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ILW.COM EB-5 Blog

USCIS Responds To Criticism Of EB-5 Application Process

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It was reported that the United States Citizenship and Immigration Services agency (USCIS) had unexpectedly modified the standards it uses to review EB-5 applications, causing much confusion and bringing some commercial projects to a standstill. 


The core of the EB-5 program is economic development and job creation. The program was established to promote and encourage those specific goals, and the "green cards" that are handed out to foreign investors who meet the requirements of the program are called employment-based, or EB, visas (the "5" stands for the specific category it represents). 


USCIS carefully reviews all EB-5 applications to ensure that jobs are being created. 10 permanent full-time jobs must be created by the commercial enterprise in which an immigrant entrepreneur has invested. If the requisite number of jobs has not been generated within two years, an investor's
conditional visa may be revoked. On the other hand, a green card awaits an investor who does meet the job creation requirements of the program.


USCIS uses certain methodologies to assess the progress of an EB-5 project and to determine whether jobs are being created.  These methodologies have been fairly consistent over the life of the EB-5 program and have given investors an understanding of what factors the agency will look to in making its decisions on an EB-5 application.  In fact, most foreign investors use the USCIS' methodologies to develop their EB-5 project strategies and business plans.


Recently, however, foreign entrepreneurs who have invested millions of dollars in EB-5 projects were thrown for a loop when the USCIS changed the way it evaluated a certain category of job creation.  At issue was the agency's approach to "tenant occupancy."  Tenant occupancy refers to a
business that leases commercial space from a landlord, such as a restaurant that leases space to operate within a hotel, for example.  In the past, USCIS would count the jobs created by such businesses toward the EB-5 project's overall job creation tally.  In the above example, a hotel
restaurant that creates 3 permanent full-time jobs would count toward the overall EB-5 goal, even if the restaurant was not directly financed by EB-5 investors. 


Although USCIS had traditionally treated tenant occupancy in this way, it unexpectedly began issuing Requests For Evidence (RFE) to foreign investors in recent months, suggesting the agency would no longer accept jobs created through tenant occupancy for purposes of the EB-5 program's job creation requirements. Since many foreign investors and their U.S.-based partners had proceeded on the basis of the USCIS' prior job creation precedents, they were surprised to learn that perhaps their expectations were misplaced and that their economic projections would need to be altered and their plans modified. 


The resulting confusion led some EB-5 investment managers to put the brakes on their projects, halt construction and the hiring of new employees. The USCIS' new approach to tenant occupancy effectively set in motion decisions and actions on behalf of foreign investors that were contrary
to the goals of the EB-5 program.


But following widespread criticism of the USCIS' new policy and an outcry from foreign entrepreneurs, USCIS has resumed its review of EB-5 applications according to previously established procedures, which EB-5 program supporters hope is a sign the agency will perhaps abandon its recent practice of issuing RFEs with respect to tenant occupancy and re-implement its
traditional evaluation standards.


One high-profile critic of the USCIS' modified tenant occupancy policy, Mayor Antonio Villaraigosa of Los Angeles, will certainly be relieved that the agency has seemingly reconsidered its position.  Downtown Los Angeles is expected to see over 3,000 jobs created through a Marriott Hotel development that is funded in part by EB-5 money.


For more information on the EB-5 visa, please visit Eb5Investors.com.


 

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