The Final Stretch:The I-829 Application
November 4, 2015
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By: Mitch Wexler
Now that the money has been invested in a new commercial enterprise and the investor has successfully obtained his or her conditional green card, is it safe to say that the investor is now home free? Not quite, but we’re almost there. Since the program’s inception in 1990, the number of applicants under the program has grown multiple-folds, as evidenced by USCIS statistics confirming that in the 2008 fiscal year, it received 1,258 I-526 applications and approved 642. In 2014, it received an astounding 10,928 I-526 applications and approved 5,115.
The increase in the number of I-526 approvals also means that an increased number of individuals will need to file the I-829, Petition to Remove Conditions, when it comes time to do so a few years down the line. Even though the time may not be ripe for some EB-5 applicants to remove their conditions yet, or even for those who are at the preliminary stages, careful planning and collaboration with subject-matter experts is critical from Day 1 to ensure that issues or roadblocks that may arise will not be fatal to one’s ability to successfully become an unconditional lawful permanent resident.
What must be shown at the I-829 stage?
Within ninety days prior to the two-year anniversary of the date on which the immigrant investor obtains conditional lawful permanent resident status, the immigrant investor will file the Form I-829 to remove his/her conditions. This form must be accompanied by evidence that (1) he or she has substantially maintained the capital investment over the two years of conditional residence and (2) evidence that the commercial enterprise can be expected to create, or create within a reasonable time, 10 full-time jobs for qualifying employees.
What is the timeline for job creation?
What exactly does the “within a reasonable time” requirement for job creation mean? The regulations require that the business plan submitted with the Form I-526 must establish the likelihood of job creation “within the next two years,” with USCIS policy providing that this two year period is deemed to commence six months after the adjudication of the Form I-526. Given the current state of affairs and oftentimes volatile nature of the economy, sometimes things don’t always go according to plan.
Luckily, USCIS recognized the need for flexibility to account for the realities and unpredictability of the business world. In its 2013 EB-5 Adjudications Policy Memorandum, USCIS clarified this “within a reasonable time” requirement and essentially gave more time for applicants to create jobs. Because the law contemplates two years as the baseline expected period in which job creation will take place, jobs that will be created within one year of the two-year anniversary of the individual’s two year conditional residency period may generally be considered within a reasonable period of time. Jobs projected to be created beyond this timeframe is generally considered to not be created within a reasonable time, unless extreme circumstances are presented. Most simply put, investors may now have more than two years to create jobs, which is truly refreshing for some whose business plans may have taken a slight detour.
What may even come as a more pleasant surprise is that USCIS recently released a draft policy memorandum in August of 2015, providing guidance on the job creation and sustainment requirements. While this memorandum is still in draft form and does not yet constitute formal agency policy, one of the notable points is that in making the determination as to whether the petitioner has created the requisite number of jobs, USCIS will not require that the jobs still be in existence at the time of the Form I-829 adjudication. Rather, the job creation requirement is met if the petitioner can show that the 10 full-time qualifying positions were considered to be permanent jobs when created. This is a hopeful indicator that USCIS is providing even more flexibility with the job creation requirements.
How does this apply in a direct investment context?
Under a direct investment case, evidence must be provided to show that the full-time positions must be created directly by the new commercial enterprise. In other words, the new commercial enterprise must itself be the employer. Acceptable forms of evidence to illustrate that the full-time positions have been created include: relevant tax records, Forms I-9, W-2’s, payroll records, or other similar documents to show that 10 qualifying employees have been hired as a result of the investment.
For example, if an EB-5 investor makes an investment into a logistics company, there must be at least 10 qualifying employees that are directly employed and on the logistics company’s payroll. This is where the concept of a job cushion is critical. A best practice is to ensure that the job projection numbers are above the bare minimum required. Therefore, in this specific example of the logistics company, it is advisable to examine from an early stage whether it is reasonable for this type of company in this specific industry to have more than 10 qualifying employees. That way, in the event that 1 or 2 employees are terminated immediately prior to the investor’s filing of the I-829 or the business has had to undergo a few cutbacks, there is still a sufficient number of jobs available for the EB-5 investor to fall back on.
What if I made my investment in a new commercial enterprise within a regional center?
For investments that are made in new commercial enterprises within a regional center, full-time positions can be created directly or indirectly. One of the benefits of these types of cases is that EB-5 investors may rely on indirect job creation that is demonstrated by reasonable economic methodologies. Depending on what methodology is used to calculate job creation, whether it be the cost of spending, revenue, or another type of economic methodology, it is important to remember that at the I-829 stage, there must be evidence of job creation. In other words, it must be documented that the total expenditures was as anticipated, or that the revenue generated from the project was aligned with initial predictions.
For example, for larger projects within regional centers that can support up to 100 investors, a best practice is to ensure that the number of jobs predicted to be created, directly and/or indirectly, should exceed the 1,000 minimal jobs required to support up to 100 investors. This is where due diligence on behalf of the EB-5 investor at the preliminary stage is critical in helping each investor make an informed investment decision.
The EB-5 Program is an attractive option for individuals who want to pursue permanent residency in the United States but it is complex and requires careful planning and technical expertise in each stage of the process. Ultimately, if done properly, it is a viable option for those who wish to become unconditional lawful permanent residents of the United States.
