December 2016
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10 Important Points from the New EB-5 Policy Manual

By:  Bernard Wolfsdorf, Esq. and Joseph Barnett, Esq. Updated December 5, 2016.


On November 30, 2016, USCIS released a draft version of the USCIS Policy Manual on the employment-based fifth preference immigrant visa category (EB-5).  The Policy Manual includes the requirements for an EB-5 Regional Center and for Form I-526, Immigrant Petition by Alien Entrepreneur.  It also describes the different types of regional center projects, including hypothetical projects and actual projects.  USCIS has combined previous adjudication memoranda and current adjudication policy in one source.  This new Policy Manual will be controlling and supersede any related prior USCIS guidance.

Here are ten important points from the new EB-5 Policy Manual:

1. Effective Date and Public Comment Period

The official notice from USCIS states that the effective date of the new Policy Manual is November 30, 2016, yet public comment is set to close on December 14, 2016.  See below. This means that, for the next few weeks, the rules included in the Policy Manual are to be followed, including the filing requirements discussed below, yet those could be changed after public comment.
Type of Document for Comment Title of Document Related Documents Opening & Closing Dates for Comment Effective Date of Policy
USCIS Policy Manual Employment-Based Fifth Preference Immigrants: Investors Policy Alert November 30, 2016 – December 14, 2016 November 30, 2016

2. Filing Requirements

The Policy Manual sets forth three new rules for EB-5 immigration filings:
  • Investors that file a Form I-526 on an investment project being presented to USCIS for the first time (not subject to an I-924 amendment/exemplar) must indicate as such and include an affirmative statement from the Regional Center confirming its awareness of the investment project being presented to USCIS.
  • Investors that file a Form I-526 on an investment project previously approved by USCIS must also file the project-specific documentation with the Form I-526.  This is currently a best practice but not a requirement.
  • Investors must include with a Form I-829 the comprehensive business plan and economic analysis previously submitted with the Form I-526.

3. Investment of Capital

The Policy Manual includes clarifications over the type of “capital” which can be invested in a new commercial enterprise.  It states that an immigrant investor using loan proceeds as capital (most commonly, a home equity loan) to be, under the terms of the loan agreement, personally and primarily liable for the indebtedness secured by assets owned by the immigrant investor.  Additionally, a loan secured by an immigrant investor’s assets only qualifies as capital up to the fair market value of the pledged assets.  The Policy Manual also provides requirements for using a promissory note (a promise to pay) as capital, including a requirement for the promissory note debt to be secured by the investor’s assets and to have been properly perfected in accordance with local laws and fully amenable to seizure by a U.S. noteholder.

4. Return on Investment and Redemption Agreements

An immigrant investor may receive a return on his or her capital in the form of a distribution of profits from the new commercial enterprise, even during the conditional residency period and before creation of jobs, as long as the distribution is not a portion of the investor’s minimum qualifying investment or is guaranteed to the investor.  For immigrant investors who contributed capital in exchange for an equity interest, there can be no redemption agreement which authorizes the immigrant investor to demand a return of some portion of the investment funds, even after obtaining conditional permanent resident status.

5. Targeted Employment Areas

A geographic area that once qualified as a Targeted Employment Area (TEA) may no longer qualify, as employment rates or population can increase over time. An immigrant investor cannot rely on previous TEA determinations that were made based on facts that have subsequently changed.  The appropriate date for USCIS to determine whether an immigrant investor’s investment qualifies for the lower capital investment amount depends on the time of the investment:  If the investment of capital is made to the new commercial enterprise (or made available to job-creating entity in regional center context), the analysis focuses on whether the area qualifies as a TEA at time of the investment.  If the investment of capital has not been made at the time of I-526 filing, the analysis focuses on whether the area qualifies as a TEA at time of the I-526 filing.  Additionally, an immigrant investor is not required to demonstrate that the area in question remains a TEA at the time the Form I-829 removal of conditions application is filed.

6. Indirect Job Creation

The Policy Manual states that USCIS may request additional evidence that indirect jobs (based on reasonable economic models) are full-time jobs.  It is baffling to these authors how/why USCIS can require an economist to determine whether indirect jobs are full-time.  RIMS II, IMPLAN, REDYN, and other economic methodologies are relied on in many industries, not just EB-5, as indicative of job creation.

7. Job Allocation

Unless otherwise stated in the relevant documents, full-time positions will be allocated to immigrant investors based on the date their Form I-829 was filed.  The Policy Manual provides the following example:
If the new commercial enterprise creates 25 jobs, yet there are three immigrant investors associated with the new commercial enterprise,  and the record is silent on the issue of allocation, the first two immigrant investors to file the petition to remove conditions will each get to count 10 of the 25 jobs. The third immigrant investor to file the petition to remove conditions is allocated the remaining five jobs.
We believe this policy is well-intended and should ensure that not all investors in a project which fails to create sufficient jobs will be prevented from obtaining unconditional lawful permanent residency.

8.   I-829 Adjudications

USCIS is proposing that all conditional permanent residents filing a Form I-829 include the comprehensive business plan and economic analysis previously submitted with the Form I-526.  USCIS clarifies that the jobs need not be in existence of the time of I-829 adjudication to be credited, as long as they were created as a result of the immigrant’s investment and such jobs were considered permanent when created.

9. Material Change

The Policy Manual provides some clarification (though also raises more questions) about the difficult concept of “material change.”  It states that changes that occur after a Form I-526 filing but before an immigrant investor obtains conditional permanent resident status are considered material if they result in the investor’s ineligibility.  This appears too vague and could be interpreted to mean leniency for minor changes that occur after filing but before approval of the conditional green card. The May 30th 2013 guidance memo is rigid on changes occurring prior to issuance of conditional permanent residence, but somewhat more lenient on changes that occur after approval of conditional permanent residence. This is important especially for Chinese waiting in the quota line who can get approval of their petitions but must wait for their place in line before they can obtain conditional permanent residence.

10.  Deference

The Policy Manual confirms there are distinct eligibility requirements at the Form I-526 stage and the Form I-829 stage of the EB-5 immigration process and that USCIS will generally defer to prior favorable determinations at a later stage in the process.  However, it appears that USCIS may be headed into looking at the earlier Form I-526 documentation to ensure there is not a material change of facts, fraud, willful misrepresentation, or an objective mistake of fact or law evidencing ineligibility.

With the EB-5 regional center sunset date of December 9,2016 approaching, the EB-5 field is extremely active with prospective new legislation circulating.

At this time the two options of a short continuing resolution passing, which might extend the program without change until March 31, 2017, or passage of an entirely new bill are both possible.

This post is designed to provide practical and useful information on the subject matter covered.  However, it is provided with the understanding that no legal, tax, accounting, or other professional services are being rendered or provided.  If legal advice or other expert assistance is required, the services of a competent professional should be sought.

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Immigration Filing Fees to Increase

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Current fee
New Fee

Genealogy Index Search Request

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Author Bernard Wolfsdorf on Panel with Charles Oppenheim at IIUSA Summit October 12, 2016

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