EB-5 Timing Issues: Not a Fast Track

I am posting a new version of my timing post from last October, with edits inspired by Robert Divine’s article The Realities and Implications of Chinese EB-5 Investors’ Wait for Visa Numbers (January 4, 2016).

Mr. Divine’s article reminds us that we need to look at backlogs, not only at posted processing times and cut-off dates, when assessing how long the EB-5 process is likely take. And we’ve recently heard shocking news about backlogs: as of December 2015 there were about 20,000 I-526 petitions pending at USCIS and about 21,000 pending EB-5 visa applications, which means about 57,000 people are currently in line for an EB-5 visa. (See Mr. Divine’s article for the sources and calculations behind these numbers, which are estimates only but with good backup.) With the annual EB-5 visa cap set at about 10,000 visas, it will take that queue about six years to advance through the system. So if you are an EB-5 investor entering the queue today, it may take you six or seven years just to reach the window where you can get conditional permanent residence (based on the number of people in front of you and the annual visa allocation, regardless of how efficient USCIS/DOS may get with processing times). And that means it may be nine to eleven years before you can expect to have conditions removed and think about exiting the investment. At least, that’s a realistic scenario if you are a China-born EB-5 visa applicant filing today. If you were born somewhere else, you’ll have opportunity to cut in front of China-born applicants, who make up about 85% of the EB-5 visa queue, when the State Department imposes a “cut-off date” for China (which happens whenever it becomes apparent both that that the annual EB-5 visa quota will likely be reached for the year and that China-born applicants are likely to exceed the technically allotted 7% of those visas). And if you filed before 2015, you have the advantage of at least being in line ahead of the over 14,000-petition surge that happened last year.
Investors and businesses using EB-5 investment should look long and hard at the timing scenarios in the chart above, and consider the implications. That T3 scenario is dire. It’s hard on investors, who are generally interested in immigrating sooner rather than later, may have children who will age out in less than six years, and who don’t want to maximize the time their capital is tied up at negligible interest. It’s hard on businesses, who’ll have to try to make predictable plans on a decade horizon, will be limited in how they can close out successful projects, and face a long period of dealing with EB-5 record-keeping and reporting. And it’s reason to lobby our leaders to adjust the visa allocation, increase protection for derivative children, and/or reconsider China demand for EB-5. For thoughts on possible responses, see Ron Klasko’s post “Winning the Numbers Game” (January 14, 2016).

This a selfless post for me, considering that my livelihood depends on US businesses being interested in EB-5 investors, and vice versa. As a business plan writer, I benefit from the popular impression (propagated largely by ill-informed criticism from journalists and politicians, but also encouraged by some promoters) that EB-5 is an easy process and a fast track to residency. It doesn’t help me to point out that the process can realistically involve a decade commitment, at least for China-born investors, and significant timing risks. And yet, as Robert Divine concludes his article: “Securities issuers need to disclose these age-out and eligibility risks to prospective EB-5 investors, who otherwise may be lulled into complacency by the Visa Bulletin that appears to reflect a two-year waiting period. And USCIS and Congress need to take action to provide more protection of the reasonable expectations of today’s and yesterday’s investors and their children.”

Notes on Timing Considerations (These notes keyed to the “EB-5 Investor Timeline Estimate” chart above have not been changed from my original post in October)

  • Investment and Escrow: During Stage (A), the EB-5 investor’s full investment must be committed to the enterprise (in the enterprise account, escrowed, or otherwise contractually committed). If escrow is used, investor funds must be released to the enterprise at latest before (D) begins.
  • Sustaining Investment: The investment must be sustained from (B) through (D) and must be actively deployed in job-creating activities at least during (D). USCIS is drafting new policy to address how exactly funds need to be deployed during (D). The EB-5 investor may not recoup or draw down his investment before (E) and may be wisest to wait until (F) to exit.
  • Material Change: The deal needs to be planned and structured carefully during (A), as the petitioner will have limited opportunity to fix any deficiencies after filing I-526. The EB-5-funded enterprise must closely follow the I-526 business plan at least during (B) and (C), when material changes are not permissible. USCIS allows some flexibility to depart from the business plan during (D).
  • Job Creation: The investor can claim job creation that occurs from (B) to (D), and following his investment in (A). Under limited circumstances, he can also claim jobs created before the date of his investment or after the date that he filed I-829. In principle, he should be able to claim jobs that no longer exist when he files I-829 provided that the jobs were created and sustained for more than two years (but USCIS has not clearly confirmed this).
  • Planning Horizon: We are required to assume the T1 scenario in the Time column when giving USCIS a plan for using funds and creating jobs, but should assume the T2 or T3 scenarios when planning the investor’s exit strategy. The T1 estimate has investors reaching the I-829 stage 2.5 years after filing I-526 (imagining best-case processing times of only 6 months for (B) plus (C)). USCIS requires the I-526 business plan to show how job creation could occur during this theoretical 2.5-year window. The longer estimate looks at current processing time averages, retrogression, and backlogs, and sees that investors may not actually reach I-829 and remove conditions until 5 to 10 years after filing I-526. The difference between theory and reality means that petitioners can expect more time than officially planned to create jobs, but also a longer period of having to sustain their investments. EB-5 investment must be sustained throughout the conditional residence period (D), so premature exits must be avoided and exit strategies should consider realistic timing. Five years used to be a standard target for investor exit, but can be dangerously early for the average investor today.
  • References: USCIS petition processing times, DOS visa availability, EB-5 Policy Memo (on investment, escrow, material, change, job creation), Draft Policy for sustaining investment, EB-5 investor process. Ask me if you need references to the AAO decisions that discuss eligibility at I-526 filing, investment timing, job creation timing, and material change.

