Give the People What THEY Want: More on Tenant Occupancy           By Joseph P. Whalen (April 20, 2012 from Atlantis Resor...
Which ones work1, which ones don’t & what FACTS or FACTORS might          make an IFFY scenario into a VIABLE scenario? EX...
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Give the people what THEY want--more on Tenant Occupancy!

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Hello from the Bahamas at the AILA 2012 EB-5 Conference!

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Transcript of "Give the people what THEY want--more on Tenant Occupancy!"

  1. 1. Give the People What THEY Want: More on Tenant Occupancy By Joseph P. Whalen (April 20, 2012 from Atlantis Resort, Bahamas)The success or failure of a proposal for an EB-5 Regional Center project that seeksto include “tenant jobs” or more aptly someone else’s employees as the “directjobs” as a category of input in an econometric model, there must be a sufficientlyexplained nexus. “It could perhaps be argued that, when the owner of a corporation pays a million dollars for shares in his business and earmarks the money for equipment, inventory, and working capital, some of the working capital will in fact be spent on initial salaries and expenses. In the partnership scenario, the new commercial enterprise is the partnership, and it too will need to spend money on initial salaries and expenses. The Service distinguishes these two situations in that, in the former example, the employment-creating entity is spending the money. In the latter example, the employment creating entity never receives the money spent on the partnership’s expenses. Especially where indirect employment creation is being claimed, and the nexus between the money and the jobs is already tenuous, the Service has an interest in examining, to a degree, the manner in which funds are being applied. 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.7 The Service does not wish to encourage the creation of layer upon layer of “holding companies” or “parent companies,” with each business taking its cut and the ultimate employer seeing very little of the aliens’ money.” Izummi at p. 179Everyone has focused on the sentence that AAO emphasized in bold in theoriginal, I direct you to concentrate MUCH MORE on the immediately precedingsentence that I have highlighted with added emphasis! Once again that is: “Especially where indirect employment creation is being claimed, and the nexus between the money and the jobs is already tenuous, the Service has an interest in examining, to a degree, the manner in which funds are being applied.”To be EVEN CLEARER, please indelibly burn the following words into yourbrain: “examining, to a degree, the manner in which funds are being applied”That is what USCIS is doing. Are you meeting that challenge? Consider a fewscenarios in terms of demonstrating a palpable connectivity that is easilyperceptible to the mind, i.e., a sufficient EB-5 nexus.
  2. 2. Which ones work1, which ones don’t & what FACTS or FACTORS might make an IFFY scenario into a VIABLE scenario? EXPLAIN.RC uses EB-5 investors’ funds to buy a RC uses EB-5 investors’ funds to buy aparcel of land. parcel of land.RC (on behalf of its investors) leases out The RC finds a need 2 and builds to suitthat parcel of land. and thereby fills a void or niche.The tenant develops the parcel with a The RC develops the parcel with a newnew job-creating whatever (factory, job-creating whatever (factory, retailretail establishment, hospital). establishment, hospital). RC (on behalf of its investors) leases out that developed parcel of land.A couple of EB-5 investors bring a A domestic investment partner (non-parcel of land to the RC as their capital EB-5 investor) brings a parcel of land toinvestment. the RC as a capital contribution.RC uses domestic funds to develop that RC develops the facility for theparcel in order to fill a need. domestic partner with EB-5 funds.RC loans EB-5 funds to a domestic RC loans EB-5 funds to a domesticdeveloper to build an apartment developer to build an industrialcomplex. complex.RC uses EB-5 funds to a build an RC uses EB-5 funds to a build a mall.apartment complex. Which3 of the above might have hope and which just plain suck?1 For sake of argument, in each scenario, the land is always in the approved geographic area andthe project ultimately developed is usually within an approved industry (guess which one doesnot fit). The purpose of the exercise is to focus on the nexus question alone.2 RC might conduct a feasibility study; RC might find someone else’s feasibility study; orsomeone may approach the RC with a feasibility study.3 I didn’t ask which might be OK “as is” but are any?

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