22.4 Employment Creation Entrepreneur Cases.

(a) General .

In 1990, Congress created the Employm ent Creation Immigrant Visa Category (EB-5). Section 121(a) of Public Law 101-649 (Nov. 29, 1990) . Section 203(b)(5) of the Immigration and Nationality Act, as amended, allows for admission to permanent residence on a two-year conditional basis to qualified aliens who will contribute to the economic growth of the United States by investing in U.S. businesses and creating needed employment opportunities. In 2002, Congress amended the EB-5 statute. Those amendments are discussed in paragraph (h), below.

(1) Basic (Non-Pilot Program) Provisions .

Section 203(b)(5) of the Act authorizes up to 10,000 visas each fiscal year to alien entrepreneurs (along with their spouses and unmarried minor children) who have invested or are actively in the process of investing in a new commercial enterprise.

The new commercial enterprise may take any lawful business form, including a limited partnership, and must both benefit the U.S. economy and directly create full-time employment for not fewer than 10 “qualifying employees,” defined as U.S. citizens, lawful permanent residents, or certain other immigrants lawfully authorized to be employed. Noncommercial activities, including home ownership, do not qualify. In general, the Act established a threshold investment amount of one million U.S. dollars ($1,000,00 0.00). In order to encourage the investment in new enterprises located in areas that would most benefit from employment creation, section 203(b)(5)(B) of the Act sets aside on an annual basis 3,000 of the available 10,000 EB-5 visas for qualified aliens who have made investments in “targeted employment areas.” Such targeted employment areas are defined in the Act to include rural areas and areas which have experienced high unemployment. The investment amount for investing in a targeted employment area is currently set at five hundred thousand dollars ($500,000.00).

(2) Regional Center Pilot Program . [Revised 12-11-2009]

(A) Program Overview .

The Regional Center Pilot Program was first instituted in 1992. Three thousand of the 10,000 total available EB-5 visas are set aside for aliens who invest in a USCIS designated “regional center” in the United States organized “for the promotion of economic growth, including improved regional productivity, job creation, and increased domestic capital investment.” Section 610 of Pub. L. 102-395 , as amended by section 116(a)(l) of Pub. L. 105-119 and section 402(a) of Pub. L. 106-396 .

An alien investing in a new commercial enterprise affiliated with and located in a regional center is not required to demonstrate that the new commercial enterprise itself directly employs ten U.S. workers; a showing of indirect job creation and improved regional productivity will suffice. Implementing regulations for the Pilot Program are found at 8 CFR 204.6(m) .

Note

Direct jobs are those jobs that establish an employer-employee relationship between the commercial enterprise and the persons that they employ. Regional centers typically use the RIMS II or IMPLAN economic models to determine the number of indirect jobs that will be created through investments in the regional center’s investment projects.

Indirect jobs are the jobs held by persons who work for the producers of materials, equipment, and services that are used in a commercial enterprise’s capital investment project, but who are not directly employed by the commercial enterprise, such as steel producers or outside firms that provide accounting services.

There is a sub-set of indirect jobs that are calculated using economic models that are known as induced jobs. Induced jobs are those jobs created when direct and indirect employees go out and spend their increased incomes on consumer goods and services.

A Regional Center Proposal must be filed with the CSC to request USCIS approval of the proposal and designation of the entity that filed the proposal as a regional center.

A “Regional Center” is defined as any economic unit, public or private, engaged in the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment.

The Regional Center Proposal must demonstrate that capital investments made by individual alien investors within the geographic area of the regional center will satisfy the EB-5 eligibility requirements in order to create qualifying EB-5 jobs.

The Regional Center Proposal should also demonstrate that the new commercial enterprise’s organizational documents, capital investment offering memoranda, and transfer of capital mechanisms for the transfer of the alien investor’s capital into the job creating enterprise are in compliance with established EB-5 eligibility requirements.

(B) Regional Center Proposal EB-5 Eligibility Requirements .

Regional Center Proposals must demonstrate the following EB-5 eligibility requirements in order to be approved:

(i) A clearly identified, contiguous geographical area for the regional center. If the regional center proposal bases its predictions regarding the number of direct or indirect jobs that will be created through EB-5 investments in the regional center, in whole or in part, by offering investment opportunities to EB-5 investors with the reduced $500,000 threshold, then the Targeted Employment Areas (TEAs), Rural Areas (areas with populations under 20,000 people) and areas of high unemployment (areas with unemplo yment rates 150% or more of the national rate), should be identified.

Note

An alien filing a regional center affiliated Form I-526 must still establish that the investment will be made in a TEA at the time of filing of the alien’s Form I 526 petition, or at the time of the investment, whichever occurs first, to qualify for the reduced $500,000 capital investment threshold.

(ii) A detailed description of how EB-5 capital investment within the geographic area of the regional center will create qualifying EB-5 jobs, either directly or indirectly. This analysis must be supported by economically and statistically valid forecasting tools, including, but not limited to, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported [if any], and/or multiplier tables.

(iii) A detailed prediction of the proposed regional center’s predicted impact regionally or nationally on household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and outside of the geographic area of the proposed Regional Center.

(iv) A description of the plans to administer, oversee, and manage the proposed Regional Center, including but not limited to how the regional center will:

· Be promoted to attract EB-5 alien investors, including a description of the budget for the promotional activity;

· Identify, assess and evaluate proposed immigrant investor projects and enterprises;

· Structure its investment capital, e.g., whether the investment capital to be sought will consist solely of alien investor capital or a combination of alien investor capital and domestic capital, and how the distribution of the investment capital will be structured, e.g. loans to developers, venture capital, etc.; and

· Oversee all investment activities affiliated with, through or under the sponsorship of the proposed Regional Center.

(C) “Exemplar” Form I-526 Petition .

The Regional Center Proposal may also include an “exemplar” Form I-526 petition that contains copies of the commercial enterprise’s organizational documents, capital investment offering memoranda, and transfer of capital mechanisms for the transfer of the alien investor’s capital into the job creating enterprise. USCIS will review the documentation to determine if they are in compliance with established EB-5 eligibility requirements.

