The I-829 petition is the last and most important step in an investor’s long journey towards permanent resident status. An EB-5 immigrant investor’s permanent resident status is conditional; the green card is valid only for two years. To obtain unconditional permanent resident status, an investor must file an I-829 petition within the 90-day period immediately prior to expiration of the two-year conditional residence period. If the I-829 is approved, the investor is able to remain in the United States permanently. If denied, the investor is placed in removal proceedings.
In order for the conditions on an investor’s status to be removed, it must be demonstrated that: (1) the new commercial enterprise was established; (2) the investor has invested the required capital in the new commercial enterprise; (3) the investment has been “sustained” and not been returned to the investor; and (4) that jobs have been created or will be created within a reasonable time. Although difficulties can arise in providing sufficient evidence of the first three requirements, the increasing complexity of EB-5 investments have created new issues in establishing that the investor created or can be expected to create within a reasonable time ten full-time jobs for qualifying employees. Two such examples exist when: (1) a tenant of a resulting project makes improvements to the building; and (2) the new commercial enterprise lends money to a borrower, but new commercial enterprise is not in privity of contract with all of the borrower’s job creating entities.
For regional centers and project companies, jobs created through construction are typically the easiest to prove. This is the case for two reasons. First, projects usually meet or exceed the construction budget and the jobs are therefore deemed created. Second, routine construction auditing can show that the construction’s hard and soft costs have been spent can be easily documented and proven. However, issues can arise in documenting the creation of construction jobs when a tenant moves into a building and makes tenant improvements. For these construction jobs to be counted, it must be established that the investor’s money was spent by the tenant in making these improvements. A solution to this issue is to have the developer enter into an agreement, usually through the lease, obligating the tenant to provide information on where and how much money has been spent.
A second area of concern is where the new commercial enterprise lends money to a borrower, but the borrower is not the only job creating entity. In this situation, the new commercial enterprise may find itself in a difficult position. It will need to get the necessary job creation information from all of the job creating entities, but they are only in a contractual agreement with the borrower. As a solution to this problem, the new commercial enterprise should attempt to strengthen the loan agreement with the borrower to require the borrower to enter into separate side agreements with the other job creating entities. These separate side agreements between the borrower and the other job creating entities would require the job creating entities to produce the necessary information regarding the job creation from the loan.