Continued from page 43
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.
44 EB5 Investors Magazine