position on this question? | EB-5 capital investment and job creation requirements typically involve a separate analysis. However, if the job creation is predicated on the infusion of EB-5 capital into a given capital investment project in order to realize indirect job creation, then the economic analysis would have to account for the timing of the infusion of capital in order to demonstrate that the indirect jobs would be created within a reasonable time. Any “promise to pay” due at a date in time post-filing of the I-526 petition must meet the requirements for promissory notes specified in Matter of Izumii and Matter of Hsiung, and must show that at the time of filing the I-526 petition that the capital is at risk, the lawful source of the capital, and that the alien has legal ownership of the capital per Matter of Ho. | |
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Investment terms |
In several memos written by attorneys on EB-5 regulations, it is stated that in respect of EB-5 new commercial enterprises, even though the statute requires an EB-5 petitioner to have invested or be in the process of investing the required capital, USCIS effectively requires the entire capital amount to be already invested and at risk in the commercial enterprise at the time the I-526 petition is filed. Please confirm that this is correct. If not, what is the timeframe in which the entire capital amount of $1,000,000 needs to be invested in the new commercial enterprise after the Form I-526 is filed. | 8 CFR 204.6(j)(2) requires that the I-526 petition must be accompanied by evidence that the required amount of capital has been placed at risk, and notes the following: Evidence of a mere intent to invest, or prospective investment arrangements entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing. The alien must show actual commitment of the required amount of capital. This regulatory requirement has been in place since the inception of the EB-5 program. The capital does not have to be fully invested at the time of the filing of the I-526 petition. However, the evidence provided in support of the investor’s I-829 petition must show that the investor has invested or was actively in the process of investing the requisite capital, and that the investment was sustained throughout the period of conditional permanent residence. See INA 216.6(d) and 8 CFR 216.6(c). | |
| It is our understanding that when EB-5 investor money provides some of the funds for a business, the EB-5 investors get credit for all the jobs saved or created. Is this true? | Yes. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur by more than one investor, provided each petitioning investor has invested or is actively in the process of investing the required amount for the area in which the new commercial enterprise is principally doing business, and provided each individual investment results in the creation of at least 10 full-time positions for qualifying employees. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur even though there are several owners of the enterprise, including persons who are not seeking classification under section 203(b)(5) of the Act and non-natural persons, both foreign and domestic, provided that the source(s) of all capital invested is identified and all invested capital has been derived by lawful means. See 8 CFR 204.6(g). | ||
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job creation |
May jobs held by members of Indian tribes in the U.S. count for EB-5 purposes? | An investor may be credited with job creation if the incumbent meets the requirements of a qualified employee under INA 203(b)(5)(A)(ii) and 8 CFR 204.6(e), to include members of Indian tribes. | |
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job creation |
In a non-regional center application, if an investor is purchasing an existing business that employed full-time and part-time employees, and the employer adds 10 more full-time employees, does it matter whether the part-time employees are still employed? | Part time employment does not affect the requirement that the EB-5 investor demonstrate that his/her capital investment created 10 full time jobs for qualifying employees. | |
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job creation (construction jobs) |
The 12/9/2009 memo clarified that direct construction job must be shown to have been positions lasting at least two years and through the filing of I-829. It would seem that neither of those requirements not apply to indirect and induced jobs arising from construction, but is that true? Is there any temporal element required to count jobs indirectly arising from construction per typical economic methodologies? | No, there is no way to determine this information from widely-available models, so it is not possible to split out temporary construction in indirect jobs. | |
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job creation (direct/indirect) |
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. | 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. | |
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job creation (direct/indirect) |
Please confirm that an investor in a troubled business in a regional center can count the indirect jobs associated with the preservation of the jobs that are preserved in the troubled business. | In theory, Yes. However, a determination as to whether a specific business plan and supporting economic analysis is compliant with the statutory and regulatory EB-5 requirements has to be made on a case-by-case basis. | |
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job creation (direct/indirect) |
Will USCIS agree with the contention that a saved or preserved job under the ‘troubled business’ definition is equivalent to a direct created job? | Every EB-5 investor must create at least 10 jobs as a result of his or her capital investment. However, meeting the job creation requirements through job maintenance in a “troubled business” also involves demonstrating that the number of existing employees were maintained at no less than the pre-investment level during the EB-5 investor’s two year period of conditional permanent residence. [See 8 CFR 204.6(j)(4)(ii) & 8 CFR 216.6(c)(iv).] The concept of what qualifies as a “direct” job for EB-5 purposes can be complicated. 1. For non-RC affiliated capital investments, job creation may only be credited through the creation or preservation of jobs that are directly within the commercial enterprise in which the EB-5 Investor made his or her investment. 2. For RC-affiliated capital investments, job creation may be credited through the creation of jobs directly within the commercial enterprise in which the EB-5 investor made his or her investment, but can also be credited with indirect job creation through equity investments or loans to other organizations, or through indirect job creation based upon an econometric model supported by a detailed business plan and associated economic analysis.3. The concept of a what a direct job is within econometric modeling differs slightly from a direct job described in #1 or #2 above, as a direct job in this context is a job that can be directly attributed to the economic impact of the capital investment in order to derive estimates of indirect job creation. | |
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job creation (direct/indirect) |
“An EB5 investor invests in a company which then invests in businesses; are the jobs created in the businesses which receive funds “direct” and/or can they be multiplied by the appropriate RIMS II multipliers to get credit for “indirect” and/or “induced jobs”? EXAMPLE: EB5 investor invests in company A which is a pooled fund; the pooled fund then invests in company B. Company A only has 2 FT employees, but Company B has 6 FT employees. Can both the 2 and 6 employees be direct employees so that they can be multiplied by the RIMS II multipliers? It appears that the Bureau of Economic Analysis considers them “direct”. An EB5 investor invests in a retail commercial center and leases to new businesses. Are the jobs created by those tenants “direct” jobs, which can be multiplied by the appropriate RIMS II multipliers to get credit for “indirect” and/or “induced jobs”? Again, BEA appears to consider them direct.” | What is the business of the RC?Commercial lending, commercial development, leasing, or retail sales Direct jobs occur in the new commercial enterprise that is created with EB-5 dollars. Problematic analyses estimating direct job creation. Solution—Capital expenditure | |
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job creation (direct/indirect) |
Can we multiply direct jobs projected by the appropriate RIMs II Direct Effects multiplier to get credit for indirect and/or induced jobs for purposes of satisfying the 10 job projection in an I-526, and, again to get credit for indirect and/or induced jobs for purposes of satisfying the 10 job requirement at the time of the I-829? If our Economic Analysis concludes that the expenditure of an amount of money creates a certain number of direct, induced and indirect jobs for each business category, then proof that the money was indeed expended into a business in that business category is proof enough, with no need to show W2s. Correct? Also, can we multiply the number of millions expended by the “Final Demand Multiplier” to get credit for projected jobs in the I-526 and actual jobs in the I-829? BEA indicates yes.” | In the Regional Center context, showing projected and actual job creation is similar because the same model is used. At the I-829 stage, you need to show what actually happened:If you based job creation projections on direct jobs, you need to show that the direct jobs were created. If you based job creation on expenditures, then you need to showthat the money was expended as specified in the business plan in the approved Form I-526 petition. | |
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job creation (direct/indirect) |
All economists agree that the following are direct jobs for purposes of EB-5 Program, and they are not indirect or induced, and therefore, they can be multiplied by the Direct Effects Multipliers to get credit for combined direct, indirect, induced jobs. Please confirm this: An investor or group of investors invest in a company which then invests in one or more other businesses. The employees hired by the business or businesses which ultimately receives the money from the company are direct jobs. An investor or group of investors invest in a building, which leases to qualifying new, expanding or troubled businesses. These tenants’ employees are direct jobs. | : First, it is incorrect to suggest that all economists could agree on anything. In EB-5 we have a special use for multipliers because the goal of the analysis is to show a connection between the investment and the job creation. There are other applications of multipliers that are not confined by these requirements. Generally, the answer to this question lies in the business plan. What is the new commercial enterprise? What is its business? | |
