(Author: Jeff Campion, Esq) USCIS offered operational guidance for tenant occupancy on December 20, 2012. As we know, the “tenant occupancy” issue revolves around whether or not the project is merely relocating jobs from another enterprise instead of creating new jobs. If the USCIS determines that jobs are merely being relocated, those tenant occupancy jobs cannot be counted.
The guidance from USCIS states there must be “evidence that the claimed jobs result, directly or indirectly, from the economic activity of the EB-5 commercial enterprise.” The guidance then proceeds to use the “but for” language stating that to count indirect jobs, it must be shown that the new indirect jobs would not have been created “but for” the EB-5 commercial enterprise’s economic activity. Of course, USCIS then claims the determination of whether the tenant occupancy jobs can be counted must be evaluated on a case-by-case basis.
With respect to the case-by-case analysis, USCIS states there are two approaches to analyze whether tenant occupancy jobs may be counted – methods that map a specific amount of direct, imputed, or subsidized investment to new jobs (i.e. a direct link between Eb-5 capital and the tenant business) orthe facilitation-based approach. With respect to the former, USCIS will look to “evidence backed by reasonable methods” showing the financial link.
With respect to the latter, it must be demonstrated there is a “significant market-based constraint” which will be removed by the project. That in turn can be shown by demonstrating that the project will correct the “market imperfection,” hence generating new “net labor demand and income” for the tenant business. One way this could be accomplished would generally be a market study for the project and its location by an independent third party demonstrating that that some market imperfection does exist; usually this takes the form of showing that the proposed market is currently underserved. Also, the project should fill an existing investment void generating new demand for the tenant business. The difference here relative to previous guidance is that USCIS had previously said the economic analysis should show there was an excess demand as indicated by high utilization rates and rising wages, but their economists belatedly realized those conditions were not likely to be evident in areas of high unemployment, so they modified their directive.
In spite of having taken a tentative step forward, it appears likely to me that the burden of proof for tenant occupancy remains high. Hence I would recommend – if possible – not relying on tenant occupancy jobs for EB-5 job creation. Even if the foregoing tests can be satisfied, this analysis is likely to increase time delays in the petition process which is already arduously long. Moreover, the jobs based on the tenant occupancy could still be disqualified at the I-526 stage, hence further postponing the ultimate goal of having immigrant investors receive their permanent residence. In those cases where it is important to count tenant jobs because the jobs are needed to raise the desired amount of funds, the issues presented above should be carefully reviewed to insure they are addressed so increase the probability of approved even when tenant jobs are counted.
Article written by Jeff Campion, Esq. Mr. Campion is an immigration attorney focusing on high net worth clients. Moreover, he is the CEO of the Texas Urban Triangle Regional Center, a designated Regional Center with a scope of 40 counties in Texas from Dallas to San Antonio to Houston and back to Dallas. Log on http://www.eb5texastriangle.com.
The guidance from USCIS states there must be “evidence that the claimed jobs result, directly or indirectly, from the economic activity of the EB-5 commercial enterprise.” The guidance then proceeds to use the “but for” language stating that to count indirect jobs, it must be shown that the new indirect jobs would not have been created “but for” the EB-5 commercial enterprise’s economic activity. Of course, USCIS then claims the determination of whether the tenant occupancy jobs can be counted must be evaluated on a case-by-case basis.
With respect to the case-by-case analysis, USCIS states there are two approaches to analyze whether tenant occupancy jobs may be counted – methods that map a specific amount of direct, imputed, or subsidized investment to new jobs (i.e. a direct link between Eb-5 capital and the tenant business) orthe facilitation-based approach. With respect to the former, USCIS will look to “evidence backed by reasonable methods” showing the financial link.
With respect to the latter, it must be demonstrated there is a “significant market-based constraint” which will be removed by the project. That in turn can be shown by demonstrating that the project will correct the “market imperfection,” hence generating new “net labor demand and income” for the tenant business. One way this could be accomplished would generally be a market study for the project and its location by an independent third party demonstrating that that some market imperfection does exist; usually this takes the form of showing that the proposed market is currently underserved. Also, the project should fill an existing investment void generating new demand for the tenant business. The difference here relative to previous guidance is that USCIS had previously said the economic analysis should show there was an excess demand as indicated by high utilization rates and rising wages, but their economists belatedly realized those conditions were not likely to be evident in areas of high unemployment, so they modified their directive.
In spite of having taken a tentative step forward, it appears likely to me that the burden of proof for tenant occupancy remains high. Hence I would recommend – if possible – not relying on tenant occupancy jobs for EB-5 job creation. Even if the foregoing tests can be satisfied, this analysis is likely to increase time delays in the petition process which is already arduously long. Moreover, the jobs based on the tenant occupancy could still be disqualified at the I-526 stage, hence further postponing the ultimate goal of having immigrant investors receive their permanent residence. In those cases where it is important to count tenant jobs because the jobs are needed to raise the desired amount of funds, the issues presented above should be carefully reviewed to insure they are addressed so increase the probability of approved even when tenant jobs are counted.
Article written by Jeff Campion, Esq. Mr. Campion is an immigration attorney focusing on high net worth clients. Moreover, he is the CEO of the Texas Urban Triangle Regional Center, a designated Regional Center with a scope of 40 counties in Texas from Dallas to San Antonio to Houston and back to Dallas. Log on http://www.eb5texastriangle.com.
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