RC Designation and Terminations, SEC (Palm House), RC List Updates

Regional Center Terminations

USCIS has now posted notices for regional centers terminated through March 2018, and I’ve added them to my termination log. Now we know the reasons behind about two thirds of the 250 regional center terminations to date.

USCIS has framed its activity in terminating regional centers as an integrity measure, but in fact only 11% of terminations so far have been due to integrity problems. The majority of terminations have been because (1) the regional center has not secured EB-5 investment in the past three or more years, and/or (2) USCIS did not receive the regional center’s Form I-924A annual report and fee on time for the most recent year.

The letters themselves are interesting for discussion of a topic not fully explained by the regulations or policy: what does it mean to promote economic growth? What must a regional center do, exactly, to justify its continued existence? How can the definition of “failure to promote economic growth” be stretched to cover the various reasons USCIS might want to terminate a regional center in practice?

A few noteworthy letters from the most recent batch posted on the USCIS website:

  • Some might see Lansing Economic Development Corporation Regional Center as a model of regional center worth: the economic development agency of a distressed city using EB-5 as a tool in its economic development toolkit. This development agency reported that it promoted the EB-5 option in multiple trips to India, China, Italy, and throughout Europe, and offered EB-5 as an option to all development projects in Lansing. However, USCIS found that “While these activities are necessary for the continued operation of any regional center in the EB-5 Program, it does not show that the Regional Center has engaged in activities that promote economic growth as understood under the EB-5 Program. Specifically, these actions have not resulted in increased export sales, improved regional productivity, job creation, or increased domestic capital investment in the Regional Center’s designated geographic area.” Whatever its promotional activities, the regional center had not yet secured any EB-5 investment, and its potential projects did not include a shovel-ready project certain to use EB-5 investment. Therefore “USClS concludes that the Regional Center no longer serves the purpose of promoting economic growth.”
  • Live in America-Midwest Regional Center is an example of an as-yet inactive regional center that’s part of an active network. USCIS issued the RC a Notice of Intent to Terminate for three years of I-924A that did not report any EB-5 investment. The Regional Center countered by pointing to successful projects sponsored by other regional centers in the Live in America network, arguing that this demonstrates LIA’s proven ability to get projects done, and potential to promote economic growth in the regional center geography. The RC indicated that is exploring and actively seeking investment opportunities,  has met with EB-5 project candidates, and has entered into strategic partnerships. USCIS responded that the RC cannot rely on evidence of projects outside its approved geographic area, and that the future plans described are merely “future aspirational goals,” and do not count as “actually engaged in the promotion of economic growth.”  Having an operator that’s been demonstrably successful in promoting economic growth did not save Live in America-Midwest Regional Center from termination. Sorry, Minnesota! The Midwest has had any regional centers at all thanks in part to serial regional center operators who can afford to give low-profile geographies a chance because they also have feet in New York and California. But USCIS appears less willing to give the Midwest a chance. Attract EB-5 investors within three years (or at least, get term sheets and file an I-924 amendment) or thy regional center designation shall be terminated.
  • Charlotte Harbor Regional Center is a cautionary tale of what can happen when a regional center does not have copies of documents submitted by its investors to USCIS in I-526 petitions.
  • USCIS terminated Greater Houston Investment Center, LLC for inactivity, and declined what seems to me a sensible request: the option to reactivate designation if a project opportunity presents itself in the future.
  • America’s Regional Center was terminated in 2017 for lack of activity (no investors in 3 years), but was restored on July 5, 2018 to the list of approved regional centers. No appeal has been published, so I don’t know how the RC overcame the termination decision.
  • Powerdyne Regional Center‘s mistake was to hire a President who turned out to be a wanted man in China.
  • These regional centers presented USCIS with evidence of EB-5 projects in the pipeline, but USCIS argued that the projects were insufficiently advanced or showed insufficient commitment to EB-5 financing. Liberty South Regional Center, EB5 Memphis Regional Center, LLC, North Country EB-5 Regional Center, LLC, Guam Strategic Development Regional Center, Immigration Funds, LLC
  • New Orleans Mayors Office of Economic Development got a 36-page termination notice that fits six termination reasons under the general umbrella of failure to serve the purpose of promoting economic growth. These are: lack of activity (only one project since 2008, and no new job creation/investment since 2013), lack of progress in the construction of the regional center’s one project, doubt about the legitimacy and viability of the portfolio business model used, material misrepresentations that cast doubt on the regional center’s legitimacy (Form I-924A reports that were inconsistent with each other and evidence that USCIS determined independently), improper use of EB-5 capital that casts doubt in investor’s ability with EB-5 requirements, and diversion of EB-5 funds (outside of the regional center geography, and inconsistent with the job creation purpose).  Generally the termination comes as no surprise, since the New Orleans Mayor’s Office made the mistake of hiring operators for their regional center who proceeded to loot investor funds (or so alleged investors as early as 2012 and the Department of Justice in 2018). USCIS did not consider the Mayor’s suggestion that her office might continue to use EB-5 as a tool for job creation and growth in New Orleans under a different operator. The decision includes this paragraph that reads like policy, though it’s not written elsewhere,
    • The reasons why a regional center may no longer serve the purpose of promoting economic growth are varied and “extend beyond inactivity on the part of a regional center.” 75 FR 58962. For example, depending on the facts, a regional center that takes actions that undermine investors’ ability to comply with EB-5 statutory and regulatory requirements such that investors cannot obtain EB-5 classification through investment in the regional center may no longer serve the purpose of promoting economic growth and may subvert a purpose of Section 610(a)-(b) of the Appropriations Act, which provides for regional centers as a vehicle to concentrate pooled investment in defined economic zones by setting aside visas for aliens classified under INA 203(b)(5). Likewise, a regional center that fails to engage in proper monitoring and oversight of the capital investment activities and jobs created or maintained under the sponsorship of the regional center may no longer serve the purpose of promoting economic growth in compliance with the Program and its authorities.