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job creation (direct/indirect) |
Objective rules as to how to use RIMS II would remove uncertainty and reduce the costs of Economic Analyses in support of an RC petition. Therefore, is this true: An appropriately applicable area RIMS II Direct Effects Multiplier can be multiplied by the number of direct jobs and the resulting combination of direct, indirect and induced jobs can satisfy the EB-5 requirements if they create 10 total FT jobs. An appropriately applicable area RIMS II Final Demand Multiplier can be multiplied by the number of millions of dollars invested and the resulting combination of direct, indirect and induced jobs can satisfy the EB-5 requirements of 10 FT jobs. | The question seems to ask how to use RIMS II multipliers (Type II). If you are using direct job data, which should be fully justified and supported by the business plan, you multiply the number of direct jobs by the direct effects employment multiplier. This yields the total number of direct, indirect, and induced jobs. Similarly, if you are using a capital expenditure model, you divide the investment amount by $1,000,000. Next, you multiply the result by the final demand employment multiplier. The result encompasses direct, indirect, and induced jobs. | |
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job creation (direct/indirect) |
Where a regional center based EB-5 project involves building a shopping center to be leased to retail tenants, will new jobs created by these tenants be considered “direct” jobs for the purpose of I-829 conditions removal? | Again, the business plan contains the answer. What is the business? Building shopping centers or building/leasing/operating shopping centers? Obviously, this is fairly case-specific and would require the details to give a complete opinion. | |
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job creation (relocation) |
We understand that the USCIS generally wants “relocated” jobs discounted from the final job count set forth in regional center economic reports. Is the ban on “relocated” jobs limited to jobs relocated within the regional center? | USCIS is unaware of any statutory or regulatory requirement, or of any vetted and published policy guidance that addresses the “discounting of relocated jobs” within a regional center’s economic analysis. As noted in the response to question #26, USCIS expects regional centers to comply with the statutory requirement regarding “concentrating pooled investment in defined economic zones” by limiting the focus of the economic impact of capital investment projects conducted within the regional center to the approved geographic boundaries of the regional center. This question asks that if a large architecture firm moved offices from New York City to San Francisco, would those relocated jobs count for EB-5 purposes since San Francisco would benefit from an increase in jobs? The answer is no, because jobs that were in existence prior to the alien investor’s capital investment into the commercial enterprise cannot be credited towards the requisite creation of 10 jobs per each alien investor. If the business qualifies as a “troubled business”, then the relocated jobs could be considered as part of the existing job threshold in determining whether the architecture firm’s jobs were retained pursuant to 8 CFR 204.6(j)(4)(ii). | |
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job creation (time period) |
What factors are considered in determining whether the necessary jobs will be created within a “reasonable time” in adjudicating an I-829 petition, per 8 C.F.R. § 216.6(a)(4)(iv)? Section 25.2(e)(4)(D) of the Adjudicator’s Field Manual lists some factors in making the reasonable time determination, but how do CSC adjudicators apply those factors in actual cases? For example, what if a regional center has an approved job creation methodology, proof that the investment has gone into the project, and has leased up the project but the tenants have not moved in when the I-829 is filed? What if the project is almost but not completely leased? Will USCIS approve an I-829 in such a case? If so, what documentation would be required? | CSC adjudicators follow the guidance put forth in the Adjudicator’s Field Manual (AFM) at section 25.2(e)(4)(D), which states: In making the “reasonable time” determination, officers should consider the evidence submitted along with the petition that demonstrates when the jobs are expected to be created, the reasons that the jobs were not created as predicted in Form I-526 , the nature of the industry or industries in which the jobs are to be created, and any other evidence submitted by the petitioner. If after considering the evidence, the officer determines that the jobs are more likely than not going to be created within a reasonable time, Form I-829 should be approved consistent with 8 CFR 216.6(d)(1) if the petitioner is otherwise eligible to have his or her conditions removed. If, however, the officer determines that the jobs will not be created within a reasonable period of time, Form I-829 should be denied consistent with 8 CFR 216.6(d)(2) . CSC adjudicators apply the factors outlined above when analyzing the facts in each individual case using the preponderance of evidence standard. Note: It is not possible to answer “what if” questions such as this question in the abstract. Whether a particular case will be approved is dependent upon the determination of eligibility, based upon the specific evidence of record. | |
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job creation (time period) |
Are the absence of permits from local authorities and other capital investment project delays are taken into account when determining whether sufficient permanent jobs were created through the investment? | USCIS stated that the adjudication of Form I-829 typically takes place approximately 2.5 years from filing Form I-526 Immigrant Petition by Alien Entrepreneur, but that that the law allows for a favorable determination to be made in the Form I-829 petition if the documentation shows that sufficient jobs will be created within a reasonable period of time. | |
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job creation (time period) |
Does the 2 ½ year rule in the Neufeld Memo regarding when jobs must be created date from the approval of an exemplar I-526 or each individual I-526? | The June 17, 2009 memo specifically addresses the timeframe for the crediting of jobs within individual I-526 petitions. However, any exemplar I-526 petition presented within a Form I-924 application must demonstrate that the prospective timelines for the proposed capital investment project must be in keeping with the requirements for individual I-526 petitions in order for a determination that the exemplar filing is EB-5 compliant. | |
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job creation (time period) |
If jobs are created on an indefinite full-time basis and then lost (such as by downturn of the business) after all EB-5 capital has been plowed into the business, but before the end of CPR status, can they be counted? | Jobs created as a result of the EB-5 investment must be maintained through the entire two-year period of conditional permanent residence. INA 216A(d) and 8 CFR 216.6(c)(iv). | |
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job creation (time period) |
If jobs must last to the end of CPR, what is the critical moment: filing of I-829 (which might precede end of two years of CPR by up to 90 days), end of CPR (two years), or approval of I-829? | The job created as a result of the EB-5 investment must be maintained through the entire period of conditional residence. The conditional residence ends when the conditions are removed, at the time of approval of the I-829. | |
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job creation (time period) |
Must qualifying jobs last two years? If a position starts prior to the I-829 filing date, does it count? | There is no requirement for how long a qualifying job must last. A June 2009 memo instructed USCIS officers to “ensure that the business plan filed with the Form I-526 reasonably demonstrates that the requisite number of jobs will be created by the end of the two year period.” A June 2009 memo states: “Although employment in some industries such as construction or tourism can be intermittent, temporary, seasonal or transient, officers should not exclude jobs simply because they fall into such industries.” | |
| Is there any restriction on a regional center soliciting EB-5 funds before it receives its approved designation as a regional center? | There is no specific prohibition to a proposed regional center soliciting EB-5 funds before it receives its approved designation as a regional center. However, USCIS is aware that some prospective regional centers have inappropriately represented that the entities have already received the regional center designation on websites and in promotional literature. Prospective regional centers may not make any representations that could potentially mislead an investor into believing that the entity has been approved for the regional center designation prior to the actual regional center approval by USCIS. | ||
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marketing |
May the USCIS logo be used on Regional Center marketing materials? | The use of Governmental logo on EB-5 materials or websites is not permitted. 18 U.S.C. § 701 provides: “Whoever manufactures, sells, or possesses any badge, identification card, or other insignia, of the design prescribed by the head of any department or agency of the United States for use by any officer or employee thereof, or any colorable imitation thereof, or photographs, prints, or in any other manner makes or executes any engraving, photograph, print, or impression in the likeness of any such badge, identification card, or other insignia, or any colorable imitation thereof, except as authorized under regulations made pursuant to law, shall be fined under this title or imprisoned not more than six months, or both.” Note: USCIS will be reviewing RC websites and promotional material as part of the I-924A review for inappropriate use of DHS and USCIS branding as well as material that is non-EB-5 compliant. | |
