Congress’s stated purpose in allowing EB-5 investment in USCIS-approved regional centers was to promote “economic growth,…improved regional productivity, job creation, and increased domestic capital investment.”[1] Regional centers have admirably risen to this objective, providing rich sources of capital investment for a variety of projects across the nation. Particularly in the current economic climate where capital investment comes at a hefty premium, regional centers have pooled foreign capital investments for a relatively low price. However, the December 2009 Neufeld Memorandum illustrates that USCIS has chosen this time to enforce a rule effectively requiring regional center investments to create jobs within an artificial two and a half year time period.

In recent months, Stakeholders have reported that USCIS has begun to deny petitions for investment in regional centers that fail to forecast requisite job creation within 2.5 years of the Form I-526 adjudication, and that at the I-829 stage they cannot document the same. Understanding the untenable nature of this requirement requires a brief discussion of EB-5 job creation requirements, as well as consideration of the economic realities of regional center investment.

The regulations break down job creation requirements into three basic categories, namely direct EB-5 investment, investment in troubled businesses and regional center investment. (Investments in troubled businesses are not relevant to the current discussion.) For a direct or individual EB-5 investment, an investor must show that her new commercial enterprise has either created ten new jobs for qualifying employees or will create such jobs within “the next two years.”[2] When the two-year window begins is not clear from the regulations, but the USCIS Adjudicator’s Field Manual states that the two-year period commences six months after the Form I-526 adjudication.[3]  This effectively creates a “2.5 Year Rule” for direct EB-5 investors, which appears to be a tenable position considering the language of the regulation.

On the other hand, for investments in regional centers, the regulation merely states that a “petition must be accompanied by evidence that the investment will create full-time positions for not fewer than ten persons either directly or indirectly through revenues generated from increased exports resulting from the Pilot Program.”[4] Notably, the regulation contains no time constraints on the projected job creation, nor does it reference the time limits for direct EB-5 investment laid out only two paragraphs preceding it. The fact that the later regulation clearly leaves out the temporal restrictions of the earlier regulation suggests that no time limit was intended. Nonetheless, the Adjudicator’s Field Manual mentions a two-year requirement for regional centers as well, a requirement that USCIS insists it will enforce.[5]

Given the nature of many markets and industries this guidance appears to be unworkable.  For example, in many cities such as New York obtaining permits and completing construction alone, can take several years.  Stakeholders need to continue to flag this issue and work with USCIS to find a reasonable resolution.  USCIS has promised since November of 2011 to issue new guidance that centralizes all of the various memorandums issued by the Agency.  The time frame for job creation must be addressed in this guidance and take into business realities. 

By Kate Kalmykov and Bryan Flannery