Providing these documents may facilitate the adjudication of the related I-526 petitions by identifying any issues that could pose problems when USCIS is adjudicating the actual petitions.

For example, if a new commercial enterprise’s limited partnership (LP) agreement contains a buy-back agreement (i.e. a redemption clause guaranteeing the return of the alien investor’s capital investment), then the alien investor’s capital investment will not be a qualifying “at-risk” investment for EB-5 purposes.

Likewise, if the LP agreement requires the payment of fees from the alien investor’s capital investment of $1,000,000 or $500,000, respectively, to the extent that the investment will be eroded below the qualifying level, preventing the full infusion of the capital into the job creating enterprise, then the alien investor’s capital investment will not meet the required EB-5 level of investment. The approval of a Regional Center Proposal containing defects such as these is not in the best interest of the pr ospective regional center or the USCIS EB-5 program as the end result will most likely be the denial of the individual alien investor’s Form I-526 petition.

Any individual Form I-526 and Form I-829 petitions claiming new commercial enterprise affiliation with a regional center and thus EB-5 eligibility based on indirect job creation must be denied if they are filed prior to the approval of the regional center’s Regional Center Proposal.

(D) Regional Center Proposal and Amendment Request Processing .

There are two general workflows for the adjudication of Regional Center Proposals, one for Initial Regional Center Proposals and one for Regional Center Amendment requests. ISOs adjudicate cases within these workflows in “first in, first out” order, unless an expedite request is granted by the CSC director in accordance with the routine expedite criteria that is used for all cases filed with USCIS.

(E) Amended Regional Center Proposals .

(i) Amendments Due to Material Changes in EB-5 Related Organizational Structure or Capital Investment Instruments .

Designated regional centers may elect to file an amended Regional Center Proposal and receive an updated approval of the regional center designation prior to the filing of individual EB-5 petitions that use supporting documentation relating to EB-5 eligibility issues that has been materially altered or is inconsistent with the documentation used as the basis for the approval of the regional center designation. Doing so, may assist in the streamlining of the adjudication of affiliated individual EB-5 petiti ons, as the altered documentation may otherwise need to be re-evaluated within the individual EB-5 petitions to determine if they still EB-5 compliant.

(ii) Other Amendments .

Some Regional Center Proposals are approved for an industry segment using a hypothetical investment project in order to demonstrate how an actual investment project will be capitalized and operate in a manner that will create at least 10 direct or indirect jobs per alien investor. Individual Form I-526 petitions are then filed with copies of the business plan for the hypothetical investment project as well as the regional center’s actual investment project.

If the actual investment project is not different in a material way from the exemplar investment project, then the job creating efficacy of the investment project, if carried through as specified in the business plan will generally be established.

Regional centers may opt to file an amendment of their Regional Center Proposal in order to eliminate the uncertainty as to whether the actual investment project is different in a material way from the exemplar investment project that was approved in the Regional Center Proposal.

The filing of these amendments is in the best interest of the EB-5 program as it may assist in the streamlining of the adjudication of the individual Form I-526 petitions. These amendments should be supported by detailed documentation relating to the actual investment project. Once approved, then only the documentation relating to the actual approved project would be provided in support of the Form I-526 petition, eliminating the uncertainty regarding whether the actual project meets EB-5 eligibility requirements.

A regional center may also file an amendment in order to provide an exemplar Form I-526 with the supporting documentation required by 8 CFR 204.6 in order for USCIS to determine if the documentation is EB-5 compliant, and thus facilitate adjudication of an actual but identical Form I-526 petition, if the evidence of record otherwise establishes EB-5 eligibility.

Note

If the Regional Center requirements are met and a determination of eligibility is made, then the favorable determination regarding regional center eligibility requirements for the capital investment structure and job creation should generally be given deference and not revisited in the adjudication of individual EB 5 petitions, as long as the underlying facts upon which the favorable decision was made remain unchanged.

The CSC EB-5 program manager should be notified to determine the appropriate action to take if an ISO discovers during the adjudication of an EB-5 petition that:

· Documentation relating to the regional center’s capital investment structure or job creation methodologies, or the exemplar Form I-526 petition has materially changed since the most recent approval of the regional center designation;

· The record contains evidence of fraud or misrepresentation; or

· The evidence of record indicates that the previously favorable decision to approve the regional center proposal (or amendment) to include the determination that the exemplar Form I-526 petition is EB 5 compliant.

(b) Governing Factors .

8 CFR 204.6(a) cites several governing factors which you must consider. They are:

• · A visa petition must be filed;

· A fee for filing the petition is required;

· Before the petition is considered properly filed, the petition must be signed by the petitioner and the initial supporting documentation required by this section must be attached;

· The petition must be filed with the California Service Center. [bullet revised 06-17-2009]

· The appeal of a denial of this petition is to the Administrative Appeals Office; and

· The approval of the petition is valid indefinitely, provided that the investment remains qualifying.

(c) Preliminary Action. (after petition has been accepted and fee paid).

(1) When to Create a File .

If the alien petitioner is in the United States, search for an existing "A" file. If none exists, create one. If the beneficiary is not in the United States, no file should be created, unless the petition is to be denied.

(2) Priority Date .

The priority date of a petition for classification as an alien entrepreneur is the date the petition is properly filed with USCIS.

(3) General Review . [Revised 12-11-2009]

Review the Form I-526 petition for completeness and signature of the petitioner.

· Verify that the name given in Part 1 (Information about you) is identical to the signature in Part 7 (Signature block).

· Remember that the petition can only be signed by the petitioner and not by his or her authorized representative.

The following EB-5 eligibility requirements must be established in the Form I-526 petition:

· The capital investment is in a new commercial enterprise;

· If the petitioner claims that the capital investment qualifies for the reduced capital investment threshold of $500,000, that the new commercial enterprise is located in a TEA;

· The investment capital was obtained by the alien through lawful means;

· The required amount of capital has been fully committed to the new commercial enterprise;

· The new commercial enterprise will create not fewer than 10 full-time positions; and

· The alien investor will be engaged in the management of the new commercial enterprise.