| Does USCIS ever approve a proposal for Regional Center designation when an actual investment project does not yet exist? | In some cases, USCIS may approve a proposal for Regional Center designation when an actual investment project does not yet exist. The approval is therefore based upon a hypothetical investment project. If this is the case, when the immigrant investor files Form I-526 Immigrant Petition by Immigrant Entrepreneur, an analysis will be done to determine if the actual business plan provided in support of the Form I-526 comports with the hypothetical business plan provided in support of the Regional Center application. For example, a Regional Center may have a hypothetical plan to build assisted living facilities. Although the geographic location of these assisted living facilities has not been identified, the hypothetical business plan demonstrates the logistics and feasibility of building the facilities within the geographic area of the Regional Center. Since the business plan does not relate to an actual project, it is considered a hypothetical investment project. | ||
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Regional Center application |
Please share tips for creating a successful economic analysis. | USCIS’ economist discussed issues related to: • Input-Output models used to demonstrate job creation in Regional Center cases and the nature and source of the information used in these models. • Helpful hints for reducing the number of Requests for Evidence (RFE) o A sound economic analysis should include a properly defined geographic scope of the region in which the investment will be made, and where inputs originate. o A quality business plan provides reasoned and defensible estimates for the inputs that are used in the economic analysis, which is fundamental to creating a quality job creation analysis of a given capital investment project. o There must be a well-reasoned basis for the initial changes in output employment and earning that are used to predict job growth (economic growth). The estimates provided in the economic analysis and business plan must make sense. o To calculate the average number of jobs per industry or average wages per industry or occupation, stakeholders were advised, that to the extent possible, publicly available data should be used. |
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Regional Center application |
Is it acceptable to submit a regional center application in which a private equity strategy was used, no specific project was identified, and the investment was made in a targeted employment area, after a regional center approval? | The UCSIS economist shared that in this scenario, the process allows for filing an exemplar project that is supported by a business plan and an economic analysis. At this stage, a generic project can be accepted because the actual determination of a TEA will take place at the filing of Form I-526 Immigrant Petition by Alien Entrepreneur, not within the adjudication of the regional center proposal. Also, a private equity strategy is an acceptable fund structure, but advised that the level of complexity needs to be well documented to include easily recognizable job creation estimates. | |
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Regional Center application |
May one entity apply for more than one regional center? | USCIS indicated that it is not uncommon for promoters to be involved in one or more regional centers as there is no prohibition on an individual or an entity making multiple regional center application and upon approval promoting multiple regional centers. | |
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Regional Center application |
Please share tips for creating a successful economic analysis. | The USCIS economist shared tips to assist customers to better prepare their filings: o Multipliers require detailed information. Bear in mind that the analysis depends on the quality of the information; o Ensure you have a well-reasoned basis for all the numbers, especially when using multipliers; o It is best to use publicly available sources of information. For example, data obtained from the U.S. Bureau of Labor Statistics; o Check the economic analysis and business plan numbers to ensure they make sense; o If using data from a private consulting firm, please provide the methodology; and o If using Rims II, please include the multiplier tables, to facilitate checking the analysis. In addition, the USCIS economist highlighted the following points: o RIMS II and IMPLAN are examples of backward-linked models; meaning the data in the model represents suppliers to the industry rather than customers. o There should be a balance between competing geographic definitions. For example, sometimes an investor may narrowly define geographic boundaries to maximize the benefit of a targeted employment area and broadly define geographic boundaries for multiplier analysis. o USCIS does not require that the person preparing the analysis have a degree, e.g. MBA, CPA. The important thing to remember is to provide well-reasoned, reproducible information. Common pitfalls to be wary of are: o Use the appropriate geographic region for multipliers; for instance, avoid using state multipliers for county region; o Ensure you compare similar data elements and offer a reasoned explanation; o The data needs to make sense; o Time periods must be level / comparable; o When making seasonal and non-seasonal adjustments for unemployment, please be specific; o If using RIMS II, become familiar with the handbook to deal with initial impacts and the backwards linkage model. Ensure to include “induced” as well as direct hire employees and indirect hired employees, as in those hired elsewhere due to an increased demand in a different area, which then go to another industry. |
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Regional Center application |
Can the Regional Center be set up and operated by the alien investor? | There is nothing that prohibits ownership of a regional center entity by an alien. | |
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Regional Center application |
In a Regional Center is there a project size requirement, or could it be one investor, with one property, leased to a single tenant that would provide multiple jobs. Is there any way this scenario would work for an individual, or would it be necessary to go the RC route since all the jobs would be indirect? | There is no project size requirement in a Regional Center application. Without all of the details, USCIS cannot speculate about what may or may not be qualifying. The regulations at 8 CFR 204.6(j)(4) outline the requirements for job creation for regular program investors and Regional Center investors. In short, regular program investors must directly create at least 10 full time positions for qualifying employees, while Regional Center investors must show that at least 10 full time positions for qualifying employees will be created either directly or indirectly. | |
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Regional Center application |
Where a U.S. business is not sure what legal organization would be best, may we submit with an RC petition or amendment several options? Will USCIS approve the ones that are acceptable and reject the ones which are not without denying the whole petition? | Yes, a Regional Center application may contain more than one legal organization plan. If upon review, one or more of the legal organization plans do not appear to be EB-5 compliant, then USCIS will issue an RFE. If upon final adjudication USCIS determines that one or more legal organization plans are qualifying, USCIS would approve the Regional Center application, and the legal organization plans that were deemed acceptable would be specifically noted in the Regional Center approval notice. | |
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Regional Center application |
What are common reasons for RFEs and denials on I-924 applications? | 1. Business Plan and Economic Analysis for Each Requested Industry Category (Form I-924, Part 7.) A. The application is not supported by a business plan and economic analysis for at least one investment project with sufficient detail to show in verifiable detail how capital investment offerings in the requested industry will create jobs; B. Insufficient evidence and/or narrative that describes the investment project activities that the regional center will engage in for each requested industry category, to include; 1. The proposed number of investors for the project(s); 2. The timeline for starting and completing the projects to demonstrate the requisite job creation; 3. A financial plan or budget including capital required and expenditures for the investment projects. 2. Reliability and Appropriateness of Data Sources for Economic Model Inputs, (Form I-924, Part 7.) A. The application of national or state data in the economic model when more accurate regional data is readily available to demonstrate the economic impacts/job creation of the regional center’s investment projects; B. The data source for economic or business activity estimates for a given investment project, e.g. the data sources for estimates regarding total revenue generated or for the estimated construction costs (if applicable) for a given project . 3. Choosing and Identifying Appropriate NAIC Codes. (Form I-924, Part 7.) A. NAIC code should be appropriate to the requested industry; B. An overly broad NAIC code may not be representative of the requested industry; C. An overly narrow NAIC code may be too restrictive for the scope of the contemplated investment project(s) in the requested industry, e.g “NAIC Code 62” includes assisted living facilities but also covers hospitals. There may be a more appropriate for the requested industry. 4. Exemplar Form I-526s submissions should be documented with evidence with the level of detail required for an I-526 petition so that the exemplar petition if approved will facilitate the review of individual Form I-526 petitions (Form I-924 instructions, page 1.) An exemplar Form I-526 petition should therefore: A. Include a Matter of Ho compliant business plan and an associated economic analysis; B. Include project timeframes for milestones: project commencement, key construction or implementation dates, completion date, and time line for the requisite job creation; C. Clearly request approval for an exemplar I-526 and include a copy of an exemplar I-526; D. Include all documents needed for I-526 approval excluding an investor’s capital investment information; E. Identify the amount and source of non-EB5 financing needed for the project. |
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Regional Center application |
