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No more EB5 job creation through tenant-occupancy models: New USCIS policy reduces availability of immigrant investor funds to create jobs for Americans

On May 15, 2018, USCIS revised its Policy Manual, effective immediately. The agency will no longer count the jobs created for US workers through tenant occupancy of EB5 properties. The result of this change is to reduce the amount of immigrant investor funds available to create jobs for US workers.

“EB5” refers to the US employment-based fifth preference immigrant visa. EB5 is a program (sometimes called “traditional EB5”) Congress created in 1990 to stimulate the US economy through job creation for US workers using investment by foreign investors. In 1992, Congress created the Immigrant Investor Pilot Program (regional center EB5), a temporary program that Congress has repeatedly extended, most recently through September 30, 2018. (See our previous posting “EB5 immigrant investor visas are available again”).

Both types of EB5s generally require that at least ten full-time equivalent new jobs for US workers be created by each immigrant’s investment. A key advantage of a regional center EB5 is that “indirect” and “induced” jobs are included in the job creation count (in addition to “direct” jobs), whereas a traditional EB5 counts only direct jobs.

Direct jobs refer to US workers employed directly by the business that received the EB5 investment. Payroll tax records show direct jobs. Indirect and induced jobs refer to employees of other business as a result of EB5 investment. The calculation of indirect and induced jobs is based on an economic analysis using models accepted by USCIS.

The “tenant-occupancy” model counts job creation by independent tenant businesses that lease space in buildings developed with EB5 funding. In the past, USCIS accepted the tenant-occupancy model.

USCIS’ skeptical attitude toward the tenant-occupancy model can be traced back to early 2012 when it rolled out a Request for Evidence (RFE) template for tenant occupancy seeking evidence that the projected jobs attributable to prospective tenants would represent only newly created jobs, and not jobs that had merely been related from another location. In December of that year, USCIS issued “Operational Guidance for EB-5 Cases Involving Tenant-Occupancy,” which clarified that to claim tenant jobs, the economic analysis must project the number of newly created jobs that would not have been created but for the economic activity of the EB5 commercial enterprise. In making that projection, the claimant must use economically and statistically valid forecasting tools. USCIS made determinations on a case-by-case basis and would generally require an evaluation of the verifiable details provided and the overall reasonableness of the methodology as presented.

The 2012 memo suggested two ways to demonstrate a causal relationship between the EB5 investment and tenant jobs:

  1. “[M]ap a specific amount of direct, imputed, or subsidized investment to such new jobs” (i.e., “show an equity or direct financial connection between the EB5 capital investment and the employees of the prospective tenants”); and
  2. Utilize a “facilitation-based approach,” seeking to “demonstrate that the economic benefits provided by a specific space/project will remove a significant market-based constraint” and “result in a specified prospective number of tenant jobs that will locate in that space.”

Beginning in 2013, USCIS modified its tenant-occupancy model position. The agency’s RFE template identified the following three distinct areas of concern:

  1. Will there be tenants to occupy the space once construction is completed?
  2. Will the tenant jobs be “new jobs” and not “merely relocated”?
  3. Are the job creation estimates based on a reasonable and transparent methodology?

Over the years, practitioners in the EB5 field have reported that in tenant-occupancy cases, USCIS, when issuing RFEs or Notices of Intent to Deny, tended to require EB5 immigrants to either (i) remove tenant jobs from the job creation calculation; or (ii) submit additional evidence that shows by the preponderance of evidence (more likely than not) that the tenants will be there to occupy the commercial space when the project is finished, that the tenant jobs are not merely relocated from another commercial space within the same geographical area, and that the estimated number of tenant jobs is a reasonable estimate.

Given the lengthy adjudication time, the capital at stake and the uncertainty involved, many EB5 immigrants gave up claiming tenant jobs. Subsequent formulations of EB5 projects largely steered away carefully from the tenant-occupancy methodology to avoid potential issues.

Now, USCIS has formally rescinded its previous guidance and will no longer consider tenant-occupancy methodology. The agency will continue to give deference to Form I-526 and Form I-829 petitions directly related to previous approved projects, absent material change, fraud or misrepresentation, or legal deficiency of the prior determination.

USCIS is accepting comments on the new policy until May 29, 2018.

Full text of the agency’s Policy Alert can be found here. Dentons represents regional centers, EB5 investment programs and individual investors on both traditional and regional center EB5 programs. Please contact your Dentons lawyer for more information.

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No more EB5 job creation through tenant-occupancy models: New USCIS policy reduces availability of immigrant investor funds to create jobs for Americans

USCIS to require applicant’s signature for delivery of green card and EAD

Delivery of alien registration cards (popularly called green cards), employment authorization documents (EADs) and reentry permits will soon require the recipient to present valid photo identification at the time of delivery, with some exceptions.