Note

If the new commercial enterprise identified in the petition is affiliated with a regional center, then the petitioner must provide with the Form I-526 petition a copy of the regional center’s:

· Most recently issued approval letter; and

· Documentation relating to its approved capital investment structure and job creation methodology.

If the evidence provided remains unchanged from the documentation that was the basis for the approval of the regional center proposal, then the prior approval of the capital investment structure and the job creation methodology should generally be given deference. The CSC EB-5 program manager should be notified to determine the appropriate action to take if an ISO discovers during the adjudication of Form I-526 petition that:

· Documentation relating to the regional center’s capital investment structure or job creation methodologies has materially changed since the approval of the regional center designation;

· The record contains evidence of fraud or misrepresentation; or

· The evidence of record indicates that the previously favorable decision to approve the regional center proposal (or amendment) to include the determination that the exemplar Form I-526 petition is EB-5 compliant was legally deficient.

(4) Review of Supporting Documents .

When reviewing the documentation submitted in support of the petition you should keep in mind the following factors:

(A) Investment in a New Commercial Enterprise .

· Whether the alien creates an original business, purchases an existing business, expands an existing business, or joins with a pool of investors who have already invested in an existing business, his or her action must be taken after November 29, 1990. The statute requires it, and the definition of the word "new" means created after November 29, 1990.

Note: [5 USC 552(b)(2) and 5 USC 552(b)(7)(E)]

If the petitioner submits evidence that the new commercial enterprise was a result of simultaneous or subsequent restructuring or reorganization of an existing business, the commercial enterprise that is the result of this action must be a new legal entity. Thus, there are three ways to invest in a new commercial enterprise: creation of brand new business, purchase of an existing business, or expansion of an existing business. You must keep in mind that in order for the business to qualify as a new commer cial enterprise, any of the above actions must have taken place after November 29, 1990.

· You must look at the evidence presented to demonstrate the date of creation of the business to determine whether it is a “new” commercial enterprise. In general, the business must have been created AFTER November 29, 1990. If the business was created BEFORE November 29, 1990, it cannot qualify, unless the petitioner can demonstrate expansion of the business after November 29, 1990. If the business was created prior to November 29, 1990, issue a RFE explaining this requirement, and requesting evidence rela ting to post-November 29, 1990, expansion.

· To qualify for creation based on expansion, the petitioner must invest the required capital in the existing business, and demonstrate that the investment has increased, by 40 percent, either the number of employees or the net worth of the business. The petitioner will still be required to employ ten additional employees before the conditional basis of his or her EB-5 permanent resident status may be removed.

(B) Investing the Required Amount of Capital .

You should always be aware that the statutory requirements of investing the prescribed amount of capital and the creation of new jobs apply no matter how the alien seeks to demonstrate investment in a new commercial enterprise. These requirements apply even if the alien is investing in a new commercial enterprise that purchases an existing business. The alien is still obligated to show that he or she has invested the prescribed amount of capital (some of which would probably be the purchase price of the o ld company) and that 10 new jobs would be created in addition to the employees of the purchased company. A mere intent to invest does not suffice for EB-5 purposes. The petitioner must actually have committed the capital to the new commercial enterprise.

Note

“Capital” is defined to include cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien provided that he or she is personally and primarily liable and the assets of the new commercial enterprise are not used to secure any of the indebtedness. If the alien uses a secured note, the alien must be able to show that this note has a real cash value, and that the total value of all capital invested, including the note, has a cash value equal to or greater than the statutory minimum.

Note also

As discussed below, all of the requisite capital must go directly into the new commercial enterprise; amounts paid for “administrative fees, attorneys’ fees,” “finders’ fees” and other types of expenses not directly paid into the new commercial enterprise will not count towards the minimum investment amount.

Note further

The term “invest” is defined as a contribution of capital. In determining whether the full amount of capital has been invested, adjudicators should be aware that proceeds that are left (i.e., “reinvested”) in the business do not count toward meeting the minimum investment requirement. Further, adjudicators should be aware that an EB-5 petitioner must make an equity investment in the commercial enterprise; a mere loan from the alien shareholder or partner to the business does not qualify as an investment o f capital for purposes of the EB-5 statute. Thus, contributions of funds to the commercial enterprise, in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement, cannot be counted toward meeting the minimum capital requirement. Balance sheets, including those incorporated into tax returns, generally, but not necessarily, should reflect the amount of equity versus debt contributed to the commercial enterprise. The determination as to what constitutes debt or equity is, in t he final analysis, a question of fact, and not simply a matter of what is reflected on a balance sheet.

(C) Investment of Capital Obtained Through Lawful Means .

The regulation at 8 CFR 204.6(j)(3) indicates that the petitioner is to submit documentation "as applicable" that investment capital has been obtained through lawful means. Since it is often difficult to determine the source of the capital used for the investment, there is no clear-cut answer as to how far back the petitioner should go to establish that he or she has met this requirement. In making your determination, you should exercise sound judgment. Obviously, if you have reason to believe that more documentation is necessary, it shoul d be requested.

An individual who is operating as a sole proprietor cannot count his or her personal bank account as committed funds. The regulation refers specifically to funds in business bank accounts, not personal bank accounts. This applies to all cases, including sole proprietorships. Funds in a personal bank account are not necessarily committed to the new commercial enterprise.

(D) Job Creation [Ch 22.4(c)(4)(D) revised 06-17-2009]

(i) Required Number of Jobs and Documentation

The petition must be supported with evidence the new commercial enterprise will create no fewer than 10 fulltime positions (or the equivalent).

If the petitioner has invested in an existing enterprise, he or she must demonstrate how the investment will cause the creation of at least 10 additional fulltime positions. Merely purchasing a share of a business from an existing shareholder, without more, will not qualify, since the payment goes to the former shareholder rather than towards the development of the enterprise.

If the employees have already been hired, the petitioner must submit copies of tax records, Forms I-9 , or similar documents relating to the 10 qualifying employees. If the employees have not been hired, the petitioner must submit a comprehensive business plan demonstrating the need for 10 new employees.

If the petitioner purchases a troubled business, it must be demonstrated that the number of jobs at the pre-investment level will be maintained for at least two years. To qualify as a troubled business, it must have been in existence for at least two years and have incurred a net loss for accounting purposes of at least twenty percent of the troubled business's net worth prior to such loss. The loss must have been incurred during the twelve or twenty-four month period prior to the priority date on the Form I-526 .

