A common statement about EB-5 investment is that it requires the creation of 10 full time jobs that are filled by U.S. citizens or by permanent residents in the country lawfully. However, a further look at both types of EB-5 filings, direct EB-5 petitions and petitions that are processed through regional centers, shows that a variety of other factors come into play when considering how the program operates.
Critics of the program have claimed that the number of jobs being created are subject to misrepresentation. The confusion that exists as to exactly how the process works makes it worthwhile to examine in greater detail the functioning of the EB-5 system in both its formats.
First, let’s take a look at the wording of the law itself. The provisions of INA § 203(b)(5)(A)(ii) state that the law’s jobs have to be created on behalf of:
“United States citizens or aliens lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States (other than the immigrant and the immigrant’s spouse, sons, or daughters).”
Full-time employment as defined by the law includes employment in positions requiring no less than 35 service hours each week at any time, irrespective of who is filling the position. Regulations for implementing the law define “qualifying employees” in greater detail, as follows:
“a United States citizen, a lawfully admitted 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. This definition does not include the [immigrant investor], the [immigrant investor’s] spouse, sons, or daughters, or any nonimmigrant alien.”
The statute creating the regional center filing system (Pub. L. No. 102-395, § 610) enables investors to set up “reasonable methodologies” to determine how many jobs have been created. This includes jobs estimated to be indirectly created via revenues derived from increased exports as a result of the program, to name one such method.
This allows filings by investors at regional centers to use these reasonable methodologies to estimate job creation instead of a direct job creation calculation. This method of determining job creation numbers resulting from an EB-5 investment has become the preferred option among investors using the regional center filing option.
In May of 2013, the EB-5 Adjudications Memo (PM-6012-0083) provided additional clarification by stating: “for purposes of demonstrating indirect job creation, petitioners must employ reasonable economic methodologies to establish by a preponderance of the evidence that the required infusion of capital or creation of direct jobs will result in a certain number of indirect jobs.”
This means that when calculating indirect job creation, there are two methods regional center investors can choose from:
· First, they can calculate job creation deriving from the investment of capital into an enterprise which creates jobs (for instance, a loan to open a restaurant which hires food service workers as a result);
· Second, they can determine the amount of jobs created using direct employment – via employment of qualified employees that leads to indirect job creation. Each of these options necessitates economic modeling.
The vast majority of regional center filings employ input-output economic modeling for the purpose of calculating job creation. There are a variety of models to choose from which have been determined to be economically valid by USCIS. These include RIMS II, IMPLAN, and REDYN. Inputs used for the models are typically expenditures of EB-5 capital, revenues created by the entity which is getting EB-5 capital, or increases in spending by visitors in a location as measured against a baseline preceding the commencement of the project. Model output consists of the full-time equivalent jobs from employment that is classified in one of the following categories: direct, indirect, and induced.
If you need legal representation to successfully obtain a visa through the EB-5 program, call Amity Law Group today at (626) 307-2800 for a free consultation.
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