Questions and Answers: EB-5 Economic Methodologies 2

On June 22, 2012, USCIS hosted a public engagement featuring two economists who work on the EB-5 Immigrant Investor program.  Following that engagement, some stakeholders sought clarification as to certain points raised by the economists.  USCIS is now pleased to provide clarification as to two of the primary questions raised.

SECOND: Acquiring Real Estate

Question: May a regional center use funds from EB-5 investors to acquire real estate?

Answer: In general, yes, subject to the requirement of Matter of Izummi, 22 I & N Dec. 169 (Comm’r 1998), that the “full amount of money must be made available to the business(es) most closely responsible for creating the employment upon which the petition is based.”  For example, a job-creating enterprise may propose to allocate some EB-5 funds to purchasing land and allocate other EB-5 funds to developing and operating a business on the purchased land, and the jobs created by the enterprise can be apportioned among all the EB-5 investors.  It is important to note, however, that real estate acquisition is not generally recognized as a job-creating activity in and of itself.  Thus, it is not generally reasonable to treat funds spent on real estate acquisition as inputs to an employment impact model.  Where some EB-5 funds will be used for real estate acquisition, such apportionment should be detailed in the business plan.

USCIS does recognize that certain soft costs directly related to real estate transactions may reasonably be counted as valid job-creating expenditures and inputs to regional input-output models.  In addition, soft costs related to the development and construction of EB-5-supported projects on designated land parcels may be considered on a case-by-case basis.  If the input-output model utilized in the economic impact analysis provides specific categories for the soft costs, the multiplier categories specific to these costs should be used instead of bundling such costs under general construction expenditures.

The first Q&A is available here.