What criteria is used in determining the appropriate geographical boundary for a regional center that has one initial “shovel ready” project but is planning future projects in a larger geographical area; but the details and location of the future projects are unknown? | A Regional Center may be granted jurisdiction over a limited geographic area for the purpose of concentrating pooled investment in defined economic zones. A Regional Center must demonstrate in the Form I-924 that its activities will focus on the requested geographic region, and not simply on isolated and unrelated areas within the region. It may be more appropriate for the Regional Center to initially request a geographic area that is in keeping with the economic impacts of the existing project, and then subsequently file an amendment request for an expanded geographic area as the details and location of future projects become known | |
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Regional Center Termination |
Under which conditions may an RC be terminated by the USCIS? | USCIS may terminate the status of an approved RC under the termination procedures provided in 8 CFR 204.6(m)(6), upon a determination that the RC no longer serves the purpose of the Pilot Program by promoting economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment. USCIS must notify the RC through the issuance of a Notice of Intent to Terminate (ITT) of the reasons for termination and provide the RC with 30 days to provide evidence in rebuttal of the issues raised in the ITT. If USCIS determines that the RC’s participation in the Pilot Program should be terminated, USCIS shall notify the RC of the decision and of the reasons for termination. As provided in 8 CFR 103.3, the RC may appeal the decision to USCIS within 30 days after the service of notice. USCIS will notify the public via the USCIS website of the termination of any previously approved RC, upon the completion of the administrative appeals process in the matter, if any. If USCIS determines that the RC’s response to the ITT overcomes the reasons for termination, then USCIS shall affirm the approval of RC’s designation for participation in the Pilot Program in writing. Note: Amended 8 CFR 204.6(m)(6), which takes effect 11/23/20010, provides for the termination of an RC using the procedures outlined above if an RC fails to provide an RC fails to submit required information of its EB-5 activities (Form I-924A). | |
| Please explain how USCIS applies the preponderance of the evidence standard in adjudicating lawful source of funds in I-526 petitions. | As we stated at a previous stakeholders meeting, in adjudicating all eligibility requirements in EB-5 related petitions, officers use the preponderance of the evidence standard. It is difficult to answer this question in the abstract without looking at the specific evidence of record. As we stated previously, if for example, an officer issues an RFE related to the lawful source of funds, the petitioner should respond to the request in a timely manner. The petitioner may choose not to provide all of the requested evidence and request a decision on the merits if he or she believes that eligibility has been established by the evidence already in the record or that the request is not proper. See 8 CFR 103.2(b)(11). Separately from the adjudicative process, if there are repeated cases in which you believe that an RFE is improvidently issued, you may send an e-mail to the EB-5 mailbox. USCIS will investigate the matter and, if necessary, will take appropriate action. | ||
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source of funds |
Are the newly assigned EB-5 adjudicators trained to understand that the burden of proof in I-526 petitions adjudications, in particular with regard to the source of funds requirement, is no higher than a preponderance of the evidence? Adjudicators of late appear to be analyzing the source of funds issue using a much higher standard. They are issuing Requests For Evidence (RFEs) demanding a penny to penny paper trail for capital sources akin to an Izummi “path of funds” analysis – which is only applicable to the tracing of funds from the investor’s personal account into the new commercial enterprise. This requirement is not applicable to the source of funds documentation, which often involve transactions, accumulations of salary, etc. that occurred over time many years ago, and in countries where documentation is limited due to local customs. In the past, the supervising officer of the EB-5 unit has stated that in analyzing source of funds, USCIS strives to be reasonable on the basis of evidence that is available. Please confirm that this continues to be true. | All USCIS adjudicators are trained to understand the burden of proof based upon the preponderance of evidence standard, to include EB-5 adjudicators. If a petitioner feels that an RFE is issued in gross error, then an inquiry can be made to the EB-5 mailbox requesting a review of the appropriateness of the RFE. It is helpful to provide a copy of the RFE in such inquiries. | |
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source of funds |
In proving the source of funds, an alien may claim that certain assets were liquidated or sold. USCIS’s EB-5 training materials state that “If the assets were acquired recently, ask for evidence of how and when they were obtained.” Please explain how an adjudicator will define the word 2 “recent” in his/her review of the application. How recent is recent? 5 years? 10 years? If an investor bought a house in 2002 and sold it in 2010, will he be asked to provide evidence regarding the source of funds used to buy the house initially? How far back must we go to obtain documentation? | The definition of “capital” at 8 CFR 204.6(e) makes clear that assets acquired, directly or indirectly, by unlawful means shall not be considered to be capital under INA 203(b)(5). Likewise, 8 CFR 204.6(j)(3) requires that I-526 petitions must be supported by evidence of the source of the investor’s capital. The 2008 EB-5 training materials referenced in the question do not define the word “recent”. Defining a blanket timeframe for the examination of the lawful source of an investor’s funds is not appropriate. Circumstances may differ from case to case. In some instances the source of the capital is readily apparent based upon the evidence presented, where in other cases the evidence regarding the source of the capital may be more tenuous, requiring supplemental documentation. | |
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source of funds |
Recently, USCIS released materials used to train officers in the adjudication of EB-5 cases. This document well instructed us on how to trace the source of the investment fund. The original text reads: “An alien may show a large amount of capital in an investment or bank account, but be unable to show where it was before the account was opened, look out for new accounts and ask where large amounts of unexplained capital came from.” The law only requires investors prove that the money they will invest into the EB-5 project was legally obtained. The investor should not be asked to explain the source of all the money in his or her bank account. To our understanding, if the investor’s account contains one million dollars, and the investor is investing $500,000 in a Targeted Employment Area (TEA), the investor need only explain the source of funds for the $500,000 investment. | The source of comingled funds in an investor’s account may need to be documented in order to demonstrate compliance with 8 CFR 204.6(e) and 8 CFR 204.6(j)(3) in certain circumstances. Oftentimes, the transfer of investment funds involves multiple transactions from different sources. It may not be apparent from the initial record which funds are for the EB-5 investment and which funds are to be used for other purposes. In addition, 8 CFR 204.6(g)(1) requires that the source of all of the EB-5 and non-EB-5 capital in the EB-5 capital investment project must be identified and shown to have been derived from lawful means. | |
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source of funds (OFAC) |
At the EB-5 stakeholders meeting in September, USCIS officials indicated that they are consulting with the Treasury Department’s Office of Foreign Asset Control (OFAC) to determine when an OFAC license may be required in EB-5 matters. What is the status of this issue? Does USCIS or OFAC have any general guidance to educate us on this issue? | USCIS has engaged OFAC on issues related to several cases that are currently pending with USCIS. USCIS cannot speak about the particulars of those cases in this forum. Prospectively, EB-5 investors who may be subject to limitations governed by OFAC should reach out to OFAC to obtain a license or clarification that no license is required before filing a petition with USCIS. | |
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source of funds (OFAC) |
OFAC issue with Iranians. What is USCIS policy on getting an OFAC license for Iranian investors? At what stage of the EB-5 process does the license need to be acquired? Does USCIS and OFAC coordinate these policies? If so, how? | The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. OFAC acts under Presidential national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze assets under US jurisdiction. Many of the sanctions are based on United Nations and other international mandates, are multilateral in scope, and involve close cooperation with allied governments. 31 CFR 560 Prohibits certain U.S. Transactions with Iran, known as the “Iranian Transaction Regulations”. (ITR) Pursuant to Section 3 of Executive Order 12959, all federal agencies are “directed to take all appropriate measures within their authority to carry out the provisions”of the ITR. Civil monetary penalties ITR violation can be $250,000 or twice the value of the transaction at issue, whichever is greater. Criminal penalties can include a fine of up to $1,000,000, and possible incarceration of up to 20 years. The statute of limitations on these violations is 5 years. USCIS has met with OFAC in order to learn about how ITR requirements may impact lawful source of funds requirements in EB-5 petitions. OFAC has confirmed that: 1. the U.S. recipients of funds from Iranian investors as well as any individuals involved in structuring/facilitating these transactions would be in violation of the ITR unless OFAC licensure procedures have been followed. 2. Investment of funds that have passed through prohibited banks would also be in violation of the ITR. For a list of prohibited banks and Specially Designated Nationals (SDN) [See: http://www.treasury.gov/resource-center/sanctions/SDN- List/Pages/default.aspx.] 3. These investors are required to apply for and received a license from OFAC, or a letter stating that no license is needed. 