‘EB-5’ Investor Visa program developments
Posted on February 28, 2014
THE USCIS Service Centers have recently received guidance and new instructions for their adjudicators relating to the timing of creating new jobs and explaining the meaning of “full-time” for positions created through the “EB-5” investor program investment.
In apparent response to some unwarranted shifts in adjudicatory processes and the Service Center’s imposition of more stringent requirements than those established by statute and agency regulations, the adjudicatory changes should have the effect of extending the period of time during which a foreign investor may demonstrate compliance with the statutory minimum investment and job creation requirements, as well as broaden the definition of “full-time” employment. Recognizing the importance of encouraging foreign investment in the US, these changes are designed to loosen the overall time frame for compliance with the statutory requirements as well as make it easier for foreign investors to show that their investment has created or will create 10 jobs.
The Immigration Act of 1990 (“IMMACT 90”) allocated an annual limit of 10,000 visas to alien investors participating in the EB-5 “employment-creation” program. The program allows the USCIS to grant permanent resident status to immigrants entering the United States to engage in a new commercial enterprise: (1) which the alien has established; (2) in which the alien has invested, or is actively in the process of investing a minimum of either $500,000 or $1,000,000; and (3) which will benefit the US economy and create 10 full-time jobs for US workers.
The minimum investment requirement of $500,000 applies only when the enterprise is located in a rural area or an area of high unemployment. The grossly underused EB-5 category only benefited a few hundred immigrant investors during each of its first several years of existence. In the middle 1990s, however, private organizations emerged offering EB-5 classification to persons investing far less than the statutory minimums, and in many cases guaranteeing no loss to the investor.
Thousands of investors took advantage of these programs, and USCIS approved the petitions. The programs superficially complied with the statutory requirements of the EB-5 program, but through the use of pooled investments, creative financing and balloon payments, generally did not create employment.
The USCIS even terminated some of the investors’ green card status and charged them with deportation, resulting in families of investors losing their houses, jobs, and their right to be in the United States, as well as the loss of millions of dollars in investment capital to the struggling US economy. In an effort to revive the program, the USCIS has loosened some of the requirements for EB-5 classification. These amendments made permanent resident status more easily available to all investors by eliminating the “establishment” of enterprise requirement.
Rather than prove they have invested in a “new enterprise,” Investors now need only show that they have invested in an existing commercial enterprise to be approved, which may also include a limited partnership.
Nonetheless, the category has still been underutilized. Under EB-5 rules, the investor must show that he will comply with the minimum investment requirements and create jobs for ten US workers, “within two years.” Since the statute is vague as to when the two-year period commences, the USCIS’ guidance sets the two-year period to begin to run 6 months after the initial investor petition is approved. Second, “indirect and intermittent construction jobs” will count as permanent and full-time, as long as the position, not necessarily a particular worker, is expected to last at least two years.
Other changes are also underway as the Administration has taken a new and closer look at the conduct of the Service Center’s responsible for adjudicating these petitions in an effort to let foreign investors know that the US is indeed open for business and will welcome foreign investment to further economic growth during this fragile recovery. –
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