Most of the termination letters have little discussion, but appear to reflect a simple bright line: you didn’t attract an EB-5 investor in three years and thus are not promoting economic growth and lose your designation. This line can look reasonable, but I also see it threatening the regional center program’s basic potential as an economic tool. Consider that according to a list of investor petition approvals by regional center (briefly published by USCIS in June 2017), only 328 out of around a thousand regional centers had had one or more I-526 adjudicated from 2014 to 2017. Of those 328 regional centers, the majority were located in New York, California, Florida, Washington D.C., Atlanta, Chicago, Seattle, or Texas. If USCIS keeps terminating every regional center that’s not immediately popular with investors and active projects, the program will soon be left with few regional centers (and thus little opportunity to use the program) outside New York, California, Florida, Washington D.C., Atlanta, Chicago, Seattle, and Texas. That certainly wouldn’t match Congressional intent for economic impact. And how does it even benefit USCIS? How much would it cost USCIS to keep the generally blameless Economic Development Corporation of Lansing, Michigan on the list of regional centers, even if that RC doesn’t have EB-5 investors yet? (On the other hand, this position paper on regional center terminations makes the case that inactive RCs burden the system and are incompatible with the RC program as defined.)

SEC Action

The SEC has announced its first EB-5 fraud action this year: Securities and Exchange Commission v. Palm House Hotel LLLP, et al., No. 9:18-civ-81038 (S.D. Fla. filed August 3, 2018).  The SEC is rather late to the party, following United States of America v. Robert V. Matthews and Leslie R. Evans (3/14/2018) and a civil suit filed by EB-5 investors in 2016. (Though not as late as USCIS, which has not terminated the regional center involved even as it hustled to terminate Lansing EDC.) The allegations are familiar: misappropriation of investor funds by people who arranged to have unfettered access to those funds. I note that the SEC’s list of defendants is much shorter than the list of defendants in the complaint by investors. The SEC identifies the regional center principals as responsible for misrepresentations, while investors also felt misled by the consultants and service providers involved.