2015 Visa Statistics, RC Termination, SEC Action, New RCs

2015 EB-5 Visa Statistics

Update: This section has been deleted as I realize I made an error, reporting only visas issued at consulates instead of waiting for the data table that also includes visas issued through the adjustment of status process. I’ll post a new chart when the Department of State publishes Section V. of Report of the Visa Office 2015.

Other Items of Note

  • SEC Action on Attorneys: We’ve known for months that the SEC has been pursuing a crack-down on unlicensed persons acting as unregistered brokers, and specifically: immigration attorneys who take compensation for selling EB-5 investors on projects, despite lacking qualifications and licensure to give investment advice. Here is a copy of the SEC’s detailed complaint against one law office: SEC v. Hui Feng and Law Offices of Feng & Associates P.C. This 7/12/2015 article in Mondo Visione lists seven other individuals and firms who have also settled enforcement actions with the SEC, and links to copies of the Cease and Desist order for each. Honestly, I feared to see a lot more names on this list, but perhaps the SEC is starting with a warning shot and giving time for others to get their affairs in order. The detailed Feng complaint is good reading for anyone who receives or pays commissions for selling EB-5 investments, as the SEC goes into detail about what exactly was wrong and why it was wrong in the Feng case.
  • Regional Center Termination: One of the Regional Centers terminated in 2015 was brave enough to fight back, and now we can read about its case in the Administrative Appeals Office decision Matter of K-R-C, LLC, dated November 17, 2015. AAO dismissed the appeal, as nearly always happens, but it’s interesting to see what kind of evidence USCIS considered significant, the issues judged to be problematic, and the timeline of USCIS’s interactions with the Regional Center. A moral of this denial, as with so many other cases anatomized by the AAO, is the overwhelming importance of clear and clean paperwork. The case focuses on little things like how expenditures were coded on this or that document and how statements were worded on this or that filing and whether the proper reports were made at the proper time. This denial decision doesn’t go so far as trying to prove problems with the business itself, but terminates the RC based on issues apparent in the paperwork describing the business. Spend good money on your secretaries and bookkeepers and document preparers, because their humble work pushing papers and keeping numbers in order and documents in line could prove essential.
  • I-829 Approvals and Denials: I don’t expect anyone besides Mr. Whalen to click on this link, but FYI a very heavily redacted file titled I-829 RFEs, denials and approvals for NY and FL during 2009-2010 has appeared in the USCIS FOIA Reading Room in the Employment Based Petitions category. Connoisseurs may be interested in reviewing the I-829 RFE template used in 2009-2010 and seeing which lawyers were filing I-829 back then.
  • Legislative Update: Whatever I hear, I add to the first paragraph of my previous post.

New Regional Centers
Additions to the USCIS Regional Center List, 12/03/2015 to 12/08/2015

  • LCR Atlantic Gulf Regional Center (Florida, Georgia) www.lcrcapital.com
  • Southern California EB-5 Regional Center, LLC (California)

FY2015 I-526 and I-829 Statistics

USCIS has published Q4 2015 processing data for I-526 and I-829 petitions on its Immigration and Citizenship Data page.
I’m copying below charts that I made from the data. For those who prefer words, here are a few points that I notice.

  • I-526: FY2015 saw a huge number of I-526 filings – over 14,000 receipts (with 46% filed in the fourth quarter in a surge prior to possible program changes). Assuming that only about 10,000 EB-5 visas can be issued in a year, and an average of 2.2 visas per investor I-526, then this year’s receipts alone will take up over three years-worth of available EB-5 visas. FY2015 ended with over 17,000 petitions pending, which would take up nearly four years of available EB-5 visas. USCIS has shown impressive year-on-year improvements in the number of I-526 petitions processed, up 32% in 2014 and 42% in 2015. USCIS even briefly caught up to the number of receipts in Q3 2015, but then got snowed under again with the blizzard of filings in Q4 2015.
  • I-829: A similar volume of I-829 petitions were filed in 2014 and 2015, but with very different distributions over the year (an increasing number of receipts by quarter in 2014 and decreasing number by quarter in 2015). Overall FY2015 had 10% fewer receipts than the previous year, but I don’t know whether to call a puzzling trend or just note seasonality. The IPO office at USCIS, which took over I-829 processing at the end of 2014, got a slow start but picked up speed and managed to process 467 I-829 petitions in Q4 2015. In all IPO processed over a thousand I-829s in FY2015, but ended the year with a backlog of over four thousand petitions. We hope that IPO picks up the pace so that the I-829 backlog alone doesn’t take four years to process.

And because it’s topical, though I doubt the significance of these averages, here’s a chart with the latest update to IPO processing times.