If the investment is in a regional center under the Pilot Program, the petition must show, through the use of reasonable methodologies, the likelihood that the business will create 10 jobs indirectly. See 8 CFR 204.6(m)(7)(ii) . Such methodologies may include multiplier tables, feasibility studies, and other economically or statistically valid forecasting devices indicating the likelihood that the business will result in increased employment.

(ii) Clarification of the Two-Year Period for Job Creation

· Form I-526 Business Plan Requirements

Petitioners who are filing a Form I-526 must submit “a comprehensive business plan showing that, due to the nature and projected size of the new commercial enterprise, the need for not fewer than 10 qualifying employees will result, including approximate dates, within the next two-years , and when each employee will be hired.” 8 CFR 204.6(j)(4)(i)(B) (emphasis added). The requirement for a business plan that shows jobs will be created in two years applies to all Form I-526 petitions, including those filed under the Regional Center Program, that will rely on indirect job creation to satisfy the statutory employment creation requirement.

The regulations, however, do not clearly state when the two-year period commences for purposes of adjudicating the Form I-526 . The reference to a two-year period relates to the two-year period of conditional residence, and the time requirement of 8 CFR 204.6(j)(4)(i)(B) is intended to ensure that aliens seeking to enter the United States on EB-5 visas have a legitimate and feasible plan to create jobs as required by the statute within that period of conditional residence. Nevertheless, at the time of adjudication of Form I-526, the alien entrepreneur will not have attained conditional permanent residence, and the officer adjudicating Form I-526 cannot be certain when the period of conditional residence will in fact commence.

USCIS has determined that the average processing times for EB-5 petitioners filing for immigrant visas via consular processing and EB-5 petitioners filing for adjustment of status is approximately six months. Accordingly, in order to best approximate the two-year period of conditional residence, the two-year period described in 8 CFR 204.6(j)(4)(i)(B) will be deemed to commence six months after the adjudication of Form I-526 . USCIS officers should ensure that the business plan filed along with Form I-526 reasonably demonstrates that the requisite number of jobs will be created by the alien’s investment by the end of the two-year period that commences six months after the adjudication of the petition. If, in the future, processing times significantly change, this paragraph may be amended.

· Special considerations for Regional Center Based I-526 Petitions

- Aliens filing Form I-526 petitions for investments to be made through a regional center may use reasonable methodologies to establish the number of jobs created. 8 CFR 204.6(j)(4)(iii) . However, some of the economic models may not expressly consider temporal aspects of job creation, and will not be able to conclusively state that indirect jobs will be created within two years. In such circumstances, officers should first explore whether there are reasonable and/or accepted temporal assumptions that can be attributed to the particular economic model and consider such assumptions in determining compliance with the two-year requirement.

For example, the RIMSII handbook states the following about the RIMSII economic model, which is often used to demonstrate indirect job creation:

Example

RIMS II, like all I-O models, is a “static equilibrium” model, so impacts calculated with RIMS II have no specific time dimension. However, because the model is based on annual data, it is customary to assume that the impacts occur in one year. For many situations, this assumption is reasonable.

This assumption supports the conclusion that the indirect jobs will be created within the requisite two-year period.

If, however, there are no reasonable and/or accepted temporal assumptions that can be made with respect to a particular economic model, USCIS may presume that the jobs will be created within the required period of time provided that the alien can demonstrate compliance with the following paragraph.

- Many economic models used to demonstrate indirect job creation rely on certain assumptions or variables to show the requisite job creation. For example, a model might demonstrate that the requisite jobs will be created if a Regional Center infuses $10 million into a particular industry. Similarly, a model might demonstrate that, using accepted multipliers, the creation of 100 direct jobs will result in a certain number of indirect jobs. Under such circumstances, the Form I-526 petition should demonstrate that the required infusion of capital or the creation of the direct jobs will occur within two years.

Nothing in this paragraph should be construed to alter in any way the current adjudication procedures. Officers may review the evidence required by the petitioner to demonstrate the number of jobs that will be created by the investment. For example, Form I-526 s filed under the Regional Center Program which rely on indirect job creation must also comply with the evidentiary requirements of 8 CFR 204.6(j)(4)(iii) to demonstrate the number of jobs created. Officers may also continue to determine the reasonableness of a business plan to ensure that the jobs are likely to be created.

(iii) Clarification of the Meaning of Fulltime Position [Revised 12-11-2009]

Section 203(b)(5) of the INA requires that the investment in a new commercial enterprise will create full-time employment for not fewer than 10 qualified employees. The INA further defines full-time employment as “employment in a position that requires at least 35 hours or service per week at any time, regardless of who fills the position.” Adjudicating ISOs should keep the following points in mind when determining if positions meet this requirement:

· Economic input/output (I/O) models, such as RIMS II or IMPLAN, used to evaluate the calculation of the number of indirect jobs (including induced jobs ) created through a commercial enterprise affiliated with a regional center do not distinguish between full-time and part-time jobs.

In other words, the job creation results of the multipliers in the economic I/O models do not distinguish between the full-time and part-time nature of the positions. Therefore, the number of indirect jobs quantified through the I/O model analysis will be considered to be full-time and qualifying for EB-5 purposes. Accordingly, determinations regarding whether jobs qualify as “full-time” are only relevant to the analysis of direct jobs created by a commercial enterprise claiming the creation of direct jobs as a result of the EB-5 capital investment.

· USCIS has interpreted the full-time employment requirement to exclude jobs that are intermittent, temporary, seasonal or transient in nature. See, e.g., Spencer Enterprises v. U.S. , 229 F.Supp.2d 1025 (E.D. Cal. 2001). Historically, construction jobs have not been counted toward job creation because they are seen as intermittent, temporary, seasonal and transient rather than permanent. USCIS, however, now interprets that direct construction jobs may now count as permanent jobs if they:

o Are created by the petitioner’s investment; and

o Are expected to last at least two years, inclusive of when the petitioner’s Form I-829 is filed.