The US Citizenship and Immigration Services (USCIS) announced on Friday, April 27, 2018, that the agency will soon start using the Signature Confirmation Restricted Delivery service from the US Postal Service. The stated goal is to increase “the security, integrity, and efficiency of document delivery” and provide “better tracking and accuracy of delivery information, improving service to applicants.” This new process applies to the delivery of secure documents, such as green cards, EAD cards and reentry permits. USCIS plans to first roll out the new process to secure documents that were returned as non-deliverable, and to subsequently expand use of signature confirmations to all deliveries of secure documents.

In general, applicants will have to present a valid ID to sign their documents upon delivery. USPS offers several alternatives, including designating another person to sign on the applicant’s behalf, authorizing the hotel or the apartment complex where the applicant resides to accept delivery, etc. Applicants can also sign up for Informed Delivery, an online service from USPS that provides delivery status notifications and allows for parcels to be held for in-person pickup at a USPS post office location.

This announcement comes less than a month after USCIS indicated that it would destroy such secure documents (green cards, EAD cards and travel booklets) after 60 days if returned as non-deliverable by USPS. These two recent announcements serve as a reminder that all foreign nationals are required to keep USCIS informed of their current address, and to report any change of address within 10 days of relocation by filing Form AR-11, either online or by post.

For more information, please contact your Dentons lawyer and for the full text of the agency’s press release can be found at the USCIS website.

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USCIS to require applicant’s signature for delivery of green card and EAD

Graduation: Time to request post-graduation work permission for foreign students

It’s April. Graduation is just around the corner. International students who are in F-1 status must consider their post-graduation plans. Now is the time to work with foreign student advisors and the USCIS for those seeking to work and gain practical training after graduation.

Optional Practical Training (OPT) is a period of temporary employment in the US that is directly related to an F-1 student’s major area of study. An F-1 student may be authorized 12 months of OPT after completing a degree from a US university. Eligible students must apply within 30 days of the foreign student advisor (known to USCIS as the “designated school official” or “DSO”) for OPT into the Student and Exchange Visitor Information System (SEVIS) record system.

The application time window is only open from 90 days before to 60 days after completing the degree. The latest possible start date for the OPT is 60 days after completing the degree. F-1 students must make sure to submit their applications, with application fee, within the time window. OPT will start after USCIS approves the Form I-765 and issues an employment authorization document (EAD).

An employer is not required when OPT is requested, but the student will need to find work soon or OPT will be lost and the student will need to leave the US if he or she is without work for more than 90 days after OPT is granted. F-1 students on OPT must report employment status to their DSOs, who will then update their SEVIS records. The reporting is important because a student with approved OPT but without current employer information in SEVIS is considered unemployed. This can have serious ramifications on the student’s future immigration opportunities. We are seeing an increasing number of requests from USCIS regarding OPT employment information when the student later applies for the H-1B work visa that is widely used by F-1 students to work in the US beyond OPT.

OPT can be extended by 24 months for F-1 students who graduate with a bachelor’s or higher degree in an eligible science, technology, engineering or mathematics (STEM) field from an SEVP-certified school accredited by an accrediting agency recognized by the US Department of Education. Eligible students must apply before the end of the OPT as indicated on the EAD.

During the STEM OPT period, the permitted unemployment period is 60 days. Unlike the initial OPT, where employer involvement is minimal, STEM OPT requires that the employer enroll in USCIS’ E-Verify employment eligibility verification program. Dentons lawyers guide employers on the E-Verify registration process and advise on compliance issues.

Also, the employer must agree to employ the student for a minimum of 20 hours per week and to provide the student with formal training and learning objectives. To fulfill this requirement, the student and the employer must complete and sign Form I-983, which must explain how the training opportunity has a direct relationship to the student’s qualifying STEM degree. Dentons lawyers assist employers in developing STEM OPT-compliant training programs.

During the STEM OPT extension period, students must report to their DSOs every six months and supply updated information regarding their employment. If an employer terminates a student’s employment or if the student leaves the job, the employer has to report in either situation to the relevant DSO within five business days. STEM OPT students must submit annual self-evaluations and report to their DSOs regarding the progress of their training. Both student and employer must report to the relevant DSO any material changes to the training plan. Reporting and record-keeping are important in case the student applies for H-1B later.

For more information about STEM OPT, please contact your Dentons lawyer and see the USDHS website for additional information.