2015 Q3 Petition Processing

Because we’d all like to see some upward-trending lines for a change today, here are charts showing EB-5 petition processing statistics for the first three quarters of FY2015. The third quarter stats are not official yet, but I calculated them from numbers verbally reported by IPO Chief Nicholas Colucci at last week’s stakeholder engagement. (UPDATE: now they are official, and posted here by USCIS  here.) The improvement in I-526 processing volume is particularly significant and heartening.
Q32015I526 Q32015I829

We also learned from Mr. Colucci that I-924 submissions have spiked, with 252 receipts since the beginning of the fiscal year and about 55 filed in July alone.

The Q&A portion of the teleconference provided some interesting insights into the huge variation we see in processing times, with some approvals coming through in weeks and others dragging on for years. Julia Harrison admitted that a bunch of 2012 and 2013 cases had gotten out of order for various reasons, particularly in connection with the moves from the California Service Center and then between facilities in Washington D.C., and that USCIS was now prioritizing older cases that had fallen through the cracks. USCIS confirmed that they do have separate workflows for RC and non-RC cases, and that the direct EB-5 workflow has gotten much slower. This contradicts a rumor I’ve heard promoted that direct cases can expect faster processing than RC cases, but USCIS stated that they’re working hard to bridge the gap between the RC and direct workflows.
The chart of IPO processing times is not so pretty (and also not very informative, considering that the standard deviation seems to be 12 months), but here it is (based on times posted here).

NYU article, 2015 Q2 Processing Stats, May 5 AAO Killer, New RCs

NYU Article
We now have a final version of the paper “A Roadmap to the Use of EB-5 Capital: An Alternative Financing Tool for Commercial Real Estate Projects” (May 22, 2015) by Professor Jeanne Calderon, Esq. and Guest Lecturer Gary Friedland, Esq. of the NYU Stern School of Business. For real estate developers considering EB-5, this paper is valuable for the database of examples alone, not to mention 70 pages that carefully explain how the program can work for real estate projects. The authors tell me that their project database with ongoing updates will be posted on the NYU Stern School of Business site.

2015 Q2 Processing Stats
USCIS has finally posted official EB-5 petition processing stats for Q2 2015. It’s wonderful to see that IPO is getting up to speed on I-829 processing while also increasing I-526 volumes. Meanwhile, note that volume of petition receipts has fallen each quarter this year.

2015 AAO Decisions on I-526 Cases
So far USCIS has posted four 2015 AAO decisions on appeals of denied I-526 petitions, including three sleepers and a bombshell. APR012015_01B7203 briefly remands the appeal to IPO in light of a court settlement, APR032015_01B7203 comes to an apparently reasonable conclusion that the business plan was not credible and waxes for several pages on “material misrepresentations” and their consequences, MAY082015_01B7203 dissects source of funds problems, and MAY052015_01B7203 pursues a blindly doctrinaire line on the requirement that “the petitioner must demonstrate eligibility for the visa petition at the time of filing.” In the MAY052015_01B7203 case, the offering memorandum filed with the original I-526 had a sentence that USCIS judged an impermissible redemption agreement. All investors signed and submitted an Agreement of Waiver to remove that sentence, and USCIS/the AAO didn’t dispute that the OM+waiver was now compliant but said that the petition still needed to be denied because the waiver post-dated I-526 filing and therefore the petitioner wasn’t technically eligible at the time of filing. This point is fair to the letter of the law, but one wonders, why decide to pound this technicality?  The petitioner did not include evidence of non-EB-5 capital commitments in the first petition filed in 2012, but duly provided the evidence when USCIS got around to requesting it in 2013. But USCIS/the AAO declined to credit the commitment letters provided in part because they post-dated the original I-526 filing. If this standard were applied fairly to all EB-5 cases – if no petitioner could file unless all other funding had been documented as raised before he filed – then multiple-EB-5 investor deals (most of the EB-5 program) would become next to impossible. Further, EB-5 would be limited to the projects that can and are willing to get all the conventional funding they need in the bank one to two years before they can hope to receive EB-5 investment (considering USCIS’s long I-526 processing times, and the common use of EB-5 escrows contingent upon I-526 approvals). In other words, EB-5 would be limited to projects that don’t need EB-5; that can take out their bank loans and go to work right away before investors even file I-526 and regardless of what happens with the I-526 petitions. The AAO decision hammers this point even further in the section that tries to apply the standard that “simply formulating an idea for future business activity, without taking any meaningful concrete action, is similarly insufficient for a petitioner to meet the at-risk requirement.” Specifically, the AAO/USCIS decided that the petitioner had not placed the required amount of capital at risk in part because the contractors who had been engaged to build the subject assisted living facility had not actually started work before the investor filed I-526. Naturally the petitioner needs to show more than a general idea for a future business, but this decision seems arbitrary and unreasonable in its application of the requirement. The business owner says “yes, here are the meaningful concrete actions we have taken” and the AAO lawyer says “no, I don’t think those qualify as a meaningful concrete action; you should’ve gone further” – what is this but an arbitrary judgment made by someone with no clear metric and no claim to qualification to assess the stages in establishing various types of business? And where is the acknowledgement of the one to two-year spanner that USCIS review puts into any development plan? And what would this mean, if applied fairly to all? Again, EB-5 would be limited to 1) projects that don’t actually need EB-5 investment, since they would be required to fully mature prior to/without it; and/or 2) investors who don’t really care about the EB-5 visa, such that they can develop projects well in advance of and independent of the fate of their EB-5 petitions. I think I’m upset about this case partly because it appears to involve the kind of business that many people would like the EB-5 program to support. EB-5 petitioners were providing about half of the capital needed to fund small assisted living facilities in Texas – a business that looks like it could have provided jobs in areas of genuine need and might not have gone forward without the EB-5 investment. Why press interpretations of the regulations that knock out this kind of investment, while further privileging deals that just use EB-5 to take out a few million of existing financing for some multimillion building project that was going ahead anyway? Someone is not thinking very carefully.

