“Tenant-Occupancy” Methodology for Establishing Job Creation in EB-5 Cases

One of the most common forms of job creation is tenant occupancy. Tenant occupancy methodology allows a foreign investor to take credit for the employees of the tenant. Until recently, the USCIS has been reluctant to approve a business plan that relied upon tenant occupancy. 

However, on November 14, 2013, the USCIS formally approved a regional center based on tenant occupancy. Examining the USCIS’ decision gives guidance on how one can improve approval of a regional center based on tenant occupancy. Applicants and petitioners must create a plan that will project, by using economically and statistically valid forecasting tools, the number of newly created jobs that would not have been created but for the economic activity of the EB-5 commercial enterprise.  This proposed plan is then evaluated on a case-by-case basis using the preponderance of the evidence standard. The USCIS will generally require an evaluation of the verifiable detail provided and then examine the overall reasonableness of the methodology as presented. The key to get the proposal approved is to show that there is a reasonable causal link between the EB-5 enterprise and the job creation that would allow for the attribution of the tenant jobs to the EB-5 enterprise.

There are some difficulties and concerns with using this methodology that are worth mentioning. In order to successfully present the plan to the USCIS, the investor must establish that the newly projected jobs will be “newly” created and not simply relocated from a different location. It is also important to keep in mind that the USCIS only provided very generic guidelines on how the USCIS evaluates each investor’s proposal, so it is very important to examine prior proposals that have been approved in order to increase the chances of getting an approval.

The investors can also utilize the facilitation-based approach. This alternative method will require the investor to demonstrate that the economic benefits provided by a specific space project will remove a significant market-based constraint. The investor can demonstrative this by showing how a specific commercial space project can correct a market imperfection and create a new labor demand and income that will create specified prospective number of tenant jobs in the invested space. 

EB-5 Investment - China Suspension: An Unnecessary Fear

The EB5 Market was inundated with unnecessary fear that the United States State Department was shutting down EB-5 Visas for Chinese Investors when it announced on Saturday, August 23, 2014, the unavailability of EB-5 Visas for Chinese Nationals for the remainder of the fiscal year.   While the announcement at first glance appears to be extremely dramatic and with dire consequences, in reality it has little, if any, impact at all for the immediate future.  First and foremost, investors must understand that  this announcement does not affect any I-526 or I-829  processing, nor does it delay immigrant processing for those investors not born on mainland China, and it only delays the processing for those born on mainland China by one month, as normal processing will resume on October 1st, 2014.  The announcement reflects that for the first time ever, the full annual allotment of 10,000 EB5 Visas will have been exhausted by the end of the fiscal year.

However, it must be noted that the U.S. Citizenship & Immigration Services (USCIS) will continue to accept EB5 Petitions submitted by Chinese born investors, however, instead of being acted upon immediately, those cases will be held in the Visa Office’s “Pending Demand” file until October 1, 2014.  At that time, all eligible cases will be automatically authorized from the “Pending Demand” file under the FY 2015 annual numerical limitations.

As such, Chinese born investors looking to utilize the EB5 program should continue to timely file their Petitions to ensure that their petitions are timely adjudicated under FY 2015 quota.

Shahzad Qadri
Partner

Wong Fleming | Washington 

Canada's Termination of Investment Based Immigration Program to Result in Opportunity for EB-5 Investment Program in the U.S.

Canada recently terminated its’ decades-old investor program that had allowed scores of wealthy Chinese to immigrate over the years. The program allowed rich foreign investors to apply for permanent residency in Canada if they had a minimum net worth of 1.6 million Canadian dollars ($1.5 million) and invested 800,000 Canadian dollars in the form of a multi-year, interest-free loan to the government. Approximately 65,000 pending applications -- which the Canadian government estimated would have taken six years to process -- will be returned and paid fees refunded. About 70% of the backlog came from Chinese applicants.

The termination of the Canadian program has left wealthy individuals from China and other countries scrambling for investment based immigration opportunities. This has opened the doors to tremendous opportunities for the EB-5 Investment Program in the United States. The EB-5 Investment Program requires a minimum of $500,000 investment in exchange for permanent residency. With no limitations as to industry or type of project that can utilize the program, EB-5 Investment Program provides a source of “cheap” capital for entrepreneurs.

Traditionally, the EB-5 Investment Program has been utilized by the real estate developers. However, the flexibility and scope of the program makes the program an invaluable source of capital for all industries from biotech, green energy to education. Furthermore, recent changes to the program has made the EB-5 Investment Program far more attractive and easier to utilize. With traditional capital markets still at a premium, foreign investment is an attractive option for all entrepreneurs.

Shahzad Qadri
Partner
Wong Fleming | Washington