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Graduation: Time to request post-graduation work permission for foreign students

Brexit latest: EU nationals who arrive during the post-Brexit transition period can stay

On February 28, the UK government announced that EU nationals who arrive in the UK after Brexit Day (scheduled for March 29, 2019), but before the end of the so-called “implementation” or “transition” period, will be able to stay permanently. This is a shift from the UK’s previous position that arrivals after Brexit Day would be entitled to remain on a temporary basis only and would become subject to immigration controls at the end of the transition period. While this announcement brings the UK closer to the EU’s stance on this matter, there are still some fundamental differences to be negotiated.

Overall this is positive news for employers, especially those who rely on EU talent, who will now have a longer period to build new talent pipelines to replace workers from the EU.

However, this concession may have come too late for some employers who have already lost valuable talent due to a general feeling of uncertainty among EU nationals and negativity around citizens’ rights. It remains to be seen whether this latest shift in negotiating position will be enough to convince EU nationals that the UK remains an attractive destination to work and build a career.

The UK’s original position was partly based on an assumption that EU nationals would rush to move to the UK before a given cut-off date. The dramatic fall in net migration from the EU since the referendum shows that there was never a risk of this happening.

EU nationals who arrive in the UK during the transition period will be subject to a registration system in line with what is already common practice in other EU member states. After accumulating five years’ residence in the UK an EU national will be able to apply for indefinite leave to remain (ILR), which will allow them to live in the UK permanently.

It should be noted that ILR is not the same as “settled status,” which EU nationals who arrive before Brexit Day will be able to apply for. The application process for ILR usually requires the applicant to satisfy minimum salary requirements, demonstrate English language ability and pass the “life in the UK” test. ILR is also more restrictive than settled status; for example, the holder of ILR will lose this status if they are absent from the UK for a period of two years, while for the holder of settled status, absence up to five years is permitted. It remains to be seen what the qualifying criteria for ILR in this situation will be, and whether a special procedure will be established that is more closely aligned to settled status.

Looking to the future, employers should also be encouraged by the following section of the announcement, which relates to a new immigration framework to be implemented post Brexit:

“… leaving the EU does not mean the end of migration between the EU and the UK. The new framework will therefore be designed to support the UK economy, enable businesses and key public sector workforces such as the National Health Service to access the skills they need, and underpin our trading relationships with partners in Europe and around the world.”

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Brexit latest: EU nationals who arrive during the post-Brexit transition period can stay

Brexodus continues

Net migration from the EU has plummeted from 165,000 in 2016 to 90,000 in 2017.

As expected, in the latest statistics released by the Office of National Statistics today, net migration from the EU has plummeted, with fewer EU nationals moving to the UK and more leaving:

2016 2017
EU nationals who immigrated to the UK 268,000 220,000
EU nationals who emigrated from the UK 103,000 130,000
Net migration +165,000 +90,000

This is of significant concern to industries and sectors that rely heavily on EU talent, with health and medical services, and farming and agriculture already dealing with considerable labour shortages.

The UK will officially leave the EU on March 29, 2019, and even though this is still over 12 months away, employers are already feeling the impact.

The other interesting statistic released today is the huge increase in EU nationals applying for British citizenship. In 2016 15,460 EU nationals applied for British citizenship—following the Brexit referendum this number more than doubled to 38,528 in 2017.

What we can take from both of these statistics is that the lack of certainty in citizens’ rights and future immigration policy following Brexit is forcing individuals to consider and protect their position in the UK. At one end of the spectrum we can see that EU nationals are securing their rights in the UK by naturalising as a British citizen, and at the other end EU nationals are reassessing whether the UK is the place to establish a life and career in the first place. Without certainty on citizens’ rights and future immigration policy we can expect these statistics to continue on the same trajectory.

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Brexodus continues

Home Affairs Committee issues report: Building consensus around immigration policy

The Home Affairs Committee consists of 11 Members of Parliament drawn from the three largest political parties (Conservative, Labour and the Scottish National). It has been chaired by Yvette Cooper MP (Labour) since 2016.

The Committee is currently managing a number of immigration-related inquiries. The most relevant to business immigration are:

  • Home Office’s capacity to deliver immigration services post-Brexit (launched October 5, 2017), which explores the capacity of the Home Office to meet the demands that Brexit will present, such as whether it can process applications from the 3 million EU nationals currently residing in the UK. Evidence has been gathered and we are currently awaiting the Committee’s report.
  • Building a consensus around immigration policy (launched October 17, 2017), which looks into the public perception of immigration and how the government might go about achieving greater consensus on immigration policy.