New Regional Centers
Additions to the USCIS Regional Center List, 5/21/2015 to 6/1/2015

  • U.S. Investment Regional Center, LLC (Arizona): usirceb5.com
  • Alexico Los Angeles Regional Center, LLC (California)
  • California Blue Sky Regional Center, LLC (California): Designation Letter
  • California Investment Regional Center, LLC (California): www.eb5-circ.com
  • Economic Development & Investment Group LLLP (California)
  • Gateway California Regional Center (California): www.gatewayeb5.com
  • Western Pacific Regional Center, LLC (California, Oregon, Washington)
  • USEGF Florida Regional Center (Florida)
  • Advantage America Hawaii Regional Center, LLC (Hawaii): www.aaeb5.com
  • GO USA EB-5 Regional Center, LLC (Illinois): www.gousaeb5.com
  • American Regional Center-Las Vegas, LLC (Nevada)
  • Century New York City Regional Center (New York): www.centurynyceb5.com
  • Land of Sky Regional Center, LLC (North Carolina, Tennessee): www.landofskyregionalcenter.com
  • Ohio Lakeside Regional Investment Center (Ohio): www.uslakesideeb5.com
  • The Lawrence Economic Development Corporation (Ohio): www.lawrencecountyohio.org
  • JMIR Texas Mega Metro Regional Center, LLC (Texas)
  • Washington Foreign Investment Management Group, LLC (Washington): www.eb5wfimg.com

Q1 2015 EB-5 processing statistics

Newly-released processing time information for the Investor Program Office shows slight increases over the previous quarter to average processing times for all EB-5 petitions and applications.
Data Source: USCIS Processing Time Information

The big story behind these numbers comes in the statistics on processing volume for the end of 2014 (USCIS’s Q1 2015), which shows a number of surprising trends: 1) the first fall I can remember in the number of I-526 petitions received; 2) a sizable increase in the number of I-526 petitions processed; 3) a near stand-still in I-829 adjudication. The California Service Center got 690 I-829 petitions out the door in the previous quarter, before the hand-off to IPO, and IPO has processed only 69 I-829s since taking over the task. I hope that future processing reports will show IPO getting up to speed with I-829 and able to handle the growing backlog of petitions (3,080 of them as of 12/31/2014).
Data Source: USCIS Immigration and Citizenship Data

1/12 IPO Processing Update, Terminated RCs

Today USCIS updated processing time information for the Immigrant Investor Program Office. Average I-526 processing times took a modest but welcome dip, while average I-829 and I-924 processing times continue to climb.
USCIS has still not restored the Regional Center program information page to its website, but it has added a new page titled Terminated Regional Centers. The page emphasizes USCIS power to revoke Regional Center designation and gives a walk of shame for Regional Centers that have lost designation, for reasons that may range from missing paperwork to misconduct. Blameless Regional Centers simply choosing to disband should seek to do so in a way that avoids being publicly listed together with the few RCs terminated for cause.

FY2014 EB-5 Visa Stats by Country

The US Department of State has updated its Report of the Visa Office 2014 with the section on EB-5 visas issued: Section V Immigrant Visas Issued and Adjustments of Status Subject to Numerical Limitations (by Foreign State of Chargeability): Fiscal Year 2014, Part 3 (Employment Fifth and Totals, Grand Totals). I’m copying below my summary table, which lists all countries associated in FY 2014 with 20+ EB-5 visas. People wondering about trends in demand for EB-5 visas should study the full file carefully. They may also compare with visa office reports from previous years.
PS: Keep in mind that visas are not the same as petitions. I-526 petitions are one per investor and filed with USCIS, which adjudicates them and publishes its own statistics. EB-5 visas are one per investor plus his/her spouse and minor children, and are issued by the State Department after a process that follows I-526 approval.

2014 I-526/I-829 Processing Stats, SEC Enforcement, New RCs (AL, CA, FL, IL, IN, NY, OH, OR, TX)

Processing Statistics
USCIS has updated its Immigration and Citizenship Data page with fourth quarter FY2014 processing statistics for Form I-526 and Form I-829.The numbers show dramatic increases in the number of petitions filed and the number processed. USCIS received twice as many I-829 petitions this year as last, and also processed twice as many. USCIS increased its I-526 processing volume as well, but not enough to keep up with receipts which exceeded 10,000 this year and pushed the volume of pending petitions over 12,000. That soaring line of I-526 receipts is sobering, considering that each represents an investor and only about 10,000 EB-5 visas are available annually for investors plus their spouses and dependents. (The State Department issued 9,228 EB-5 visas in FY2014, and China-born investors face a high probability of EB-5 quota retrogression in 2015.) On the bright side, 1,603 investors removed conditions this year, representing millions of dollars successfully invested and thousands of new jobs successfully verified. The image below shows summary charts from my Excel file of the data, based on files from the USCIS page linked above.

