USCIS Creates Controversy Over Tenant-Occupancy Economic Model

U.S. Citizenship and Immigration Services (USCIS) created a new controversy in the EB-5 immigrant investor world when it released a memorandum on February 17, 2012, concerning what it calls the “tenant-occupancy” economic methodology. According to USCIS, the tenant-occupancy methodology seeks credit for job creation by independent tenant businesses that lease space in buildings developed with EB-5 funding. According to a standard request for evidence (RFE) that many EB-5 regional center applicants received after issuance of the memo:

USCIS has concerns that the attribution of certain direct jobs to the EB-5 investment may not be based on reasonable economic methodologies, and therefore do not demonstrate in “verifiable detail” that the requisite jobs will be created. Rather, contemporary economic methodologies appear to indicate that such jobs would more appropriately be attributed to the tenants themselves and not to the regional center because the demand for labor precedes the decision about where to house that labor as a general economic principle. For example, if a federal agency determined that additional federal employees needed to be hired to fulfill the agency’s mission at a particular location, the federal agency would seek to hire the requisite number of employees and as part of that process, would also take steps to lease the appropriate physical premises to provide sufficient workspace for the new hires. In this instance, it is the federal agency that is creating the jobs through its decision to hire more employees, not the landlord who will ultimately lease the workspace to the federal agency.