On January 15, 2017, the Committee published its report on the latter topic: “Immigration policy: basis for building consensus.” Click the UK Parliament website to read (i) the report summary, (ii) the report conclusions and recommendations and (iii) the full report.

To summarize the report’s main themes:

  • There is a lack of trust in official data, targets and decision-making on immigration policy.
  • Rules are complex and hard to understand, and there is concern that they are not being enforced.
  • Stronger coordination is needed between immigration policy and labor market policy.
  • Action is needed to address the impact of immigration, including appropriate investment in housing, public services and integration plans.

As the saying goes, perception is truth. While immigration rules are arguably easier to understand now than prior to the introduction of the points-based system, if public perception is the opposite then there is work still to be done.

If we look at the last 15 years there have been a number of events that have had an impact on the perception of immigration, such as the global financial crisis, the EU’s expansion into Eastern Europe and, most recently, the referendum on exiting the EU.

The report makes a number of compelling recommendations to address the public’s negative perception of immigration. With inevitable changes due to Brexit we have an opportunity to develop an immigration system that will be viewed positively by the wider population.

Some of the recommendations that are most relevant to business immigration and employers are:

  • Scrap the current net migration target and replace it with a new framework of targets and controls based on evidence.
  • Publish an annual migration report on migration flows, the economic contribution from migration and the measures taken by the government to manage impacts and pressures.
  • Link immigration policy for work purposes to strategy for improving investment in domestic skills and training with the target of reducing dependency on migrant labor.

Assess whether over reliance on migrant labor in some low-skilled jobs is due to poor pay, terms and conditions, and what restrictions and controls are needed to prevent undercutting and exploitation.

 

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Home Affairs Committee issues report: Building consensus around immigration policy

Trade deals and immigration

How will future trade deals impact UK immigration policy?

With Brexit negotiations between the UK and the European Union progressing, the UK is keen to start trade talks with the EU as soon as possible. While a trade deal with the EU is a priority, other countries, including India and Australia, have expressed that, in the fullness of time, they also would like to negotiate their own trade deals with the UK.

The UK’s Brexit Secretary, David Davis, has stated that he is looking for a “Canada Plus Plus Plus” trade deal with the EU, a reference to the recent deal between the EU and Canada. Labor mobility is a key element of that deal, making it easier for certain skilled professionals from Canada to work temporarily in the EU, and vice versa.

We can also learn from other trade deals:

  • The Trans-Pacific Partnership (TPP) trade deal currently being negotiated between 11 Pacific Rim countries (notably not including the US, which withdrew from the pact) is also looking to include an element of labor mobility. For example, it is proposed as part of this deal that it will be easier for Australian employers to recruit people from Canada, Chile, Japan, Malaysia, Mexico and Vietnam by exempting them from the usual requirement of advertising the role to Australians as part of the immigration process. In return, Australians will get reciprocal access to the labor markets of these six countries.
  • Likewise, one of the outcomes of the Australia-United States Free Trade Agreement (AUFTA), which came into effect in 2005, was the US E-3 visa, which is available only to Australians. The E-3 visa is similar to the H1-B visa, however more generous in that it has a separate quota of 10,500, is renewable indefinitely and has the additional benefit of the spouse of the main visa holder being able to work. In contrast, the H1-B visa has a quota of 65,000 (for applicants of all other nationalities), is capped at six years and the spouse of the main visa holder is not able to work. Singapore and Chile enjoy similar preferential immigration routes to the US as a result of their free trade deals.

One of the key arguments for voting to leave the EU was that the UK would be able to negotiate its own trade deals. So what are our likely trading partners saying?

  • Australia has spoken of the need for “greater access” to the UK for Australian business people.
  • India has already stated that the UK will need to relax immigration rules and make it easier for professionals and presumably students from India to come to the UK.
  • The EU is another matter entirely with many competing priorities and parties. The degree of labour mobility post Brexit will depend on whether we see a “soft Brexit” or a “hard Brexit”, which is still very much to be decided.

What is certain is that any trade deal the UK negotiates after Brexit will be about more than goods and services. Labor mobility will be a key element and it is therefore inevitable that any future trade deals the UK agrees will have an impact on immigration policy.

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Trade deals and immigration

Immigration briefing papers

 

 

 

 

 

 

 

This week saw the publication of two briefing papers—one by Bernard Ryan, Professor of Migration Law at the University of Leicester (for the Immigration Law Practitioners Association (ILPA); and the other by the Institute of Public Policy Research (IPPR)—that make significant contributions to the ongoing conversation on immigration policy, particularly in light of the inevitable changes due to Brexit.