SEC Compliance
Chad Ellsworth of Fragomen, Del Rey, Bernsen & Loewy, LLP has an interesting article Emphasis on Compliance and SEC Interagency Cooperation a Year after the Appointment of Chief Nicholas Colucci to the USCIS Immigrant Investor Program (EB-5). The article summarizes the SEC’s recent EB-5-related activities and describes the content of broad subpoenas issued by the SEC to a number of Regional Centers.

Additions to the USCIS Regional Center List,11/4/2014 to 11/24/2014

  • Cornerstone Regional Center, Inc. (Alabama and Florida): www.cornerstoneregionalcenter.com
  • Golden Opportunity Regional Center (California)
  • Southern California Health and Hospitality Regional Center, LLC (California): www.eb5mg.com
  • American Advancement Capital Co. (California)
  • Success Dragon, LLC (California)
  • Clearwater Beach Resort Regional Center, LLC (Florida): www.eb5clearwaterbeach.com
  • Miami Regional Center, LLC (Florida)
  • Orlando Regional Center, LLC (Florida)
  • Crossroads Investment Partners, LLC (Illinois, Indiana, Ohio)
  • NYC Regional Center, Inc (New York)
  • American International Venture Fund – Oregon, LLC (Oregon)
  • PetroSam, LLC (Texas): petrosam.net

FAQ page, Retrogression, I-829, Processing Times, New RCs (CT, IL, IN, LA, NJ, NY, TX)

I have started a new Frequently Asked Questions page that compiles official and unofficial USCIS answers to questions that affect business plans. So far I’ve linked in answers from USCIS policy guidance and stakeholder meetings, and I’ll be adding references to AAO decisions that treat sticky business plan questions.

Speaking at the IIUSA conference on October 23, Charles Oppenheim predicted that the EB-5 visa category will likely retrogress in July 2015. This remains a moving target, however. Ron Klasko’s blog has published a timely article on Surviving and Thriving in Times of EB-5 Quota Backlogs.

You may thank us at the IIUSA editorial committee for another great edition of the Regional Center Business Journal (October 2014). Three feature articles provide advice and analysis for I-829 petitions: The Latest Analysis of What USCIS Looks For in EB-5 I-829 RFEs and Denials, It’s Never Too Soon to Begin Preparing for I-829 Petition Filings, and Removal of Conditions for EB-5 Investors: Practical Guidance in Preparing I-829 Petitions.

Processing Times
The USCIS website has a sharp new look as of last week, but no new EB-5 content except a IPO processing times update. I-829 times are back to normal, while average I-526 and I-924 processing times continue to inch up.
IPO 930

IIUSA Conference
Mark your calendars for IIUSA’s 2015 EB-5 Regional Economic Development Advocacy Conference on April 12-14, 2015 in Washington, DC.

Additions to the USCIS Regional Center List, 10/20/2014 to 11/04/2014

  • EB5 Fund, Inc. (Connecticut, New Jersey, and New York)
  • Great Lakes Regional Center, LLC (Illinois, Indiana, and Wisconsin): www.glrceb-5.com
  • Southern Opportunity Regional Center LLC (Louisiana and Texas)
  • Premier Regional Center, LLC (Texas): www.premierregionalcenter.com

Processing Times and Volumes 2014 Q3

And now for images summarizing recent information on EB-5 petition processing times (from the USCIS Processing Time Information page, updated 8/7 for IPO), I-526 and I-829 petition volume (from the USCIS Immigration and Citizenship Data page, updated 8/19), and I-924 processing volume (my unofficial tally). The numbers show that EB-5 petition receipts still exceed the number of petitions processed every quarter, with that gap increasing for I-526 and holding steady for I-829. Denial rates were unusually low last quarter. Overall processing volume improved significantly for I-829 and fell again for I-526. Perhaps fortunately, since the 7,688 I-526 petitions received already in FY2014 would put us well over the annual EB-5 visa allocation if adjudicated in a timely manner.  Average processing times have not shown dramatic change over the past few months (except for when USCIS took I-924a out of the I-924 average between March and April). Meanwhile, the roster of approved Regional Centers continues to expand rapidly.
I526Q3 I829Q3
TimesQ3 RCapprovalsQ3
Click on any image to view the full size version.
And note my other new posts from today on business plans and the newly-announced 9/10 stakeholder meeting.

FY2014 Q2 EB-5 Petition Data, Material Change AAO Decisions, New RCs (AR, CA, CT, DC, FL, ID, IL, IN, MD, MI, NJ, NV, NY, PA, TN, TX, VA, WV, UT, WI)

The USCIS Immigration and Citizenship Data page has been updated again with data for I-526 and I-829 Petitions processed in the second quarter of Fiscal Year 2014 (January to March). Once again, here are my little charts illustrating how the numbers compare with previous quarters.
1526q2 I829q2
I-526 processing volumes show modest increase overall, but below last quarter’s spike and still nowhere near Mr. Colucci’s goal of having the number of processed petitions at least exceed the number of petitions received each week. I-829s, on the other hand, flew off the shelf in Q2 – maybe because they’re all the California EB-5 team has to work on as of February? We’ll see how the processing story continues to unfold in coming quarters.