Although employment in some industries such as construction or tourism can be intermittent, temporary, seasonal or transient, officers should not exclude jobs simply because they fall into such industries. Rather, the focus of the adjudication should be on whether the direct positions, as described in the petition, are continuous full-time employment rather than intermittent, temporary, seasonal or transient.

Example

If a petition reasonably describes the need to directly employ general laborers in a construction project that is expected to last several years and require a minimum of 35 hours per week over the course of that project, the positions would meet the full-time employment requirement.

However, if the same project called for electrical workers to provide services as direct employees during three to four five week periods over the course of the project, such positions would be properly deemed to be intermittent and not meet the definition of full-time employment.

· Generally, it is the position that is critical to the full-time direct employment criterion, not the employee . Accordingly, the fact that the position may be filled by more than one employee does not exclude a position from consideration as full-time employment.

Example

The positions described in the above bullet would not be excluded from being considered full-time employment if the general laborers needed to fill the positions varied from day to day or week to week, as long as the need to directly employ general laborers in the position remains constant. This interpretation is consistent with 8 CFR 204.6(e) , which includes job sharing arrangements as part of the regulatory definition of full-time employment.

· It is important to note, however, that this interpretation does not override the regulatory definitions of employee and full-time employment at 8 CFR 204.6(e) . Thus, direct jobs must still be filled by qualifying employees and not by independent contractors.

Positions filled by independent contractors are not qualifying direct jobs and may only be credited for EB-5 job creation purposes in petitions involving commercial enterprises that are affiliated with a regional center. In addition, multiple part-time positions may not be combined to create one full-time position, unless those part-time jobs can be shown to be part of a job-sharing arrangement.

· Full-time employment relating to the creation of direct jobs as defined in 8 CFR 204.6(e) means year-round employment and not seasonal full-time employment. Full-time employment consists of 35 hours a week. Seasonal positions do not qualify for purposes of the full-time employment requirement for direct jobs .

(E) Alien Petitioner Engaged in the Management of the New Enterprise .

The alien petitioner must be involved in the new enterprise by either exercising managerial control of the day-to-day operations or through policy formulation. The alien petitioner cannot just invest in the new enterprise; he or she must be involved in the new enterprise. An alien must be “actively involved in the business;” a purely passive investor may not qualify for the EB-5 classification. Se e 8 CFR 204.6(j)(5) . While an alien may seek EB-5 qualification on the basis of an investment in a limited partnership, under current regulations, even he or she, as a limited partner, must have a certain level of involvement in the running of the business. Under 8 CFR 204.6(j)(5)(iii) , if the alien is a limited partner, he or she must have been granted all (i.e., not simply some) of the rights, po wers, and duties granted to the other limited partners in the partnership in order to be considered sufficiently engaged in the business.

(F) New Commercial Enterprise in a Targeted Employment Area . [Revised 12-11-2009]

A TEA is either :

A rural area or an area experiencing a high unemployment rate at the time of the capital investment or the time of filing of the Form I-526 petition, whichever occurs first. If the petitioner shows that the area where he or she is investing is a rural area, the petitioner need not also establish that the area has high employment. Conversely, if the area is a high unemployment area, the petitioner need not also show that it is a rural area.

INA 203(b)(5)(B) and 8 CFR 204.6(e) require that in order to establish eligibility for the reduced EB-5 investment threshold of $500,000, the area in which the alien makes a capital investment must qualify as an rural area or an area of high unemployment when the investment is made. Matter of Soffici , 22 I&N Dec. 158 (BIA 1998), provides in pertinent part that:

A petitioner has the burden to establish that his enterprise does business in an area that is considered “targeted” as of the date he files his [ Form I-526 ] petition. The fact that a business may be located in an area that was once rural, for example, does not mean that the area is still rural.

A conflict between the statutory and regulatory requirements, and Matter of Soffici may arise when an alien makes a capital investment at a point in time prior to the filing of the Form I-526 petition when the area in which the investment is made qualifies as a TEA, only to have the area no longer qualify as a TEA at the time of filing of the Form I-526 petition.

In order to promote predictability in the capital investment process and to reconcile the potential conflict outlined above, ISOs must identify the appropriate date to examine in order to determine that the alien’s capital investment qualifies for the reduced $500,000 threshold according to the following “if, then” table:

TEA “if then” Table

If the Investment…	Then…
Is made into the commercial enterprise’s job creating project prior to the filing of the Form I-526 petition…	The TEA analysis should focus on whether the location of the investment qualifies as a TEA at the time of the investment.
Has yet to be committed to the commercial enterprise’s job creating project at the time of filing of the Form I-526 , i.e. is still in escrow or is otherwise not irrevocably invested into the commercial enterprise pending the approval of the I-526 petition….	The TEA analysis should focus on whether the location of the investment qualifies as a TEA at the time of the filing of the Form I-526 petition.

Note 1

In some instances, an alien may request eligibility for the reduced investment threshold based on the fact that other EB-5 aliens who previously invested in the same project qualified for the $500,000 minimum investment, even though the area did not qualify at the time of the instant alien’s investment or the filing of his or her Form I-526 . Each alien must establish that his or her capital investment qualifies for the reduced investment threshold, and cannot rely on previous TEA determinations made based on facts that have subsequently changed.

Note 2

The area where the new commercial enterprise is located may qualify as a TEA at the time the capital investment is made or the Form I-526 petition is filed, whichever occurs first, but may cease to qualify by the time the Form I 829 petition is filed. Changes in population size or unemployment rates within the area during the alien investor’s period of conditional permanent residence are acceptable as increased job creation is the primary goal of the EB 5 program.

(i) Rural Area Defined .

The term “rural area” means any area that is both outside of a metropolitan statistical area (MSA) and outside of a city or town having a population of 20,000 or more based on the most recent decennial census of the United States. See INA § 203(b)(5)(B)(iii) and 8 CFR §204.6(j)(6)(i) . MSAs are designated by the Office of Management and Budget and can be found at www.census.gov .