The ILPA briefing paper, “Who will remain after Brexit? Ensuring protection for all persons resident under EU law,” identifies gaps concerning both EU citizens and third-country nationals who, potentially, will be negatively impacted by Brexit as they are not included in the government’s current thinking. These groups include, for example:

  • EU citizens and family members resident outside the UK at the point of Brexit who have a history of residence in the UK and may need or desire to resume residence in the UK in the future; and
  • EU nationals whose primary residence is outside of the UK but who, for either business/work or personal reasons, have a second place of residence in the UK. Post Brexit, these individuals may fail the required residency requirements to obtain residence or settled status, given their high absences from the UK, and instead be treated as visitors to the UK, a status that would obviously not permit them to work in the UK.

A summary of the paper, together with the full version, is available here.

The IPPR paper, “An immigration strategy for the UK: Six proposals to manage migration for economic success,” addresses the need to link immigration with the strategic priorities of the UK, particularly economic ones, in a post-Brexit world, and to understand the role that immigration plays in meeting these. The six proposals referred to in the title are:

This paper serves to remind us of the enormous challenge facing policymakers as they seek to ensure that all affected parties are captured in their thinking and that adequate protections are included in both the withdrawal agreement and future UK immigration legislation.

  1. Immigration strategy should clearly differentiate between types of immigration.
  2. Immigration strategy should actively address geographical imbalances in the economy.
  3. Immigration strategy should be designed to spur innovation.
  4. Immigration strategy should forge a new compact between employers and government, as a means to achieving a high-pay, high-productivity economy.
  5. Immigration strategy should support the UK’s trade balance.
  6. Immigration strategy should promote equality and integration.

In the lead-up to what will inevitably be an overhaul of the immigration system due to Brexit, the IPPR paper reminds us of the opportunity this brings, and the need to be active in the ongoing immigration debate.

The full report is available to download at the IPPR website. (The four-page summary is well worth a read.)

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Immigration briefing papers

Cooking up a storm: Tier 2 chefs

 
 
 
  
 
 
       
 
 
 
 
 

UK immigration rules make a distinction between chefs working in takeaway establishments and those working in restaurants.

If the job requires five or more years of relevant experience in a role of at least equivalent status to the one in which the visa applicant is proposing to start, and the job is neither a fast food outlet, standard fare outlet or takeaway outlet, then the position will fall under the chef roles on the Tier 2 Shortage Occupation List.

This has recently been the subject of High Court cases in which chefs argued that it’s arbitrary and unreasonable to exclude from the Shortage Occupation List those working at restaurants that provide high-quality cuisine just because the establishment also, incidentally, happens to offer takeaway service. The chefs argued that all skilled chef roles should be on the Shortage Occupation List, and that the focus should be on the nature of the establishment rather than the fact that it incidentally provides takeaway food.

The Secretary of State argued otherwise and the court agreed, finding that the exclusion of jobs in takeaway, fast food and standard fare outlets from the Shortage Occupation List was justified. The court based its decision on evidence provided by the government that takeaway establishments were generally not associated with the kind of cuisine requiring highly skilled chefs.

In view of the rise in the number of gig economy delivery drivers delivering takeaway orders from fine-dining establishments, this is surely an issue that will rumble on.

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Cooking up a storm: Tier 2 chefs

Mind the gap

Employment law issues seem to be rife with gaps at the moment. We have already reported on the gender pay gap, brought to the fore by the UK’s new reporting regulations for gender pay that took effect on April 6, 2017. However, it looks like we are now dealing with another gap: the skills gap that commentators believe will be one of the consequences of the UK exiting the EU. In fact, we are already seeing the effects, as potential migrant workers are reluctant to come to the UK at a time of such uncertainty. As a result, there is a significant shortage of workers to fill such typical blue collar jobs as drivers, electrician assistants and construction workers. Sectors such as healthcare, retail and construction are among those feeling the squeeze, as they are heavily reliant on EU migrant workers. A study by the Recruitment and Employment Confederation (REC) points out that EU migrants are over-represented in low-skilled jobs, filling 15 percent of them, compared with 7 percent by non-EU migrants and 78 per cent by Britons.

Furthermore, Brexit has led to curbed planned growth and investments for one in four small and medium-sized enterprises (SMEs), according to the latest “UK SME Confidence Index” from Vistage. And the shortage of workers has forced employers to raise starting salaries. According to the REC study, in August salaries increased at the fastest pace in nearly two years. This trend may not be sustainable over the long haul if it impacts too negatively on profitability and business sustainability.

In the meantime, automation and digitalization have been proposed as possible solutions to bridge the gap. However, whether replacement of people with machines is quite what voters intended back in June 2016 when the referendum took place is questionable at best.

 

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Mind the gap