4. OFAC will determine if such transactions will get a license or not via the application procedure set forth in 31 CFR 501.801(b ). The only instance where a license would not be required is when the Iranian national resides outside of Iranand the money is shown to be obtained through a lawful source and transferred to the United States without having traveled through a prohibited bank. In all other situations, any U.S. recipient of prohibited funds and facilitators of such transaction (attorneys, accountants etc.) should apply for a license from OFAC, who will determine if the transaction is or is not prohibited by the ITR and, if prohibited, whether to grant a license to permit the transaction. OFAC has indicated that each individual transaction must be licensed separately. The lawful source of an EB-5 investor’s capital investment must be established at the time of filing of the Form I-526 petition. The application for licensure with OFAC must be resolved prior to the filing of a Form I-526 petition by an EB-5 investors if the lawful source of the capital investment may be impacted by OFAC licensure requirements. The Administrative Appeals Office recently issued an unpublished decision which examines OFAC licensure requirements in the EB-5 context which may be helpful to those who wish to have further information on this topic. If the OFAC license appears to be limited and does not appear to cover all of the transactions presented in the I-526 petition, then the petitioner has failed to establish lawful source of funds. If the license does not authorize any transactions that occurred prior to the date of issuance, then the license cannot cover the transfer of funds from Iran included in the petition where the license was obtained after the petition was filed. | |
| Setting up an escrow account is a standard way for RCs to receive investors’ funds. Please confirm that for cases which are not affiliated with an RC that putting funds in an escrow account is permissible if all funds are committed to be released to the new commercial enterprise upon the approval of the individual’s I-526. | USCIS does not require the use of escrow agreements. However, such agreements are permissible if the terms of the escrow agreement comports with 8 CFR 204.6(j)(2), which requires that the I-526 petition must be accompanied by evidence that the required amount of capital has been placed at risk. | ||
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Stand-alone EB-5 |
Could there be several EB5 Direct Basic investors who invest together in a restaurant? For example, 3 investors jointly invest as limited partners in the restaurant and are actively involved in the restaurant. | Yes. The EB-5 regulations at 8 CFR 204.6(g) provides in pertinent part that: The establishment of a new commercial enterprise may be used as a basis of a petition for classification as an alien entrepreneur by more than one investor, provided each petitioning investor has invested or is actively in the process of investing. | |
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Stand-alone EB-5 |
In a non-regional center application, if an investor is purchasing an existing business that employed full-time and part-time employees, and the employer adds 10 more full-time employees, does it matter whether the part-time employees are still employed? | Part time employment does not affect the requirement that the EB-5 investor demonstrate that his/her capital investment created 10 full time jobs for qualifying employees. | |
| An EB-5 investor invests in a company that operates several retail outlets. The company’s headquarters office is in a designated TEA, but the retail stores directly owned and operated by the company are not in TEAs. Assume 5 jobs will be created in the headquarters location and 5 jobs will be created at retail stores that are not in TEAs. How much money must the investor invest: $500,000 or $1 million? | This question cannot be answered in the abstract without a clear presentation of the facts in the record of proceeding. Whether a particular case with this fact pattern can be approved is dependent upon a review of the specific evidence of record. | ||
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TEA |
Pursuant to 8 C.F.R. § 204.6(i), please confirm that a targeted employment area (TEA) may consist of a geographic area designated by a governor’s delegate, that is described by a collection of wards, census tracts, and/or other political descriptions (such as sets of city blocks), even when the precise location of a particular commercial enterprise is located in a ward or census tract that does not by itself have an unemployment rate of 150% of the national average. | The regulation at 8 CFR 204.6(i) provides that a state government may designate a particular geographic or political subdivision located within a metropolitan statistical area or within a city or town having a population of 20,000 or more within such state as an area of high unemployment (at least 150% of the national average rate.) The following reasoning for involving states in this process was noted in legacy INS’ final rule implementing the initial EB-5 regulations, Employment-Based Immigrants, [56 FR 60897]. Twelve commenters called for the Service to change the definition of targeted employment area. The Service cannot, of course, alter the statutory definition of targeted employment area. The Service has concluded, however, that the designation of smaller geographic or political areas within metropolitan statistical areas or within cities or towns with a population of 20,000 or more as areas of high unemployment would comport with the intent of Congress regarding targeted employment areas. [emphasis added]. This part of the rule contains a method for the designation of such geographic or political areas as areas of high unemployment. Under the final rule, a state government may delegate to any agency, board, or other appropriate state governmental entity the authority to certify that geographic or political subdivisions of non-rural areas within the state qualify as areas of high unemployment. The delegation must be reported to the Immigration and Naturalization Service through the Associate Commissioner for Examinations prior to the issuance of any area designation. The evidence of such area designations that a state provides to a prospective alien entrepreneur should include a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained. This part is not intended to place any unnecessary burden upon any state. With respect to geographic and political subdivisions of this size, however, the Service believes that the enterprise of assembling and evaluating the data necessary to select targeted areas, and particularly the enterprise of defining the boundaries of such areas, should not be conducted exclusively at the Federal level without providing some opportunity for participation from state or local government. This part of the rule is merely intended to afford the states a method by which particular areas of high unemployment within their boundaries may qualify as “targeted,” and to allow alien entrepreneurs the opportunity to invest in such areas under the targeted employment area guidelines, including lowered investment amounts. Based upon the reasoning provided in the final rule, state-issued TEA designations under 8 CFR 204.6(i) must be in accordance with the statutory definition of targeted employment in INA §203(b)(5)(B), which requires that a targeted area either be “rural” or an “area of high unemployment.” Further, 8 CFR 204.6(i) does not provide states with the authority to make TEA designations regarding whether a certain area qualifies as “rural”. Any state TEA designation must involve the assembly and evaluation of data in a manner sufficient to arrive at a defensible finding of high unemployment within the bounds of the area to be designated in a manner that is in keeping with the statutory requirement. That is why 8 CFR 204.6(i) provides that state designations be accompanied by a description of the boundaries of the geographic areas, and explain the method or methodologies by which the unemployment statistics were obtained. While state governments clearly have the authority to make TEA designations, states governments do not have the authority to designate areas as high unemployment that do not in reality qualify as a targeted area under INA §203(b)(5)(B). It appears that this question solicits confirmation from USCIS that state-sanctioned attempts to “gerrymander” a finding of high unemployment that is not in accordance with the statutory requirement, through the cobbling together of various portions of political subdivisions so that an investment in a commercial enterprise in a location that is not a high unemployment area would ultimately qualify as one, is an acceptable business practice for EB-5 purposes. On its face, this supposition blatantly frustrates the congressional intent behind INA §203(b)(5)(B). As such, USCIS cannot confirm that this is an acceptable business practice for states to use in making TEA designations. | |
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TEA |
Are state-issued TEA designations required in order to demonstrate that an area is a TEA based upon high unemployment? | 8 CFR 204.6(j) Initial Evidence to accompany (Form I-526) petition. 8 CFR 204.6(j)(6)(ii)(A) Evidence of TEA. 8 CFR 204.6(j)(6)(ii)(B) Letter from State-designated official that meets the requirements of 8 CFR 204.6(i). | |
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TEA |
Can a project involve a TEA consisting of rural areas in multiple counties and even multiple states within a regional center jurisdiction? | 8 CFR 204.6(e) defines rural area. | |
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TEA |
Do both the new commercial and the capital investment project have to be in a TEA in order to qualify for the reduced capital investment? | The new commercial enterprise must be “principally doing business” in a targeted employment area. 8 C.F.R. 204.6(j)(6). In Matter of Izummi, the AAO determined that in order to qualify for the reduced investment amount, a new commercial enterprise that lends capital to other job-creating businesses must only lend money to businesses located within TEAs, even if the new commercial enterprise is located in a TEA. Similarly, direct expenditures of capital by the new commercial enterprise should also be principally within a TEA in order to qualify for the reduced capital investment amount. | |
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TEA |
