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Although falling out of favor with many regional centers — following a string of difficult I-924 Requests for Further Evidence ( RFEs ) in 2012 — the use of tenant occupancy as a measure of job creation still continues to today . 6 The theory behind tenant occupancy is that projects attract independent tenants who employ workers and positively impact the economy . There exists some variance as to how an economist might consider the “ input ” to a tenant occupancy model of job creation . For example , the input might require the actual number of employees at a given establishment . In such a case , affidavits from employers and business tax filings are likely required . On the other hand , job creation might be calculated by the square footage of the space leased . An economist might be able to calculate the job creation by multiplying the leased space by industry density rates published by an authoritative entity . In such a case , the square footage should be substantiated by building floor plans and occupancy permits . These leased areas should also be validated by the tenants ’ leases .
Documenting direct employment in addition to indirect employment calculations
Although most filings involve business models that do not involve any direct job creation by the new commercial enterprise ( NCE ), regional center filings are not precluded from doing so . In fact , using the NCE ’ s employees may arguably have some advantages , including being able to leverage the indirect effects of those employees ’ salaries for additional jobs . Documenting qualifying “ direct employment ” has its own challenges that non-regional center EB-5 investors invariably face .
The employee of the new commercial enterprise must be a “ qualifying employee ” to count towards the job creation requirement . A common shorthand heard in industry discussions is that EB-5 must “ create jobs for U . S . citizens or lawful permanent residents .” That , however , is only partially true . A “ qualifying employee ” is defined as a U . S . citizen , lawful permanent resident , “ or other immigrant lawfully authorized to be employed in the United States including , but not limited to , a conditional resident , a temporary resident , an asylee , a refugee , or an alien remaining in the United States under suspension of deportation .” 7 Note that the examples of “ other immigrant ” are inclusive , not exhaustive , and who exactly qualifies remains somewhat unclear . 8 What is clear , however , is that the documentation of direct EB-5 job creation must substantiate that the employees are both full-time and qualifying .
Proving the employees are full-time requires substantiating that they work 35 hours a week or more . IRS Forms W-2 and 941 prove that the total number and employer-employee relationships exist . Payroll records establish that employees have worked the requisite number of hours . Proving that salaried employees are full-time can be tricky given that most do not “ punch a clock ” when reporting to work . In this case , an employer might be able to demonstrate sufficient hours through the application of unique benefits , such as healthcare or retirement , or through employee schedules or affidavits .
However , the process of establishing that the employees are qualifying is fraught with concerns . Those documenting the employees ’ immigration status may submit Form I-9 . 9 It would behoove the employer to first have an immigration lawyer review the forms and perform an audit if necessary , given that improper I-9 procedures can give rise to investigations and fines by Immigration and Customs Enforcement . In and of themselves , I-9s may not be probative . I-829 RFEs frequently request the individual ’ s documents substantiating their status . 10 This is problematic because the documents that are requested in order to establish immigration status ( e . g . a U . S . passport or green card ) are more restrictive than those required to properly complete an I-9 . Employers are prohibited from restricting their employees ’ choices when completing an I-9 , 11 and doing so has been punished by substantial fines and negative publicity . 12 Accordingly , the most prudent course of action is to collect the documents needed to prove an individual is a “ qualifying employee ” separate and apart from when a job offer is made and the I-9 completed .
However one chooses to document the creation of jobs following an EB-5 investment , it is wise to look at the examples of others , and to choose strategies that seem the most successful . As Congress continues to create new legislation , it also remains important to keep up with any changes in EB-5 law or requirements , including those related to job creation .
★
Matthew Galati
Matthew T . Galati is an associate attorney at Klasko , Rulon , Stock & Seltzer , LLP , one of the nation ’ s most renowned immigration firms . Matthew focuses much of his practice on the preparation of I-526 and I-829 petitions , and in counseling investors in unusual or complicated situations . Matthew is admitted to practice in Pennsylvania and Virginia . He received his law degree from The George Washington University Law School ( J . D ., with Honors ). You may reach him at mgalati @ klaskolaw . com .
6
See Klasko , H . Ronald “ Tenant Occupancy is Alive ( And Well ?),” Dec . 5 , 2013 , available at http :// blog . klaskolaw . com / 2013 / 12 / 05 / tenant-occupancy-is-aliveand-well / ( discussing recent victory before USCIS Decision Board , but noting risks ).
7
8 C . F . R . § 204.6 ( e ) ( emphasis added ).
8
The EB-5 regulations do not define “ other immigrant .” The Immigration and Nationality Act defines “ immigrant ”, and it does so by defining the term negatively by excluding all nonimmigrant classes . In other words , if an alien is in the United States and does not hold non-immigrant status , such as a student visa or H-1B , then s / he is an immigrant . If the INA ’ s definition can be imparted to the I-829 regulations , then individuals that are 1 ) not nonimmigrants and are 2 ) lawfully authorized to work in the US should count for the purposes of job creation . However , based on RFE requests , it is not clear whether USCIS agrees with this interpretation , and the May 30 memo does not elaborate beyond citing the regulatory text . See the May 30 Memo at 16 . See also Sujanani , Yale-Loehr , and Divine , “ A Cumulative Analysis of What USCIS Looks For in EB-5 I-829 RFEs and Denials ,” Oct . 21 , 2013 ( listing common I-829 RFEs for particular qualifying employees ).
9
See 8 CFR 216.1 ( a )( iv )( 4 ).
10
See Sujanani et al , supra note 7 .
11
See INA § 274B
12
This is done though investigations by The Office of Special Counsel for Immigration-Related Unfair Employment Practices . See http :// www . justice . gov / crt / about / osc / htm / I9 _ Verification . php .
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