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EB-5 BASICS

EB-5 Immigrant Investor Visa

By Zachary Rodriguez

A Reasonable Explanation

Writing a business plan and following a business plan are two very different things. Sticking to deadlines is not always as easy as it is presented in a business plan. Businesses and Regional Centers involved in the EB-5 immigrant investor visa program know this all too well. Having every action under the scrutiny of the United States Immigration and Citizenship Services (USCIS), as well as pressure from developers and investors, adds to the complexity of the situation.

What if there are delays in the project beyond the control of developers? And, what does that mean in terms of the EB-5 job creation requirements? USCIS released a policy memorandum on February 14, 2013, in an effort to clarify certain EB-5 adjudication policies. Among the issues brought up in this memorandum, USCIS addressed certain matters concerning the I-829 petition.

The purpose of the I-829 petition is for a conditional permanent resident who obtained such status through investment to remove the conditions on his or her residence. Each EB-5 investor becomes a “conditional permanent residence” upon approval of their I-526 petition.

In order to remove the conditions, or have an I-829 petition approved, certain evidence must be submitted with the 8 C.F.R. § 216.6. The two most relevant things this evidence must prove are:

  1. “…that the immigrant investor invested or was actively in the process of investing the required capital and sustained this action throughout the period of the immigrant investor’s residence in the United States. The immigrant investor can make this showing if he or she has, in good faith, substantially met the capital investment requirement and continuously maintained his or her capital investment over the two years of conditional residence”

  2. “…that the commercial enterprise [into which the foreign national invested] created or can be expected to create, within a reasonable time, ten full-time jobs for qualifying employees.”

With this information, USCIS determines whether to approve, reject, or request further evidence on an I-829 petition. As Regional Centers file these I-829 petitions, a question comes to mind: what exactly is “within a reasonable time” in the 2/14 memo?

USCIS offers a convoluted explanation of this phrase, which causes confusion, rather than relief. As one reads through the memorandum, the explanation of the phrase begins by citing the original language of the EB-5 Program regulations, which say that job creation must occur within two years of filing a Form I-526. However, USCIS goes on to acknowledge that extenuating circumstances within the development of a new business may prevent jobs being created within two years. Therefore, “jobs that will be created within a year of the two-year anniversary of the approved Form I-526 will ordinarily be considered to be created with a reasonable period of time.“

Now, the EB-5 immigrant investor visa community has a three year baseline from which to work from, keeping in mind that whatever the regulations may say, USCIS has the right to make any determination seen fit, based on the “totality of the circumstances.” So, could three and a half years be acceptable? Four years? Three years from the beginning of construction?

As this guidance memorandum reads, it seems as though USCIS recognizes the volatility of a new business, and tries to account for it with a more flexible job creation timeframe. However, USCIS makes it clear that it has the right, under law, to approve, reject, or request further evidence regarding the justification of a particular job creation timeframe. Further, USCIS regards three years as a “reasonable timeframe,” as long as the circumstances justify such a timeframe.

This clarification is necessary and helpful, but all together, lacking. Rather than clarifying the meaning of a “reasonable timeframe,” USICS has determined that three years may or may not be reasonable, but that it really depends based on the totality of the circumstances. And ultimately, as usual, it is for USCIS to decide, leaving Regional Centers and investors with little to no objective and predictable standards.

The 2/14 memorandum has left Regional Center’s scratching their heads as to what exactly “within a reasonable time” is and whether their situation justifies a longer job creation timeframe. While USCIS cannot propose exact guidance for every situation, there is still some work to be done concerning this phrase’s meaning. Some helpful direction could include:

  • Fleshing out what circumstances do and do not justify a longer job creation timeframe
  • Providing examples of EB-5 projects that may justify longer job creation timeframes, possibly broken down by industry, geography, or financial structure
  • Explaining ways to avoid having to extend job creation timeframes

By providing further explanation of the phrase, USCIS would not only be helping Regional Centers, investors, law firms and businesses that are preparing these business plans and I-829 petitions, but could also quicken the EB-5 adjudication process. Therefore, more Regional Centers will know what USCIS expects, helping them better prepare documentation and set reasonable project milestones.

As the EB-5 community waits for this further guidance, Regional Centers should stick to the two year baseline determined at the outset of the EB-5 Program. And if any questions or issues begin to percolate concerning job creation, Regional Centers should reach out to USCIS, asking for further clarification. Hopefully as more Regional Centers press for clarification, USCIS can provide an explanation that is both reasonable and useful.

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