USCIS continues to post 2014 Administrative Appeals Office decisions on EB-5 cases. APR232014_01B7203 and MAY122014_01B7203 are interesting as case studies of the much-misunderstood material change issue. People tend to panic that “material change” means that one can’t at any time deviate from any point of a business plan submitted to USCIS. The May 30, 2013 EB-5 Policy Memo and Matter of Izummi don’t say that, however. USCIS policy focuses on the period prior to I-526 approval and the problem of petitioners who, having filed an I-526 Petition that doesn’t demonstrate eligibility for EB-5 visa benefits, respond to Requests for Evidence with a new set of facts, materially changing the proposal under which the original petition attempted to qualify. The USCIS position is that the petitioner must demonstrate eligibility for the visa petition at the time filing, the petitioner cannot secure a priority date based on future events, and USCIS cannot consider facts that only came into being subsequent to the filing of the petition. For example, the petitioner in APR232014_01B7203 invested through a loan model with indirect job creation, which a non-Regional Center investor may not do, and then, in response to an RFE, tried to change track and present USCIS with a new and different business structure and investment terms. The AAO agreed that: “Purchase and termination of ___ in response to the director’s request for evidence in order to meet the direct job creation requirements reflects a material deviation from the business structure claimed at the initial filing of the petition. The business structure change constitutes an effort to make an apparently deficient petition conform to users and regulatory requirements. Therefore, users must analyze the petition only on the basis of the original claims.” In the MAY122014_01B7203 case, the petitioner’s problem was that “at the time of filing, he had invested only $105,000 and had not, at that time, properly committed the balance of the required investment with a secured note or agreement.” The moral of the material change story is to get your ducks in a row before filing an I-526 Petition. Don’t just throw something together and file it, assuming that the worst case scenario is that USCIS will send Requests for Evidence giving you a chance to go back and forth supplying new information and fixing problems until the petition is finally approvable. The worst case scenario is that the content of that original I-526 would need such material changes to become approvable that USCIS will say (to paraphrase): Forget it. This filing was crap, and if you have new facts and a new story now then you can go back to square one and file a new petition for us to consider. (For the official statement, see pages 24 to 27 of the EB-5 Adjudications Policy memo.)

The USCIS Regional Center list continues to expand by leaps and bounds, reflecting hard work by the USCIS Investor Program Office and adding to a crowded field. We’re continuing to see many multi-state RCs and many RCs associated with operators who control multiple RCs.

Additions to the USCIS Regional Center List 5/6/2014 to 5/27/2014

What’s New (processing times, statistics, legislation, AAO deference decision, and new RCs in CA, FL, ME, NY, WA, WI)

Processing Times: As promised in the 2/26 EB-5 stakeholder meeting, a new section has been added to the USCIS Processing Time Information page. Now, instead of selecting “CSC – California Service Center” from the dropdown menu at the bottom of the page, select “IPO Processing Dates” button to see processing times for I-526 and I-829 (with I-924 promised to appear any day now). The news still isn’t good (indicating that as of January, IPO was working on I-526s filed April 2013 and I-829s filed May 2012), but at least it’s easy to check.

EB-5 Petition and Visa Statistics: This week USCIS updated its Immigration and Citizenship Data page with reports on I-526 and I-829 adjudications through Q4 2013. The stats show that USCIS made decisions on fewer EB-5 petitions overall in FY2013 than it did in FY2012, despite an increasing number of receipts. On the bright side, the second half of FY2013 had a significantly higher volume than the first half, particularly for I-526 adjudications, so we can hope for a continuing upward trend. On the dark side, pending petitions topped 7,000 for I-526 in 2013. For visa statistics, note that the State Department has reorganized its website, with the annual Report of the Visa Office from 2000 to 2013 now collected on one Visa Statistics page. To see the EB-5 visa numbers (itemized by Country of investor origin) for any year, open that year’s report and visit Section V. Part 3. For statistics related to the volume, use, and impacts of EB-5 investment, note that IIUSA has published a sneak peek of data highlights from the IIUSA-commissioned 2012 Economic Impacts Report, and will be featuring exclusive new program data in its forthcoming edition of the Regional Center Business Journal.

Legislation: The House is talking about EB-5 again, with a new bill proposed this month (The American Entrepreneurship and Investment Act of 2014) that would permanently authorize and make some modifications to the EB-5 program. See Laura Reiff’s post “House Member Introduces Bi-Partisan Immigration Legislation to Enhance and Augment the EB-5 Regional Center Program

New AAO Decision: USCIS has uploaded another 2013 AAO decision (DEC302013_01B7203) on a Regional Center case in which “the AAO remands the matter to the chief for a new decision that explains its compliance with the May 30, 2013 Policy Memorandum.” The AAO found that “the chief did not explain why the economic impact analyses filed in support of the instant petition were not afforded due deference.” The decision requires USCIS to support its determination that deference is not warranted by providing examples of underlying change to material facts between the impact analyses supporting the approved Regional Center application and the denied I-526 petition. (See also SEP232013_01B7203, another deference-related decision on a different Regional Center case.)