How to credit job creation outside the RC? | USCIS has interpreted that a regional center should focus its EB-5 capital investment activities on a single, contiguous area which is within the bounds of the limited geographic area for which a regional center requests jurisdiction. Beyond these statutory and regulatory directives there are no specific mandates that indirect jobs be created in any particular location. There is an exception pertaining to Targeted Employment Areas (TEAs). INA 203(b)(5)(B)(i) provides that a certain number of visas made available under the EB-5 category “be reserved for qualified immigrants who invest in a new commercial enterprise … which will create employment in a targeted employment area” (emphasis added). 8 CFR 204.6(e) define a TEA as “an area which, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 percent of the national average rate.” A reduced capital investment amount of $500,000 is permitted for a TEA. If a proposed RC business plan in the Form I-526 includes a TEA and the petitioner is relying on a capital investment of $500,000 in a new commercial enterprise rather than $1,000,000, the predicted jobs created must be within the TEA. This interpretation of the statutory and regulatory language does not justify job creation data methodologies that are not reasonable. While the RC’s EB-5 capital investment activity may produce a legitimate economic benefit outside its formal jurisdictional RC boundaries, the data set used to estimate job creation should fit within the intended impact of the capital investment project. Where appropriate, regional data should be used as the basis for a regional center’s job creation analysis in keeping with 8 CFR 204.6(m)(3)(i). USCIS may not accept statewide data or data from a broader area outside a regional center as suitable for the job creation analysis when regional data is readily available that focuses solely on an RC’s geographic area. The scope and nature of industries present in an entire state or in an area outside the geographic boundaries of an RC may not be comparable to the more limited scope and nature of the industries within the RC’s jurisdictional area and included in the data for the region. However, if the prospective impacts of the capital investment project provided in the project’s business plan and associated economic analysis indicate that a broader geographic area should be considered, USCIS will do so. | |
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TEA |
Is it acceptable, for purposes of defining a TEA, to link a high unemployment area with census tracts or political subdivisions with low unemployment in order to arrive at an aggregate finding of high unemployment when the intent is actually to invest in the low unemployment area? | USCIS advised that a TEA determination must be based upon valid statistics for the TEA area and comply with the statutory requirement that the area has an unemployment rate that is at least 150% of the national average unemployment rate. The data used should comport with the U.S. Bureau of Labor Statistic standards. | |
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TEA |
How do you identify a TEA area so that investors can qualify for the $500,000 vs the 1,000,000 investment threshold? | The EB-5 investor must demonstrate in the Form I-526 petition that the area in which the capital investment has been made qualifies as a “rural” area or an area of “high unemployment.” The specific evidence to submit is outlined in: 8 CFR 204.6(j) Initial Evidence to accompany (Form I-526) petition. 8 CFR 204.6(j)(6)(ii)(A) Evidence of TEA 8 CFR 204.6(j)(6)(ii)(B) Letter from State-designated official that meets the requirements of 8 CFR 204.6(i). | |
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TEA |
How may one identify a TEA so that investors can qualify for the $500,000 investment threshold? | USCIS stated that the investor’s Form I-526 petition must show that the area in which the capital investment has been made qualifies as a “rural” area or an area of “high unemployment as of the date of filing of the Form I-526 petition or the date of the capital investment, whichever occurs first. For additional information regarding the statistics to use in making TEA determinations, stakeholders may contact the Local Area Unemployment Statistics (LAUS) division within the U.S. Bureau of Labor Statistics (BLS) as the BLS has published technical bulletins on this topic. Moreover, two avenues by which someone can establish an area as a TEA are by providing the statistical documentation directly to USCIS or by obtaining a TEA determination from the state in the area in which the investment is going to be made. In every case, the TEA determination is made as part of an I-526 petition adjudication. | |
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TEA |
8 C.F.R. § 204.6 (j) 6 (ii) A&B instruct demonstration that a new commercial enterprise has created or will create employment in a targeted employment area through submission of one of two attachments to the petition. The first appears to be independent submission of data indicating it has met the unemployment criteria. The second is through communication from the Governor presumably providing the same statistical support. Please discuss any additional authority the State Governor may possess and if there is none, please discuss the intent of the two options. | A state government’s authority is limited to making TEA designations based upon a finding that an area is an area of high unemployment. See 8 CFR 204.6(i). The two evidentiary avenues to demonstrate that an area qualifies as a TEA in I-526 petitions is described in 8 CFR 204.6(j)(6)(ii) and allows an investor to (1) directly provide evidence of TEA eligibility or (2) seek assistance from the state government in providing the required evidence. | |
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TEA |
If we have the TEA designation letter from an authorized state official, do we still have to show strict proof that the area either is a rural area or is experiencing an unemployment rate of 150% of the national average at the time of I-526 filing? | State governments do not have the authority to issue TEA designations based on a finding that an area meets the TEA “rural” criteria. A state-issued TEA designation must be supported by evidence, including a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained. See 8 CFR 204.6(i). The statistics used in the state’s analysis must reflect the national and local unemployment rates for these regions at the time of the alien investor’s capital investment. See 8 CFR 204.6(e). | |
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TEA |
Please discuss how the USCIS recommends a State Government identify and submit TEA’s when there are municipal development and environmental issues (i.e. protection of water source, transitional military bases, local targeted- development ordinances) that the local government needs to have addressed in designating TEA’s? | State governments have the discretion to decide whether to issue TEA designations based upon high unemployment. No state government is required to issue such a designation if it might be detrimental to an area based upon potential adverse impacts of an EB-5 project. The Environmental Protection Agency (EPA) is most likely the appropriate federal source for a state government to consult with regarding environmental issues that may be impacted by EB-5 capital investment projects. Note that the regulation at 8 CFR 204.6(i) only provides state governments the authority to delegate areas as TEAs based on a finding of high unemployment to “the agency, board, or other appropriate governmental body of the state…” Since municipal governments, such as a local city government or a town government are not a part of state government, state governments may not delegate the TEA determination authority to a local governmental body. | |
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TEA |
What is the meaning of a “geographic subdivision” in 8 CFR § 204.6(i)? What are the limitations in creating and designating such a special area? (Assume that the high unemployment data yields a qualifying rate.) The words geography or geographic refers to physical features on the Earth’s surface; therefore, a geographic subdivision would refer to an area carved out based on physical features. For example: Central Valley, San Joaquin Valley. Yet, current practice by applicants interprets it to be any area carved out at will, irrespective of geographical and political boundaries. It goes as far as creating an area by “statistical gymnastics” that yields a qualifying rate for high unemployment area designation and bears no relationship to any economic or employment effect of the prospective business. | State governments have the discretion to decide whether to issue TEA designations based upon high unemployment. The following reasoning for involving states in this process was noted in legacy INS’ final rule implementing the initial EB-5 regulations, Employment-Based Immigrants, [56 FR 60897]: The evidence of such area designations that a state provides to a prospective alien entrepreneur should include a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained. This part is not intended to place any unnecessary burden upon any state. With respect to geographic and political subdivisions of this size, however, the Service believes that the enterprise of assembling and evaluating the data necessary to select targeted areas, and particularly the enterprise of defining the boundaries of such areas, should not be conducted exclusively at the Federal level without providing some opportunity for participation from state or local government. If a state government is presented with a request to designate an area as a TEA that the state does not feel is appropriate, then the state may in its discretion refuse to issue the TEA designation. Note that when the regulation at 8 CFR 204.6(i) was published 18 years or so ago the required data for making TEA determinations based upon high unemployment was not readily available to the general public. Now state and federal unemployment data is readily available from government sources on the internet. | |
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TEA |
What is the meaning of a “political subdivision” in 8 CFR § 204.6(i)? What are the limitations in labeling an area as political subdivision? (Assume that the high unemployment data yields a qualifying rate.) Explanation: The common meaning of the term political subdivision refers to a civil administrative unit of the government such as a county or city. Yet, the US census Bureau provides data based on elections districts. Are elections districts such as congressional districts, state representative districts, state senatorial districts, county supervisor districts, city council member districts qualify as political subdivisions for the purposes of high unemployment are designation? | According to Black’s Law Dictionary (8th ed. 2004), a political subdivision is a division of a state that exists primarily to discharge some function of local government. The examples provided above appear to meet the legal definition of a political subdivision. | |
