EB5 Investors Magazine Volume 2 Issue 1 | Page 50

Continued from page 47 Practical concerns and frequently asked questions: Can EB-5 funds be used to purchase real estate? Yes and no. USCIS clarified4 that it is not prohibited to use EB-5 funds to acquire real estate; however, it is not generally reasonable to treat EB-5 funds spent on real estate acquisition as inputs to an employment econometric impact model. The Matter of Izummi holds that the “full amount of money must be made available to the business(es) most closely responsible for creating the employment upon which the petition is based.” For example, a job-creating enterprise may allocate some EB-5 funds to purchasing land, and other EB-5 funds to developing and operating a business on the purchased land. The jobs created by this enterprise can be apportioned among all the EB-5 investors. Such apportionment should be detailed in the business plan. 5 Investors cannot obtain permanent residence by passive investments such as simply purchasing real estate in the United States, because the investment capital must be placed “at risk” and the capital must be used to create jobs. Should I be concerned about tenant occupancy? Real estate projects have grown in complexity in terms of job creation and capital stack. Tenant occupancy issues have been a key concern for mix-used, renovation, and newly built real estate projects. In a recently issued RFE, USCIS requires the project to prove that “the construction project will be attracting a tenant from within the region who was not able to operate prior to the commercial construction project or attracting new tenants from another geographical region.” The following evidence should be provided to show that the tenant jobs are “new” jobs, rather than “merely re