(ii) Definition of High Unemployment Area . The term “high unemployment area” means an area which has experienced unemployment of at least 150 percent of the national average rate. See INA § 203(b)(5)(B)(ii) . The Form I-526 petitioner must demonstrate that, at the time the capital investment is made or the petition is filed (whichever occurs first), there has been an unemployment rate of at least 150% of the national unemployment rate within the MSA or other non-rural area in which the commercial enterprise that will create or preserve jobs is located. This should be based on the most recent information available to the general public from federal or state governmental sources as of the time the I-526 petition is submitted.

In some instances Form I-526 petitioners may claim high unemployment in only a portion or portions of a geographic area or political subdivision for which distinct unemployment data is not readily available to the general public from federal or state governmental sources. This may be indicative of an attempt by the petitioner to “gerrymander” a finding of high unemployment when in fact the area does not qualify as being a high unemployment area. Such a claim is not sufficient to establish that the area is a high unemployment area un less it is accompanied by a designation from an authorized authority of the state government. (State designations are discussed below in (iii) of this section.)

The Bureau of Labor Statistics (BLS) provides data regarding the national average rate of unemployment at www.bls.gov/cps/ . BLS’s Local Area Unemployment Statistics (LAUS) program produces monthly and annual unemployment and other labor force data for census regions and divisions, states, counties, metropolitan areas, and many cities, by place of residence. This information can be found at www.bls.gov/lau/ . States, the District of Columbia, and the U.S. territories may also publish local area unemployment statistics on their government websites.

(iii) State Designation of a High Unemployment Area .

The state government of any state of the United States may designate a particular geographic area or political subdivision located within a metropolitan statistical area or within a city or town having a population of 20,000 or more within such a state as an area of high unemployment.

Before any such designation is made, an official of the state must notify USCIS of the agency, board, or other appropriate governmental body of the state which shall be delegated the authority to certify that the geographic or political subdivision is a high unemployment area.

Evidence of such a designation, including a description of the boundaries of the geographic or political subdivision and the method or methods by which the unemployment statistics were obtained, may be submitted in support of the Form I-526 petition in lieu of other documentary evidence of high unemployment in the area where the new commercial enterprise is located. See 8 CFR 204.6(i) . The statistics used in the analysis must reflect the national and local unemployment rates for these regions at the time of the alien investor’s capital investment. See 8 CFR 204.6(e).

The designation of high unemployment areas are within the purview of each U.S. state governor, or if applicable, his or her designee. USCIS personnel have no substantive authority to question or challenge such high unemployment designations, and therefore must rely on the high unemployment designations that conform to the requirements outlined above that are made by a U.S. state governor or his or her designee.

ISOs should notify the CSC EB-5 program manager and seek guidance regarding how to address the TEA issue in petitions that contains a state designation letter that does not conform to the requirements of 8 CFR 204.6(i) , utilizes statistics that do not reflect the national and local unemployment rates at the time of the alien investor’s capital investment, or has been issued by an official of a state that has not notified USCIS regarding who in the state government has the authority to issue such designations.

Note

State designations of high unemployment areas also include designations issued by the appointed government body with authority to make such certifications by the governors of the U.S. territories or the mayor of the District of Columbia.

(G) Eligibility Requirements for the Review of a Form I-526 Petition that Seeks Consideration of a Business Plan that Differs from the Business Plan in a Previously Approved Form I-526 Petition . [Added 12-11-2009]

Some EB-5 aliens may encounter difficulties when unforeseen circumstances cause the achievement of the requisite job creation outlined in the Form I-526 petition to be cast in doubt. This may occur when the job creating capital investment project or commercial enterprise that was relied upon for the approval of the Form I-526 petition fails or otherwise cannot be completed within the alien’s two-year period of conditional residence.

The structure of the EB-5 program is inflexible in that the capital investment project identified in the business plan in the approved Form I-526 petition must serve as the basis for determining at the Form I-829 petition stage whether the requisite capital investment has been sustained throughout the alien’s two year period of conditional residency and that at least ten jobs have been or will be created within a reasonable period of time as a result of the alien’s capital investment.

The business plan in the Form I-526 petition may not be materially changed after the petition has been filed. In addition, USCIS may not act favorably on requests to delay the filing or adjudication of Form I-829 petitions beyond the timeframes outlined in 8 CFR 216.6(a) and (c) .

The following “if, then” table explains how an EB-5 investor can seek consideration of a business plan that differs from the business plan in a previously approved Form I-526 petition.

New Form I-526 Petition “If, Then” Table

If…	Then…
The alien wishes to change the business plan from the business plan outlined in a previously filed Form I-526 petition…	S/he may file a new Form I-526 petition with fee that is supported by the new business plan and addresses all requirements of the I-526 petition.
If the new Form I-526 Petition is Filed…	Then…
Before the alien adjusts status (AOS) or is issued an immigrant visa (IV)…	The new petition, if approved, will be the basis for the AOS or the IV and the new business plan will be used as the basis for evaluating EB-5 eligibility at the Form I-829 stage.
After the alien adjusts status or is issued an IV, but before the due date of the filing of the Form I-829 petition (90 days prior to the end of the two-year CPR period).	Upon approval of the new Form I-526 petition, S/he may file Form I-407 with a Form I-485 adjustment application. The prior CPR status will be terminated and the new AOS application will be approved, if otherwise approvable, granting a new two year period of CPR status. The new I-526 petition will be used as the basis when evaluating eligibility at the Form I-829 stage. If the new Form I-526 is denied, then the alien will have to file the I-829 petition and use the initial Form I-526 petition as the basis for the eligibility evaluation in the Form I-829 petition.
After the alien adjusts status or is issued an IV on or after the due date for the filing of the Form I-829 petition.	If the new Form I-526 is approved, S/he may request the withdrawal of the initial I-829 petition and file an AOS application. The prior CPR status will be terminated and the new AOS application will be approved, if otherwise approvable, granting a new two year period of CPR status. The new Form I-526 petition will be used as the basis when evaluating eligibility at the second Form I-829 stage. If the new Form I-526 petition is denied, then the initial Form I-829 petition will be adjudicated using the project plan in the initial I-526 petition as the basis for the initial I-829 eligibility evaluation.