New Regional Centers 3/6/2014 to 3/18/2014

2014 Events, EB-5 Stats, New AAO Decisions, New RCs (CA, CO, FL, GU, MD)

EB-5 Events
It’s time to sign up for the best EB-5 event of the year: IIUSA 7th Annual EB-5 Regional Economic Development Advocacy Conference in Washington, D.C. May 7-9, 2014. I look forward to seeing you there! Also notice the IIUSA 2014 Webinar Series, with monthly webinars on topics including industry advocacy, securities laws, due diligence, retrogression, economic impact analysis, EB-5 in the capital stack, adjudication trends, TEAs, I-924a, and escrow and fund administration. The IIUSA webinars last year were substantive and timely, and I look forward to this new series.

EB-5 Statistics
If you’re interested in trends in receipts, approvals, and denials of EB-5 petitions, see: “IIUSA Obtains I-526/829/924 Adjudication Data for FY2013, Releases Comprehensive Dataset (1991-2013).” The FY2013 data shows a growth in receipts over 2012 of 8% for I-526 petitions, 71% for I-829 petitions, and 82% for I-924 applications. USCIS already doubled the number of approved Regional Centers in FY2013 by approving 220 applications, and – unless many of those 436 new I-924s received in 2013 were amendments – RCs will be facing a very crowded field moving forward. We’re on track to hit the annual EB-5 visa allocation cap of around 10,000 based on filings, with the only uncertainty being whether USCIS can manage to process enough I-526s in one year to make that happen (and whether processing times will speed up enough that Chinese investors would even notice being retrogressed). As with most things in EB-5, this issue is complicated. If you want to read more, see “Department of State Predicts EB-5 Visa Retrogression for China” on the EB-5 Insights Blog and “FAQs on EB-5 Quota Backlog” by Ron Klasko.

New AAO Decisions
Since last time I checked, USCIS has uploaded 18 new 2013 AAO decisions on I-525 cases. (May 24 to June 18, and September 23 to November 15). Besides RFEs, which aren’t public, AAO decisions are my best chance to see what’s going on behind the scenes with adjudications and current policy applications. For me, the most interesting decisions in this batch are SEP232013_01B7203, which addresses a Regional Center’s attempt to claim deference to prior approvals, refers extensively to the 5/30 policy memo, and considers what amendments mean; JUN052013_01B7203, which withdraws the director’s assessment of a business plan’s credibility; and MAY242013_01B7203, which discusses which business activities prior to I-526 filing will help the investment to qualify as “fully invested and placed at risk.” Nearly all AAO decisions on I-526 cases include a section on source of funds problems. People involved in that area may particularly want to read JUN182013_03B7203, which goes into detail on what went wrong with a typical China source of funds scenario involving real estate. Or for comedy, you can review MAY242013_02B7203, which treats a petition for investment in a business that will trade in healthcare products and/or operate a restaurant and/or import textiles and/or export fly traps and avocado oil.

New RCs
New entries to USCIS’s Regional Center list 12/30/2013 to 1/22/2014
Live in America-California Regional Center (California)
U.S. Gateway Regional Center, LLC (California)
InvestAmerica EB-5, LLC (Colorado)
My Florida Regional Center, LLC (Florida)
E Development Corporation dba EDC (Guam)
Birch MD BioPark Regional Center (Maryland) USCIS Approval Letter

New RCs (CA, NJ, OR, WA), Processing Statistics

The USCIS Regional Center list has added more new entries, for a total of 49 new centers approved in 2013. Congratulations to Powerdyne for receiving approval of an application filed in May 2012 — comparatively record speed.

Powerdyne Regional Center, LLC
Geographic Area: Riverside and San Bernardino Counties, California
Industry Categories: Boiler, Tank, and Shipping Container Manufacturing (NAICS 3324), Electric Power Generation, Transmission and Distribution (NAICS 2211)
Designation Letter

New Jersey
N U.S. Immigration Fund – NJ, LLC

Washington and Oregon
EB5 West LLC

(Note: See my Regional Center directory page for my most updated listings for all RCs. And please email me if you would like to provide additional information regarding your RC.)

As of this week, the approval letters still define the designation by saying: “USCIS approves the applicant’s request to focus, promote economic growth, and offer capital investment opportunities in the following geographic area and industry categories….” I wonder what approval letters will say going forward, now that we have a Policy Memo stating that amendment requests are not necessarily required if investment opportunities arise outside the approved geographic area and industry categories. What if anything defines/limits RC designations now? In his article Key Points from USCIS EB-5 Policy Memo published May 30, 2013, Robert Divine suggests that the new memo brings new value as well as risks to Regional Centers.

IIUSA has obtained statistics for I-526, I-829, and I-924 processing in Q1 and Q2 2013. To summarize:
I-526s: 3,285 received, 1,526 approved, 483 denied
I-829s: 427 received, 467 approved, 24 denied
I-924s (includes amendments and applications for initial designation): 325 received, 65 approved, 13 denied

Processing Backlog, Meeting Summary, Best Practices

The USCIS Processing Time information from the California Service Center shows that as of 4/3/2013, the last I-526 processed had a filing date of 3/16/2012. The Case Status section of the USCIS website illustrates the dire backlog situation for Form I-526.
Wow. 5,887 I-526 petitions pending. I’m so glad that I’m not an adjudicator. The trend line for I-829 looks more promising, though still reflecting a significant backlog.

Thank you to IIUSA for publicizing the processing backlog, as well as the pointing out the Executive Summary of 3/5/2013 CIS Ombudsman EB-5 Immigrant Investor Program Stakeholder Meeting. I also recommend IIUSA’s Comments to USCIS on the EB-5 Adjudications Memo, which give a good summary of the hot questions in EB-5.

