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  • Article: Comments to the Draft Policy Memorandum of August 10, 2015. By Jeff Campion

    Comments to the Draft Policy Memorandum of August 10, 2015


    On August 10, 2015, USCIS issued a draft Policy Memorandum (the “Draft Memo”) to provide guidance on the requirements of job creation and sustaining the investment. Below, I comment on the items addressed.

    1. 1. Commencement of the Two Year Period for Job Creation at the I-526 Stage. USCIS affirmed its standard that the two (2) year period for jobs creation at the I-526 stage is deemed to commence six (6) months after adjudication. The six (6) month period is an arbitrary number that supposedly contemplates the time period required to either consular process or adjust status to that of permanent resident. Such time period is almost never six (6) months and is sure to be longer for most EB-5 investors because of visa cut-off dates for those born in Mainland China. While this seems to be a position that should be changed, the impact may not be seen given the other considerations in the Draft Memo.

    1. 2. Job Creation at the I-829 Phase. The Draft Memo contains some very beneficial language regarding job creation at the I-829 phase. Permanent jobs are those that last for two (2) years or more. However, because of processing times, visa cut-off dates, and just general practical realities of when an investor will receive his/her green card, there is a chance that permanent jobs could have been created for the requisite period and while at the I-829 phase they are no longer in existence. USCIS rectifies this issue. The Draft Memo states “USCIS will not require that the jobs still be in existence a the time of the Form I-829 adjudication in order to be credited to the petitioner. Rather, the job creation requirement is met if the petitioner can show that at least ten full-time jobs for qualifying employees were created by the new commercial enterprise as a result of his or her investment, and such jobs were considered to be permanent jobs when created.” The Draft Memo will maintain current USCIS policy as it relates to when jobs must be created – three (3) years after the investor’s admission as a conditional resident unless force majeure. These two policies combined make for a very favorable policy. The jobs can be “banked” in a sense once they are created and since at the time period of job creation remains the same there will actually be more time to create jobs given visa cut-off dates for many investors.

    1. 3. Sustaining the Investment. As part of the removal of conditions phase (Form I-829), the Draft Memo confirms that the capital must be at risk and sustained “in a single new commercial enterprise.” The Draft Memo intertwines the “sustaining the investment” requirement throughout different subsections. I list those and conclude with what the Draft Memo policy appears to be.

    In the regional center context, the Draft Memo acknowledges under the “New Commercial Enterprise” section that funds may be deployed into different job-creating entities and points out that “the funds must remain invested in the same new commercial enterprise throughout the conditional residence period.” The Draft Memo under the “At Risk” section provides an example of a job-creating entity that declares bankruptcy extinguishing a portion of the money owed to the new commercial enterprise and paying a portion of the money owed back. The Draft Memo proposes that the new commercial enterprise must “continue to deploy such repaid capital in an ‘at-risk’ activity for the remainder of the sustainment period.”

    Contrast the “must” with the “may” under the “Material Change” section where it proposes that the new commercial enterprise “may” redeploy repaid capital if (1) the investment went to the job-creating entity in the initial filing, (2) the requisite number of jobs were created in accordance with the business plan, and (3) the loan was repaid to the new commercial enterprise.

    It is not clear why in the “At-Risk” section of the Draft Memo the capital must be redeployed and in the “Material Change” section it may be deployed. In both scenarios if the jobs were created and the investor remains an owner in the new commercial enterprise (as required), then the requirement to redeploy (or lack thereof) should be the same – either the new commercial enterprise “may” or “must” redeploy the capital. But, there should not be a different standard.

    The Draft Memo addresses some of the most pressing issues in EB-5. It handles the job creation issue in a favorable manner. However, it leaves some doubt as to redeployment of capital and whether it must be redeployed to meet the “sustaining the investment” requirement for I-829 approval. Hopefully, with further comment and revision, the Draft Memo will bring clarity on this issue.

    Reprinted with permission.

    About The Author

    Jeff Campion

    Mr. Campion received his J.D. with Honors from the University of Florida College of Law in 1997. While in law school he also completed the coursework for a Masters in Arts Latin American Studies. He received his B.B.A. in International Finance and Marketing in 1993 from the University of Miami graduating Cum Laude with Departmental Honors and from the Honors Program. Mr. Campion has a unique perspective in the EB-5 industry in that he has been involved in all sides of the EB-5 process – forming regional centers for clients, ensuring projects are EB-5 compliant, reviewing projects for immigration risks for his investor clients, and overseeing regional centers as ceo of several regional centers. Mr. Campion began working with EB-5 projects as an attorney in 2008. He is currently serving as: Founder of Jeffrey E. Campion P.A and ceo of Pathways – a family of approved regional centers that operate in every major U.S. population area. He also is a co-founder of EB-5IC, is a member of AILA EB-5 Committee, was voted as “Top 25 EB-5 attorney” by “EB5 Investors,” and was an IIUSA Best Practices Committee Member and Public Policy Committee Member.

    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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