Note

Dependents will have to file I-407 s at the same time as required for the principals as well as Form I-485 applications in order to terminate their CPR status and be “re-adjusted” to CPR anew. The dependents must be eligible to be classified as EB-5 dependents at the time of the filing of new Form I-485 application, i.e. the dependents must be the spouse or unmarried child under the age of 21 years of the EB-5 principal alien.

(d) Approval of the Petition .

(1) Affix the approval stamp on the Form I-526 and sign.

(2) An approved visa petition should be sent to the specified embassy or consul or if petitioner is requesting adjustment, then the petition should be routed (with file) to the main file shelf waiting request by field office.

(3) Keep a record of statistics (approvals, denials, returned, etc.)

(4) Update CLAIMS with appropriate information. Do not place on clerical hold unless there is documentation to be sent back to the petitioner.

(e) Action to be Taken if the Petition is Denied .

Denial decisions will be prepared on Form I-292, usually with the reference "SEE ATTACHMENTS." The attached pages will cover the specific grounds for denial as determined from the evidence. Form M-188 (on appeals and motions) and Form I-290B will be attached to all visa petition denials. It is essential that any denial you prepare be premised solely on the evidence submitted. Refer in your denial to controlling statutes and regulations. Where the decision is motivated by or governed by any published decisions, reference to those decisions must be made in the approved format. Your decision should be written in direct and comprehensible language. All reasons for denial should be included. In all denial cases, an "A" file must be used to hous e the petition and supporting documents. Copies of the decision must be sent to the petitioner and any attorney of record. Once your supervisor has signed off your denial, CLAIMS should be updated to reflect that the case has been denied.

(f) Revocation of Petitions .

Visa petitions approved under section 204 of the Act may be revoked under the provision s of section 203(e) or section 205 of the Act.

(g) Precedent Decisions .

The following precedent decisions relate to employment creation petitions:

· In re Soffici, ID #3359 (Commr, 1998). (1) A petitioner under section 203(b)(5) of the Act cannot establish the requisite investment of capital if he lends the money to his new commercial enterprise. (2) Loans obtained by a corporation, secured by assets of the corporation, do not constitute capital invested by a petitioner. Not only is such a loan prohibited by 8 CFR 204.6(e) , but the petitioner and the corporation are not the same legal entity. (3) A petitioner's personal guarantee on a business's debt does not transform the business's debt into the petitioner's personal debt. (4) A petitioner must present clear documentary evidence of the source of the funds that he invests. He must show that the funds are his own and that they were obtained through lawful means. (5) A petitioner who acquires a pre-existing business must show that the investment has created, or at least has a reasonable prospect of creating, 10 full-time positions, in addition to those existing before acquisition. The petitioner must, therefore, present evidence concerning the pre-acquisition level of employment. Simply maintaining the pre-acquisition level of employment is not sufficient, unless the petitioner shows that the pre-existing business qualifies as a "troubled business."

· In re Izumii, ID #3360 (Assoc. Commr, 1998). (1) Regardless of its location, a new commercial enterprise that is engaged directly or indirectly in lending money to job creating businesses may only lend money to businesses located within targeted areas in order for a petitioner to be eligible for the reduced minimum capital requirement. (2) Under the Immigrant Investor Pilot Program, if a new commercial enterprise is engaged directly or indirectly in lending money to job-creating businesses, such job-creatin g businesses must all be located within the geographic limits of the regional center. The location of the new commercial enterprise is not controlling. (3) A petitioner may not make material changes to his petition in an effort to make a deficient petition conform to USCIS requirements. (4) If the new commercial enterprise is a holding company, the full requisite amount of capital must be made available to the business(es) most closely responsible for creating the employment on which the petition is based. (5) An alien may not receive guaranteed payments from a new commercial enterprise while he owes money to the new commercial enterprise. (6) An alien may not enter into a redemption agreement with the new commercial enterprise at any time prior to completing all of his cash payments under a promissory note. In no event may the alien enter into a redemption agreement prior to the end of the two-year period of conditional residence. (7) A redemption agreement between an alien investor and the new commercial en terprise constitutes a debt arrangement and is prohibited under 8 CFR 204.6(e). (8) Reserve funds that are not made available for purposes of job creation cannot be considered capital placed at risk for the purpose of generating a return on the capital being placed at risk. (9) USCIS does not pre-adjudicate immigrant investor petitions; each petition must be adjudicated on its own merits. (10) Under 8 CFR 204.6(e), all capital must be valued at fair market value in United States dollars, including promissory notes used as capital. In determining the fair market value of a promissory note, it is necessary to consider, among other things, present value. (11) Under certain circumstances, a promissory note that does not itself constitute capital may constitute evidence that the alien is "in the process of investing" other capital, such as cash. In such a case, the petitioner must substantially complete payments on the promissory note prior to the end of the two-year conditional period. (12) Whether the promissory note constitutes capital or is simply evidence that the alien is in the process of investing other capital, nearly all of the money due under the promissory note must be payable within two years, without provisions for extensions.

Note

In 2002, Congress eliminated the requirement set forth in Izumii that, in order for a petitioner to be considered to have “created” an original business, he or she must have had a hand in its actual creation. Under the new law, an alien may invest in an existing business at any time following its creation, provided he or she meets all other requirements of the regulations.

· In re Hsiung, ID #3361 (Assoc. Commr, 1998). (1) A promissory note secured by assets owned by a petitioner can constitute capital under 8 CFR 204.6(e) if: the assets are specifically identified as securing the note; the security interests in the note are perfected in the jurisdiction in which the assets are located; and the assets are fully amenable to seizure by a U.S. note holder. (2) When determining the fair market value of a promissory note being used as capital under 8 CFR 204.6(e) , factors such as the fair market value of the assets securing the note, the extent to which the assets are amenable to seizure, and the present value of the note should be considered. (3) Whether a petitioner uses a promissory note as capital under 8 CFR 204.6(e) or as evidence of a commitment to invest cash, he must show that he has placed his assets at risk. In establishing that a sufficient amount of his assets are at risk, a petitioner must demonstrate, among other things, that the assets securing the note are his, that the security interests are perfected, that the assets are amenable to seizure, and that the assets have an adequate fair market value. (4) A petitioner engaging in the reorganization or restructuring of a preexisting business may not cause a net loss of employment.