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TEA |
Can USCIS clarify the amount of capital that an investor must demonstrate for a Targeted Employment Area? For some of my clients that invested through a Regional Center with capital investment of $500,000, I have received requested from EB-5 adjudicators that demand investor to demonstrate Source of Fund for amounts above the $500,000 investment. | 8 CFR 204.6(j)(3) Capital Obtained through Lawful Means: is concerned with “capital” as opposed to “required capital.” As such the EB-5 petitioner should submit evidence of the lawful source of any capital invested into an EB-5 investment project. In addition, 8 CFR 204.6(g)(1) requires that the source of all of the EB-5 and non-EB-5 capital must be identified and shown to have been derived from lawful means. | |
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TEA |
Is it correct to say that investors may invest in Targeted Employment Areas. | Yes. INA section 203(b)(5)(B) allows for investment within designated Targeted Employment Areas. | |
| Some within USCIS seem to think that all EB-5 funds must be used directly to create jobs, almost as if it is put into a trust fund from which only wages can be paid. In reality, capital may very likely more efficiently create more jobs by putting it into capital improvements, equipment etc. or even to pay off old high interest loans or to buy out owners who are standing in the way of more efficient operation. All that should matter is that the invested capital is spent in such a way that the business plan projects enough jobs to satisfy the EB-5 requirements and that ultimately those jobs are in fact created. Is this correct? | USCIS will determine whether the funds must be used to directly create jobs based upon the economic model and business plan submitted and approved with the petition. The capital investment must be fully infused into the job creating enterprise most closely responsible for the capital investment activities that will create the jobs. The approved business plan guides the expenditure of these funds which could include purchases of items such as property, inventory, equipment, office supplies, wages, etc. From an economic perspective, these purchases generate further indirect and induced job creation. | ||
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Use of EB-5 Capital |
Please confirm how USCIS treats job creation where the new commercial enterprise purchases the assets of a distressed corporation for the purposes of revitalization. For example, if the new commercial enterprise purchases a commercial property, such as a shopping mall, that at the time of purchase has only 20% of its tenants in operation because the other 80% went out of business, please confirm that the job creation requirement would be met by showing that alien investment into the new commercial enterprise resulted in the creation of 10 jobs per investor, provided only that the job count does not include jobs associated with the tenants that were in operation at the time the shopping mall was purchased. | It is not possible to confirm whether the job creation requirement would be met, based on the limited information provided above. Such a case would have to be evaluated by a review of the specific evidence in the record, which may or may not establish that the job creation requirement would be met. Further, based on this fact pattern, such an investment would have to be made through a petition affiliated with a regional center as the job creation appears to depend on the crediting of indirect jobs. | |
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Use of EB-5 Capital |
May an EB-5 investor use existing assets that are not presently in use by a business, to create jobs.? | An EB-5 investor may use existing assets that are not presently in use by a business, to create jobs. For example, if there is a mall sitting fallow, nothing prohibits an EB-5 investor from acquiring that asset for use by a new business in order to create jobs. | |
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Use of EB-5 Capital |
Is interest paid on an EB-5 loan by non-EB-5 capital part of the total project cost for purposes of an input to the expenditure amount used for calculating indirect/induced jobs. For example, lets say there is a $100mm construction project financed $50mm by EB-5 capital and $50mm by non-EB-5 capital. Of the $50mm non-EB-5 capital, $8mm is used to make interest payments on the $50mm EB-5 capital. Would the total expenditure amount for this project be $100mm or $92mm (for purposes of calculating the expenditure input in an economic job creation model)? | Paying interest on a loan does not create jobs, therefore, should be removed from the investment amount. | |
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Use of EB-5 Capital |
Is it permissible to utilize EB-5 funds to pay off a loan on a capital investment project as long as it is clearly described in the business plan and will result in job creation? | USCIS shared that there have been some instances where the plan presented has been approvable, and there have also been other instances where timing is a factor. If the project has essentially concluded and EB-5 capital is simply going to replace debt in which the jobs are already created through non EB-5 capital, this does not make a compelling argument that jobs were created as a result of the investment. Also in all instances whether it’s an equity position or a loan instrument into a project, the agency is looking for EB-5 job creation. Therefore, like in all EB-5 cases, the evidence must demonstrate that the loan is EB-5 compliant and that jobs would be created within a reasonable period of time. | |
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Use of EB-5 Capital |
Please confirm how USCIS treats job creation where the new commercial enterprise purchases the assets of a distressed corporation for the purposes of revitalization. For example, if the new commercial enterprise purchases a commercial property, such as a shopping mall, that at the time of purchase has only 20% of its tenants in operation because the other 80% went out of business, please confirm that the job creation requirement would be met by showing that alien investment into the new commercial enterprise resulted in the creation of 10 jobs per investor, provided only that the job count does not include jobs associated with the tenants that were in operation at the time the shopping mall was purchased. | It is not possible to confirm whether the job creation requirement would be met, based on the limited information provided above. Such a case would have to be evaluated by a review of the specific evidence in the record, which may or may not establish that the job creation requirement would be met. Further, based on this fact pattern, such an investment would have to be made through a petition affiliated with a regional center as the job creation appears to depend on the crediting of indirect jobs. | |
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Use of EB-5 Capital |
Please confirm that if a new commercial enterprise’s business operations involve acquiring (out of bankruptcy or bank foreclosure portfolio) and renovating an incomplete or abandoned commercial building, completion or renovation of the building by the new commercial enterprise will be treated as a new business for EB-5 purposes. If not, what arrangements would be necessary to allow the project to be treated as a new commercial enterprise? | See the response to question #32 for a description regarding what constitutes a “new” commercial enterprise. Acquiring assets that are not currently being used in business operations by any other entity is unrelated to whether a commercial enterprise is “new” for EB-5 purposes. | |
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Use of EB-5 Capital |
This question relates to a planned apartment complex to be financed in part by immigrant investors through an EB-5 Regional Center. The immigrant investors will invest in a separate entity that will develop and lease the apartments. The EB-5 RC application will submit an economic report showing expected job creation. Under EB-5 program rules, can the RC application claim, as indirect jobs, those positions at the development/leasing entity associated with the rental payments by occupants of the apartments? Can the application also claim, as indirect jobs, those jobs within the same RC boundaries that result from those same apartment occupants spending money for other goods and services (i.e., other than rent)? Note that the number of such jobs would be estimated, both for the rental payments and for the other expenditures of the apartment occupants, by putting the amount of these expenditures into an input-output model, noting the direct, indirect, and induced jobs the model predicts for those expenditures | This is a very case-specific question. The author should be cautious when attempting to count spending by apartment residents. This is not new spending within the economy like a tourist coming to town. This spending already exists. Moving into a new apartment doesn’t generate new rounds of economic activity. There is also little job-creation related to leasing apartments. | |
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Use of EB-5 Capital |
Must an investment be completely spent before an application for removal of conditions is filed? | Per a June 2009 memo addressing Form I-829: “Primarily, USCIS is determining whether the alien has invested the requisite capital and created the requisite jobs through that investment.” Per a December 2009 memo: “The Form I-829 petition must demonstrate that all of the terms and conditions of the EB-5 program have been met by the alien investor in order for the conditions on his or her permanent residence to be removed.” | |
| Based on the USCIS June 17, 2009 memo regarding EB-5 job creation, it is our understanding that USCIS has accepted the use of economic models that are based on infusion of capital into a particular industry. Please confirm that if such a model is used to calculate job projections at the I-526 stage, an investor would receive credit for job creation at the I-829 stage simply by establishing that he/she invested the requisite amount into the new commercial enterprise, and that the new commercial enterprise spent that capital, regardless of any data about actual job creation. | This form of capital investment involves more than simply investing a certain amount of investment dollars into a particular industry. An important aspect to any economic analysis model is the feasibility and quality of the business plan that is the basis for determining the appropriate inputs into an economic model, such as RIMS II, IMPLAN, etc. If the infusion of capital occurs according to the approved business plan and economic analysis, and the capital investment scheme comes to fruition in the manner outlined in the business plan, then the economic data provided in support of the Form I-526 petition regarding indirect job creation may be sufficient to demonstrate the creation of the indirect jobs without the submission of further data about job creation at the Form I-829 petition stage. | ||