Thank you also to Catherine Holmes, Victor Shum and Angelique Brunner for an excellent contribution to the effort to define best practices for Regional Centers. See the aricle Protecting the integrity of the EB-5 investment market through the adoption and use of due diligence best practices. So long as you’re on the Hotel Law blog, you may also want to check out their useful posts on SEC compliance, partnering with a Regional Center, and EB-5 investment in an existing business.

FY2012 EB-5 Petition and Visa Statistics

IIUSA has published the EB-5 processing statistics through Q42012 recently released by USCIS to AILA. The report shows that USCIS has been particularly busy with I-526 petitions, of which it received 6,041 and processed an impressive 4,634 in FY2012 (ending 9/30/2012). This year saw a record number of I-526 approvals and a record number of I-924 denials. The approval percentages for investor petitions fell slightly from FY2011, down to 79% for I-526 and 92% for I-829, while approvals for Regional Center applications and amendments tanked to an average 36%.

Source: USCIS

IIUSA has also published FY2012 EB-5 visa statistics released by the US Department of State. These numbers are significant because they show that EB-5 visas are, for the first time, threatening to exceed the annual allocation of about 10,000 visas. The State Department’s Visa Bulletin for December 2012 notes that “It appears likely that a cut-off date will need to be established for the China Employment Fifth preference category at some point during second half of fiscal year 2013. Such action would be delayed as long as possible, since while number use may be excessive over a 1 to 5 month period, it could average out to an acceptable level over a longer (e.g., 4 to 9 month) period. This would be the first time a cut-off date has been established in this category, which is why readers are being provided with the maximum amount of advance notice regarding the possibility.”

Source: IIUSA

IIUSA  has published an article on “THE IMPACT OF CHINESE QUOTA RETROGRESSION ON EB-5 INVESTORS AND EB-5 INVESTMENTS” by Tammy Fox-Isicoff and H. Ronald Klasko.

I also recommend Kate Kalmykov’s blog post on Understanding the Implications of Retrogression in the EB-5 Category and her follow-up post EB-5 Retrogression for China Unlikely in 2013, According to Department of State.

Also note that the State Department website now has an informative EB-5 page.

EB-5 Visa Stats by Country

The U.S. Department of State website has finally published the Report of the Visa Office 2011. The data is old news by now, but I still enjoy looking at the table that details EB-5 visas and status adjustments by country and type of investment. Now we know that in all the world in FY2011, only one Chinese investor and up to four Dutch took advantage of a Regional Center offering at the $1 million level. During the same period, there were over three thousand visas/adjustments in connection with Regional Center TEA/$500,000  investments. Stand-alone (non-Regional Center) EB-5 investments included a relatively large percentage at the $1 million level, with 230 visas associated with investments outside of TEAs as compared with 152 visas associated with TEA/$500,000 investments. Props to the lone Australian who is the only person in all of Oceania to have gotten an EB-5 visa in FY2011, and who didn’t even add spouse/children to the visa count. The total number of EB-5 visas issued nearly doubled between 2010 and 2011 and is projected to nearly double again in 2012 according to a State Department estimate. The annual limit for EB-5 is approximately 10,000 visas (7.1% of the total 140,000 employment-based immigrant visas.) Changing the visa allocation would require an Act of Congress.

The following charts summarize data from the FY2010 and FY2011 reports from the State Department Visa Office as well as the preliminary data for FY2012 reported to AILA in July 2012.

EB-5 visas issued and adjustments of status, by region
FY 2012 as of 06/2012 FY 2011 FY 2010







North America



South America










Grand Total

(Estimate for FY 2012: 6,200)



EB-5 visas issued and adjustments of status, by foreign state chargeability
Country FY 2011
China-mainland born


Korea, South


China-Taiwan born




Great Britain




















South Africa












All other countries




EB-5 Stats up to Q3 FY2012

USCIS has released EB-5 statistics through the third quarter of FY2012 in advance of  the 7/26 EB-5 Stakeholder Engagement teleconference. Please read the linked document for all the details. A few points of interest to me:

  • Approval rates for I-526 and I-829 have remained fairly high in FY2012 though slightly below the 2011 average (79% approval percentage for I-526 compared to 81% last year, and 94% for I-924 compared to 96% last year)
  • USCIS received 69% fewer I-829 in the first three quarters of 2012 than in the first three quarters of FY2011
  • USCIS received (and also processed) 38% more I-526 in Q1-3 2012 than it did in the first three quarters of FY2011
  • 60% of the I-924 Regional Center applications and amendments processed in Q1-Q3 2012 were denied
  • There are currently 209 approved Regional Centers, up from 174 in FY11, 114 in FY10, 72 in FY09, 25 in FY08, and 11 in FY07.

EB-5 Visa Stats as of 03/2012

The State Department Visa Office has still not released its report for 2011 (and about time, too, since its FY2011 ended last September), but IIUSA has obtained a report on EB-5 visa usage up to 03/2012. IIUSA thoughtfully provides charts that illustrate the increase in visa usage by year and track trends by country. I’m interested to note that Iran and Venezuela have moved into the top five countries by visa usage, and that Chinese nationals continue to dominate the list (accounting for nearly 70% of EB-5 visas issued in 2011 and 2012 to date).


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