· In re Ho, ID #3362 (Assoc. Commr, 1998). (1) Merely creating and capitalizing a new commercial enterprise and signing a commercial lease are not sufficient to show that an immigrant investor petitioner has placed his capital at risk. The petitioner must present, instead, evidence that he has actually undertaken meaningful concrete business activity. (2) The petitioner must establish that he has placed his own capital at risk; that is to say, he must show that he was the legal owner of the invested capital. Bank statements and other financial documents do not meet this requirement if the documents show someone else as the legal owner of the capital. (3) The petitioner must also establish that he acquired the legal ownership of the invested capital through lawful means. Mere assertions about the petitioner's financial situation or work history, without supporting documentary evidence, are not sufficient to meet this requirement. (4) To establish that qualifying employment positions have been created, Forms I-9 presented by a petitioner must be accompanied by other evidence to show that these employees have commenced work activities and have been hired in permanent, full-time positions. (5) In order to demonstrate that the new commercial enterprise will create not fewer than 10 full-time positions, the petitioner must either provide evidence that the new commercial enterprise has created such positions or furnish a comprehensive, detailed, and credible business plan demonstrating the need for the positions and the schedule for hiring the employees.

Note

There are also a number of precedent decisions that pertain to old (pre-1978) immigrant investor provisions under the former non-preference immigrant visa category. While some of these decisions may be interesting from a historical perspective, they have little or no relevance to the "employment creation" investor category created by IMMACT 90 and should not be relied upon when adjudicating post IMMACT 90 cases.

(h) November 2, 2002 Amendments to EB-5 .

On November 2, 2002, the President signed into law certain amendments to the EB-5 program. Title I, subtitle B of Division C of the Twenty-First Century Department of Justice Appropriations Authorization Act (the “2002 DOJ Appropriations Act),” sections 11031-37 of Public Law 107-273.

On June 10, 2003, USCIS issued interim policy guidance regarding changes effected by the new law. Memorandum from William R. Yates, HQ40/6.1.3, entitled “Amendments Affecting Adjudication for Alien Entrepreneur (EB-5)” (the “Yates Memorandum”). The Yates Memorandum provides that:

· As before, the com mercial enterprise must be “new,” that is, have been created after November 29, 1990. See 8 CFR 204.6(e) . Section 11036 of the law does, however, eliminate the previous requirement that an alien personally have “established,” that is, have had a personal hand in, the creation of the new commercial enterprise. Under the 2002 DOJ Appropriations Act, the alien need only “sustain” his or her investment in a pre-existing commercial enterprise. This effectively allows multiple investments in the same commercial enterprise at any time, provided that the alien still creates ten new positions for qualifying U.S. workers jobs and meet s all other EB-5 requirements are complied with. The law applies to both pending I-526 and I-829 petitions filed on that date or thereafter. This provision modifies 8 CFR 204.6(h)(1) , regarding the creation of an original business.

Note

The 2002 DOJ Appropriations Act does not change the requirement that the commercial enterprise create 10 new jobs. In order to determine whether the commercial enterprise actually has created ten new positions, adjudicators must first determine whether the petitioner personally created the commercial enterprise and, if the petitioner did not create the business, the number of jobs there were in the existing business at the time the petitioner acquired the business.

Note Also

The 2002 DOJ Appropriations Act supercedes, in part, 8 CFR 204.6(h)(3), which describes “the establishment of a new commercial enterprise,” due to the removal of the requirement that the alien entrepreneur establish the new commercial enterprise. Section 204.6(h)(3) of the Act continues, however, to be relevant in that it describes the circumstances under which a commercial enterprise in existence prior to November 29, 1990 will be considered “new” for purposes of the law. Enterprises that have been expand ed or substantially reorganized, as described above, will continue to meet the definition of “new” regardless of when the commercial enterprise was actually created.

· As was the case by regulation before November 2, 2002, a new commercial enterprise may include a limited partnership.

· Full-time employment is defined as employment that requires at least 35 hours of service per week “at any time,” regardless of who fills the position. This provision does not change the requirement that, in order to be “full-time,” the job created may not be seasonal. If the enterprise employs individual workers on a temporary basis, it can meet the “full-time” requirement only if the job itself is permanent in nature and will be staffed year-round by qualified U.S. workers for the requisite 35 hours per w eek. For example, an enterprise which is staffed by qualifying workers on one-year contracts would qualify only if, upon expiration of a particular contract, the enterprise, without break, continues to employ the same or another U.S. worker in that same position.

· With the limited exception of certain persons eligible for a “second opportunity” to make a qualifying investment (discussed below) under the 2002 DOJ Appropriations Act, as before, a petitioner may invest capital, for purposes of EB-5, in only one commercial enterprise. A petitioner who filed a Form I-526 petition after August 31, 1998 therefore may not qualify for removal of conditions if he or she has invested in multiple commercial enterprises.

· The 2002 DOJ Appropriations Act does not change the definition of “qualifying employee.”

The 2002 DOJ Appropriations Act also provides a second opportunity for certain aliens whom USCIS believes failed to make a qualifying investment, now to satisfy USCIS that they have done so, provided certain conditions are met. Persons specifically covered by this provision of the 2002 law may invest in the same or a new commercial enterprise, or even a combination of the two. This second opportunity is limited, however, to cases where the alien’s EB-5 petition does not contain any material misrepresentati on. Persons eligible for this “second chance” to comply with the statute and regulations are those whose Form I-526 petitions were approved between January 1, 1995 and August 31, 1998. The 2002 DOJ Appropriations Act also contains provisions with respect to certain aliens who applied for immigrant visas or adjustment of status prior to November 2, 2002, but did not obtain or were not granted conditional resident status.

Note

The 2002 Appropriations Act is NOT an amnesty program; the statute merely provides certain aliens with a second chance to establish that they have made a qualifying investment. Conditions may not be removed with respect to any of these persons unless they can establish, at the end of their two-year period of conditional residence, that they meet all applicable requirements for removal of conditions.

Regulatory guidance will be forthcoming as to how cases covered by the 2002 Appropriations Act are to be handled.