RC Real Estate
Historically, a majority of EB-5 Regional Center investment opportunities involved real estate development, and many relied on counting tenant jobs among the employment impacts of the investment projects. In 2012, USCIS began issuing notices raising concerns about so-called “tenant occupancy methodology,” the practice of crediting direct tenant jobs to EB-5 investment in construction and leasing/management activities. USCIS declines to go on record as saying that it has changed policy and will simply no longer accept the practice of using direct employees of tenants as inputs to the economic model. Rather USCIS’s line is that the issue is “case-specific” and “the applicant might present additional evidence to demonstrate an economically acceptable nexus between the EB-5 investment and responsibility for job creation.” I have yet to see USCIS actually accept additional evidence in tenant occupancy cases, but the story continues to unfold. Here are relevant links.
- 12/2013: Ron Klasko reflects on lessons learned from successfully representating a regional center developer before the new Decision Board in connection with a regional center application and exemplar I-526 for which the key issue was job creation based on tenant occupancy methodology. See his blog post: Tenant Occupancy is Alive (And Well?)
- 08/2013: IIUSA obtains and publishes a copy of USCIS training materials on “tenant occupancy”
- 04/2013: A number of I-924 applicants who had attempted to present additional evidence supporting “tenant occupancy” job counts received Notices of Intent to Deny.
- 12/20/2012: USCIS issued “Operational Guidance for EB-5 Cases Involving Tenant-Occupancy.” This memo states that USCIS is not opposed to counting tenant jobs in principal but “whether an applicant or petitioner has demonstrated that an EB-5 enterprise caused the creation of indirect tenant jobs will require determinations on a case-by-case basis and will generally require an evaluation of the verifiable detail provided and the overall reasonableness of the methodology as presented.” The memo suggests two ways to demonstrate a causal relationship between EB-5 investment and tenant jobs: 1) “map a specific amount of direct, imputed, or subsidized investment to such new jobs” (i.e. “show an equity or direct financial connection between the EB-5 capital investment and the employees of the prospective tenants”) and 2) a “facilitation-based approach” which seeks to “demonstrate that the economic benefits provided by a specific space/project will remove a significant market-based constraint” and “result in a specified prospective number of tenant jobs that will locate in that space.” The memo also states that an I-924 or Exemplar I-526 need not identify a specific tenant (but must identify the industry type), and that modified tenancy arrangements do not necessarily constitute a material change.
- Summer 2012: A group of American Life investors sued USCIS for denials based on the tenant occupancy issue(http://www.slideshare.net/BigJoe5/carlsson-et-al-v-uscis-et-al-complaint, http://www.slideshare.net/BigJoe5/carlsson-et-al-v-uscis-et-al-restraining-order-denied). The case was settled privately.
- 7/17/2012: USCIS included a Q&A on tenant occupancy in its Executive Summary of the 5/1/2012 EB-5 Quarterly Stakeholder Engagement
- 7/3/2012: USCIS published a Q&A clarifying questions from the conference call
- 6/22/2012: USCIS held an EB-5 stakeholder meeting with its economists
- 5/8/2012: USCIS published “Guidance on EB-5 Adjudications Involving the Tenant-Occupancy Methodology” The memo treats the issue of deference to prior adjudications.
- 4/27/2012: Director Mayorkas made a statement on “tenant occupancy” during a conference call
- 02/2012: USCIS issued “Tenant Occupancy Request for Evidence” to many I-924 applicants