Question for USCIS Economists

We have the opportunity to submit agenda items and questions for the engagement with USCIS  economists on June 22. Here is the question that I plan to send in by the deadline on Monday 6/11.

True or False: There exist fact-specific scenarios in which USCIS may accept attribution of tenant-created jobs to EB-5 investors in the entity responsible for construction/leasing/management of the building that houses those 3rd party tenants. (Assume that deference to prior approval is not a factor.)

If false, please explain whether this judgment of “too-attenuated nexus” between construction investment and tenant job creation is based on economic principles or on other reasoning. If true, please describe a fact-specific hypothetical “tenant occupancy” scenario that would be acceptable, and demonstrate a proper use of economic methodologies to count job creation for this particular hypothetical case.

About Suzanne (www.lucidtext.com)
Suzanne Lazicki is a business plan writer, EB-5 expert, and founder of Lucid Professional Writing.

6 Responses to Question for USCIS Economists

  1. LY says:

    I don’t think USCIS and their economists are willing to give a hypo with details in which they would accept. They adjudicate petitions, not instruct on fact-specific scenario. They will only instruct on general principles such as “excess demand”. And each applicant bring their fact-specific petition for them to adjudicate whether it satisfies the general requirement or not.

    • Do you have any suggestion as to how I can phrase a question that asks for clarity on “the general requirement”? How about this..

      True or False: There exist some fact-specific scenarios in which USCIS would accept attribution of tenant-created jobs to EB-5 investors in the entity responsible for construction/leasing/management of the building housing those 3rd party tenants. (Assume deference to previous approvals is not an issue.)

      I suspect that the USCIS economists’ answer to this question is “false,” and if so we need to know that now before we waste more time on detail like excess demand. USCIS will have no petitions to adjudicate soon if it will not give public guidance, but effectively says “you invest half a million dollars first and make up an application and then I’ll wait six months and tell you privately through an RFE what the basic rules are.” For the moment I am turning away most Regional Center prospects with the advice not to consider the program until we get some clear statements on the current rules of the game.

      • LY says:

        I think the issue you brought up in the 3rd paragraph has been raised in the stakeholder meeting for several times. And I think the response, whatever it is, would be consistent with what Sasha Haskell commented after the meeting.

        For the True or False question, I think the RFE already answered the question by saying “USCIS does not foreclose the possibility that RC might present additional evidence to demonstrate”, such evidence, as is illustrated later, could be summarized as proof of excess demand or non-relocation of already existing jobs.

        I am sorry I cannot come up with a question, which I think, will help to get meaningful practical information from USCIS. My suggestion is since it is the first meeting with economists, there might be a clue that people can grab and ask a useful follow-up question.

  2. It appears to me that the “tenant occupancy RFE” raises two separate issues: 1) the question of investment/jobs nexus, and 2) the question of “new” job creation. The remedies suggested by the RFE (showing excess demand, etc) apply to the second issue, but the second issue is moot if the first issue effectively excludes all invest-in-construction-count-tenant-jobs scenarios, regardless of whether the tenant jobs can be shown to be new. For example, see this language in an I-924 RFE from June 2012: “It has not been clearly shown that a significant amount of EB-5 capital will be used to create or fund the establishment or operations of the businesses that will occupy the project after construction is complete. The economic impact analysis credits the applicant with the employment impacts of the tenant businesses. The parameters are not applicable because they apply to the operations of the project’s tenants.” This language suggests that the jobs of 3rd party tenants are inadmissible, period, regardless of demand etc, due to the problem of insufficient nexus with EB-5 investment. I suspect that the “USCIS does not foreclose the possibility…” language in the RFE is to protect against charges that they are changing policy, but I would be surprised if USCIS could describe any scenario in which it would credit tenant jobs to investors whose money funded building construction only. I suppose that USCIS cannot afford to state a general rule, but the EB-5 community must know the effective standards.

  3. LY says:

    Exactly. There were two issues in the RFE. USCIS raised the first issue, but concluded that they are not going to play this card right now by saying “USCIS does not foreclose the possiblity …”. It is definite a change of policy because the first issue essentially exclude ALL real estate project that use EB-5 money to construct building, but count tenant jobs to investors. I don’t think they will play this card for now, because of its tremendous impacts on the EB-5 world. It would shut down too many projects, those have used this scenario for long time and approved by USCIS.

    Also, it is still an arguable issue, because for some unique project/business, without the construction, there won’t be job creation without construction using EB-5 money. In other words, there will always be job creation through ANY tenants because of project’s unique business concept. In this case, the supply creates demand, and the job creation should be credited to landlord/EB-5 investors, not the tenants. I think, the “unique concept” not only can prove that it is “new” job creation as is mentioned in the RFE(the 2nd issue), but also can be used as an argument for the 1st issue.

    Anyway, if in the upcoming meeting, economists can confirm they are not going to raise the first issue in the future, that will be great.

    • Thank you for your thoughtful comments. I suppose you must be correct that USCIS will not (cannot afford to) play the first issue card now, but I’m not so sure about the people on the ground at the CSC. That RFE sentence that I quoted in my previous comment seems to come from an adjudicator who thinks the first issue is an issue. Maybe the poor adjudicators are as unclear as we are. I sure hope that the coming meeting will bring clarity for everyone!

      In case you are interested, I am attaching a document that I wrote in March when this issue was fresh and I optimistically wanted to suggest some defenses for my clients who had relied on previously approve-able “tenant occupancy” methodologies. TO RFE response v.SL 2012-0307 (Now I am resigned to the fact that my comments do not matter and I just want to hear the new standards clarified, whatever they are!)

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