Processing Times

USCIS updated the Processing Times page on August 1, with improvements for all EB-5 forms (-23 days for I-526, -5 days for I-829, and -63 days for I-924).

Washington Updates

As I hear anything new on the Yoder amendment with potential to remove per-country limits for EB-5, I add it to my previous post. Not that I have heard much. Since the explosion of conflicting comment on my post, perhaps others in EB-5 have learned better than to make statements on this topic. (Update: IIUSA has finally made a comment.) I guess that response has also been complicated by the difficulty of reading the amendment text; it appears that even Yoder and the House appropriations committee may not have initially understood what was actually in it. I hear that my reader comments are being noticed and appreciated, and I hope that those comments help inform discussions among the powers that be.

I keep an eye on www.reginfo.gov just in case EB-5 regulations should proceed after all to the review stage in time to be finalized in August 2018. But nothing there yet.

Regional Center List Changes

Additions to the USCIS Regional Center List, 7/16/2018 to 08/02/2018

  • Cypress Regional Center LLC (California)
  • Liberty Harbor Regional Center LLC (Connecticut, New Jersey, New York, Pennsylvania)
  • Lighthouse Regional Center, LLC (Texas)
  • My Life Atlanta Regional Center, LLC (Georgia)
  • Rise Investment Management, LLC (Connecticut, New Jersey, New York)
  • Tinian EB-5 Regional Center, LLC (Commonwealth of Northern Marianas Islands)

New Terminations

  • Northeast Ohio Regional Center (Ohio) Terminated 7/18/2018
  • Nevada Development Fund LLC (Nevada) Terminated 7/12/2018
  • Americas Green Card Regional Center (Maine, Massachusetts, New Hampshire) Terminated 7/12/2018
  • Chicagoland Foreign Investment Group (CFIG) Regional Center (Illinois, Indiana, Michigan, Minnesota, Wisconsin) Terminated 7/16/2018
  • EB5 United West Regional Center, LLC (California) Terminated 7/27/2018
  • Fairhaven Capital Advisors American Samoa Regional Center Corp. (American Samoa)
  • Cal Pacific RC LLC (California) Terminated 7/16/2018

Per-country limits in question?

I do not normally quote the Center for Immigration Studies, but for once I agree with David North. This is a concerning development:

An alarming bit of news – generally ignored by the press – is that the country of origin ceilings that try to diversify our immigration streams may be scrapped by congressional action.

The House Appropriations Committee, while marking up the Department of Homeland Security spending bill this week, inserted language that would eliminate the long-standing requirement that no more than 7 percent of any group of employment-based immigrants could come from a single nation. The same provision would ease the 7 percent rule on family migration as well, but not eliminate it. (See the amendment here, on pp. 23-28; it was introduced last year as a stand-alone bill, H.R. 392.)

This came about because the chair of the DHS Appropriations Subcommittee, Rep. Kevin Yoder, R-Kan.), managed to persuade his colleagues on the full committee that the current system is unfair to the Indian nationals whose visa applications, notably in the EB-2 category, are backlogged for several years. The provision would also speed up the delivery of EB-5 (immigrant investors) to Chinese applicants, while slowing down their arrival for people elsewhere in the world.

