count of the New Commercial Enterprise or in U.S. Treasury
spend the money and build the project, the jobs are creat-
bonds is unlikely to meet this requirement. Redeploying
ed permanently, and that is the end of the story. It does not
the funds into a new real estate development project, on
matter when you file the I-829, the jobs are created. Not
the other hand, seems likely to be acceptable. However,
surprisingly, the vast majority of EB-5 projects are real es-
there are a number of other options that are also likely suit-
tate development projects, and this method of modeling
able, and some new solutions currently in development.
job creation is probably one of the reasons for that trend.
I-829 Basics
log increases, so does the risk that a business will have
At this point, it’s worth reviewing the basic requirements
to make changes to remain viable before the investor be-
Many EB-5 projects rely on jobs that are created as a result
for the I-829 petition, as such a review will help frame the
comes a conditional resident. And the longer the business
of the operation of the project business. Most of these pro-
issues. The requirements seem deceptively simple. An in-
exists, the more likely it is to need to change due to market
jects also contain a construction component. For example,
vestor must demonstrate that he or she:
pressures. This presents an immigration risk that is created
the development of a hotel has a construction component
by the combination of the visa backlog and the two-tier
and an operations component, both of which create jobs
structure of the EB-5 program (as currently administered).
and may be used to meet the minimum job creation re-
1) Invested the requisite amount of capital, at-risk, in a
New Commercial Enterprise;
quirement. There are essentially two ways of calculating
2) Maintained the investment, at-risk, throughout the con-
Maintaining the Investment ‘At Risk’
ditional residence period; and
This topic has also been the subject of much discussion.
economic model. In the regional center context, jobs are
3) The investment has resulted or will result in the creation
Current USCIS policy requires an investor to maintain the
almost exclusively calculated with an economic model.
of at least 10 jobs for U .S. workers.
investment, at risk, for the entire conditional residence pe-
The model, however, can use direct W-2 employee hires
riod. The longer that period takes to end, the longer the
or revenue as an input, though it is much more common to
Number 1) is ordinarily resolved at the I-526 stage, and
money must be at risk. This, of course, is a financial risk,
use revenue as an input. Using revenue or direct employ-
therefore not really an issue at the I-829 stage. Where
but it also presents an immigration risk. An investor faces
ees in an economic model works the same way that it does
things get interesting are in numbers 2 and 3), which will
the prospect of USCIS denying his or her I-829, and losing
for construction. For every employee or million dollars of
be discussed further below. The most important point to
the green card, if the agency determines that the investor
revenue, a certain number of jobs are created. Unlike con-
remember is that the investor cannot get his or her invest-
did not meet this continuing at-risk requirement.
struction jobs, however, these jobs are not automatically
operations jobs—counting W-2 employees, and using an
ment back until after the conditional residence period is
over.
considered to be permanent3.
Most EB-5 projects sponsored by regional centers (which
receive 99 percent of EB-5 investments under the program)
Operations jobs present two potential immigration risks.
use a “loan model,” where investors invest into a new com-
First, the EB-5 project needs to have a certain amount of
This topic has been written about fairly extensively, so this
mercial enterprise, and that enterprise loans the money to a
success in order to generate those jobs. With construction
article will not discuss it in depth. According to the USCIS’
job creating enterprise. The problem here is that no borrower
jobs, it doesn’t matter if the business fails; the jobs are
May 30, 2013 Policy Memo, it is no longer an automatic
wants a loan that is of an indeterminate term. Borrowers want
created as a result of spending the money and construct-
ground for denying an I-829 petition if there has been a
the ability to repay the loan and stop paying interest, or at
ing the building. On the contrary, operations jobs are not
material change in the business plan of the New Commer-
the very least, to know when the loan is due. As a result, there
cial Enterprise between the time the investor became a
may be circumstances under which the loan is repaid prior to
conditional resident and the filing of the I-829. While this
the end (or possibly even the beginning) of the investor’s con-
Perhaps the most complicated issue resulting from the visa
question about what happens if the business subsequently
is a substantial improvement over the prior policy, which
ditional residence period. If this happens, then the investor
backlog is how it affects the credit an investor will receive
declines or fails. Current USCIS policy is unclear, and the
resulted in denied I-829s for investors whose businesses
needs to make sure the new commercial enterprise is going
for creating jobs. In the regional center context, it is very
current thinking is that the jobs should continue to exist at
had to change to react to business pressures during the
to do something to keep the money at risk. Of course, the
common for EB-5 projects to rely on construction jobs to
the time of the I-829 filing, and possibly even all the way
conditional period, it is not quite as generous a policy as
investor probably wants to know where the money is being
satisfy the job creation requirement. Construction jobs are
until I-829 approval.
it seems.
invested and wants that investment to be at least as safe as
calculated through the use of an economic model, usually
the original investment, so there is an obvious disclosure is-
an input/output model such as RIMS II or IMPLAN, which
If the conditional residence period ends up being between
sue here.
allows the number of jobs that will be created to be pre-
seven and ten years, a lot can go wrong before the investor’s
Material Change
The May 30, 2013 Policy Memo also indicates that if there
is a material change between the time the investor files
Job Creation Complications
created unless an operating business exists. Second, once
the jobs have been successfully created, there is an open
dicted by using construction expenditures as an input. We
I-829 petition is approved. Thus, there is a current percep-
an I-526 and the time he or she becomes a conditional
Redeployment is a complicated issue, and USCIS has, un-
put “X” millions of dollars of construction expenditures
tion that operations jobs carry an inherently greater immigra-
resident, the investor may have to file a new I-526 petition
surprisingly, failed to issue any guidance on what might be
into the model, and get “Y” number of jobs. According
tion risk than construction jobs, and the longer an investor
because a material change is grounds for the denial or rev-
suitable as a subsequent investment. Clearly, the money
to economic theory, the jobs that are created are deemed
has to wait to become a conditional resident and start the
ocation of an I-526 petition. Obviously, as the visa back-
must be at risk, and having money sitting in the bank ac-
to be permanent additions to the economy. Thus, if you
two-year period, the greater the operational risk becomes.
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EB5 INVESTORS MAGAZINE
3: It is arguable that jobs modeled using revenues should also be deemed
to be permanent in the same way that jobs modeled using construction
expenditures are, but USCIS policy on this issue is not clear.
WWW.EB5INVESTORS.COM
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