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Verifying Job Creation |
If an EB-5 investor/petitioner uses a professional employer organization (PEO) to administer payroll for his employees, does this meet EB-5 job creation requirements? | The PEO concept may possibly be acceptable within the EB-5 context in certain instances. However, as the scope and nature of PEO contractual relationships vary greatly, the approvability of such an arrangement for EB-5 purposes would have to be decided on a case-by-case basis through a review of the specific evidence of record. | |
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Verifying Job Creation |
Please consider accepting a declaration from the employer of the created jobs concerning the number of full-time positions employed and an attestation that the employer has properly completed Forms I-9 concerning such employees. USCIS can coordinate with ICE to perform any desired audits of I-9s to discover and sanction any violations or any identity theft by workers who may turn out to be unauthorized | The initial evidence to provide in support of EB-5 petitions regarding whether the jobs were created is identified in 8 CFR 204.6(j)(4) and 8 CFR 216.6(a)(4)(iv). 8 CFR 103.2(b)(2) provides the regulatory framework for the submission of secondary evidence and affidavits. Note that the EB-5 statutory requirement at INA §203(b)(5)(A)(ii) clearly requires that the EB-5 investment must create full time employment for “not fewer than 10 United States citizens or alien lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States.” With respect to direct jobs, it is the EB-5 investor’s burden to demonstrate that the jobs created by the investment qualify under this statutory provision. | |
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Verifying Job Creation |
To the extent USCIS will require individual I-9 forms, will an I-526 or I-829 be denied where the requisite 10 full-time positions have been created but, unbeknownst to the investor, one or more of the employees occupying those positions at any given time may not in fact be a permanent resident or citizen? Will the investor be given an opportunity to replace any such worker before final adjudication of the petition? Is it sufficient that the full-time positions are created? | As noted, above, it is not sufficient that the EB-5 alien simply create at least 10 full-time jobs. Congress through enacting INA §203(b)(5)(A)(ii) clearly requires that the EB-5 investment must create full time employment for “not fewer than 10 United States citizens or alien lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States.” With respect to direct jobs, it is the EB-5 investor’s burden to demonstrate that the jobs created by the investment qualify under this statutory provision. EB-5 investors’ should determine whether the jobs that they have created are EB-5 compliant before filing the Form I-829 petition. | |
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Verifying Job Creation |
What factors are considered in determining whether the necessary jobs will be created within a “reasonable time” in adjudicating an I-829 petition, per 8 C.F.R. § 216.6(a)(4)(iv)? Section 25.2(e)(4)(D) of the Adjudicator’s Field Manual lists some factors in making the reasonable time determination, but how do CSC adjudicators apply those factors in actual cases? For example, what if a regional center has an approved job creation methodology, proof that the investment has gone into the project, and has leased up the project but the tenants have not moved in when the I-829 is filed? What if the project is almost but not completely leased? Will USCIS approve an I-829 in such a case? If so, what documentation would be required? | CSC adjudicators follow the guidance put forth in the Adjudicator’s Field Manual (AFM) at section 25.2(e)(4)(D), which states: In making the “reasonable time” determination, officers should consider the evidence submitted along with the petition that demonstrates when the jobs are expected to be created, the reasons that the jobs were not created as predicted in Form I-526 , the nature of the industry or industries in which the jobs are to be created, and any other evidence submitted by the petitioner. If after considering the evidence, the officer determines that the jobs are more likely than not going to be created within a reasonable time, Form I-829 should be approved consistent with 8 CFR 216.6(d)(1) if the petitioner is otherwise eligible to have his or her conditions removed. If, however, the officer determines that the jobs will not be created within a reasonable period of time, Form I-829 should be denied consistent with 8 CFR 216.6(d)(2) . CSC adjudicators apply the factors outlined above when analyzing the facts in each individual case using the preponderance of evidence standard. Note: It is not possible to answer “what if” questions such as this question in the abstract. Whether a particular case will be approved is dependent upon the determination of eligibility, based upon the specific evidence of record. | |
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Verifying Job Creation |
What steps, if any, must an investor take to ascertain the citizenship or permanent residence of a direct employee beyond the proper completion of an I-9 form? | The burden is on the EB-5 investor to demonstrate that the incumbents in the direct jobs to be credited for EB-5 purpose have been created for qualifying employees, e.g. United States citizens, LPRs, refugees or asylees. As noted above, EB-5 investors’ should determine whether the jobs that they have created are EB-5 compliant before filing the Form I-829 petition. | |
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Verifying Job Creation |
Are the absence of permits from local authorities and other capital investment project delays are taken into account when determining whether sufficient permanent jobs were created through the investment? | USCIS stated that the adjudication of Form I-829 typically takes place approximately 2.5 years from filing Form I-526 Immigrant Petition by Alien Entrepreneur, but that that the law allows for a favorable determination to be made in the Form I-829 petition if the documentation shows that sufficient jobs will be created within a reasonable period of time. | |
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Verifying Job Creation |
Does the 2 ½ year rule in the Neufeld Memo regarding when jobs must be created date from the approval of an exemplar I-526 or each individual I-526? | The June 17, 2009 memo specifically addresses the timeframe for the crediting of jobs within individual I-526 petitions. However, any exemplar I-526 petition presented within a Form I-924 application must demonstrate that the prospective timelines for the proposed capital investment project must be in keeping with the requirements for individual I-526 petitions in order for a determination that the exemplar filing is EB-5 compliant. | |
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Verifying Job Creation |
If jobs are created on an indefinite full-time basis and then lost (such as by downturn of the business) after all EB-5 capital has been plowed into the business, but before the end of CPR status, can they be counted? | Jobs created as a result of the EB-5 investment must be maintained through the entire two-year period of conditional permanent residence. INA 216A(d) and 8 CFR 216.6(c)(iv). | |
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Verifying Job Creation |
If jobs must last to the end of CPR, what is the critical moment: filing of I-829 (which might precede end of two years of CPR by up to 90 days), end of CPR (two years), or approval of I-829? | The job created as a result of the EB-5 investment must be maintained through the entire period of conditional residence. The conditional residence ends when the conditions are removed, at the time of approval of the I-829. | |
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Verifying Job creation |
What documentation is required at the I-829 stage to prove indirect jobs with an expenditure model? What if some of the foundation facts on which the economic report was based have occurred and others have not? | The determination regarding whether the investor has met the job creation requirements will be established by a review of the required initial evidence at 8 CFR 216.6(a)(4) for the Form I-829 petition. Investors must show at the time of the removal of conditions that they performed the activities described in the approved Form I-526 petition, and the economic analysis of the activities must be based upon the associated approved regional center methodology for demonstrating job creation. An investor’s I-829 petition to remove the conditions which was based on such a project within an approved I-526 petition involving the crediting of jobs based on a capital expenditure econometric model needs to be supported by evidence showing that the funds were expended in the job-creating activities outlined within the Form I-526. The impacts on the ultimate outcome of a given I-829 in the event that some of the foundation facts on which the economic report was based have occurred and others have not are dependent on the specific fact pattern of the case. | |
| Based on the number of I-526 petitions that were approved in FY2010, the 3,000 visas allocated to the Pilot Program should have been surpassed. Is USCIS planning to give the Pilot Program applicants more visas every year, or to allow the applicants to be in queue to wait for following year’s visa allocation? | USCIS interprets the set aside of visas to ensure that a minimum of 3,000 visas are available for regional center based applicants. We do not see the set aside as limiting the number of visas that can be granted to regional center based applicants, to the extent that such applicants can be allocated up to 10,000 visas, along with the non-regional center based applicants. |
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Typos in the EB-5 Q&A “Subject” column for “hypotetical [sic] projects” entries dated 6/16/10 and 10/14/10. An “h” is missing…should be “hypothetical”.
By the way…excellent website!
Thanks, Jim!