This amendment language may not get into a final bill, but it’s still important for the community to be educated about what the per-country limit means for EB-5. Based on data for EB-5 usage to date, here is what I calculate would happen to EB-5 visa availability if the per-country cap were removed as part of the FY2019 funding bill in September:

  • The October 2018 Visa Bulletin would have a 2014 cut-off date for the EB-5 category for all countries.
  • From 2019 to 2027, Department of State would be issuing EB-5 visas to people already in the backlog as of 2018, with no visas left for contemporary demand. Here are my estimates for when visas would be available to investors from various dates, based on data about I-526 filings from 2014 to 2018 and assumptions about denials/dropouts, family size, and visas already issued. Investors from all countries would be in the same line in order by priority date, without regard to nationality.
    • 2014 priority date: visa issued in 2019 (5-year wait)
    • 2015 priority date: visa issued in 2020/2021 (6-year wait)
    • 2016 priority date: visa issued in 2022/2023 (7-year wait)
    • 2017 priority date: visa issued in 2024/2025 (8-year wait)
    • 2018 priority date: visa issued in 2026/2027  (9-year wait)
    • 2019 priority date: visa issued in 2027/2028
  • China-born applicants would dominate the front of the line for EB-5 visas, having the oldest priority dates. They would get 99% of EB-5 visas in 2019, and gradually reduce to about 80% of visas by 2027.

Pros and Cons

  • Removing the per-country limit for EB-5 would give past China-born investors a predictable visa wait of 5 to 10 years, mostly just competing with each other for visas. That would be better than the current hard-to-predict wait of 5 years to life that depends on the wild card of future incoming non-China demand. Removing the per-country limit would give the China-born investor filing today an estimated 9+ year wait rather than the currently-estimated 15+ year wait. This is a benefit for China, but not a solution even for China. 9 years is preferable to 15 years, but this difference becomes irrelevant if both times are unacceptably long.
  • Removing the per-country limit for EB-5 would be a pure disaster for non-China investors. All non-Chinese with pending I-526 or pending visa applications would find themselves in line behind the tens of thousands of Chinese with older priority dates, with many-year visa waits for everyone. Today’s China-born investor suffers, but at least it’s from policy that was in place when he invested, and an excess China demand situation knowable at that time. The non-China investor already in the system would suffer retroactively from new policy that didn’t exist when he invested.
  • Lacking the per-country limit to protect new investment from a variety of countries, the EB-5 program would be essentially dead as regards new investment for the next ten years. Interest might revive by 2030, when the backlog that piled up in 2011-2018 is out of the system, leaving visas available for new applicants. (Or earlier, if many people in the system are shocked at finding their visa timeline unexpectedly expanded by 5-10 years, and try to exit.)

There’s still room for lobbying on this issue, so judge where your interest lies and speak with your contacts.

Additional Reading:

Visa Numbers (FY2018 Q3 and conference update)

The 2018 eb5 investors Magazine EB-5 Convention in Los Angeles provided a platform to discuss a challenged industry. The dominant theme was EB-5 visa numbers, and the consequences of excess demand for a limited quota.  Panels and conversations discussed alternatives to China in view of untenable visa wait times, alternatives to EB-5 for investors and project companies and service providers, alternatives to the visa quota as currently interpreted, and options for deploying past investor funds during the visa wait. I learned that everyone is confused about redeployment and material change, with smart lawyers giving conflicting advice, and that many people are confused about visa availability.   I copy below the most important piece of solid information I learned at the conference – the latest DOS statistics on EB-5 visas issued – followed by my comments and predictions.

Information reported by Bernard Wolfsdorf at the EB-5 Waiting Line panel at the eb5 investors Magazine EB-5 Convention on July 24, 2018, based on information provided by Charlie Oppenheim at the Department of State Visa Controls Office [recording here]

As of the third quarter of FY2018 (June 2018), Department of State had issued the following number of visas:

  • Worldwide: 7,900
  • China: 4,049
  • Vietnam: 692
  • South Korea: 423
  • India: 375
  • Taiwan: 337

DOS China Predictions:

  • On October 2018, the cut-off date for China will move to August 8, 2014 (or maybe August 15).
  • China has received a large number of visas annually because it has been able to take visas unused by other countries. Increased marketing in the rest of the world means that the number of visas available for China is dropping. Charlie will allocate 4,675 visas to China in FY2018—much fewer than in previous years. (China received 7,567 visas in FY2017.) Charlie predicts that China will have 3,500 visas available in FY2019, and 3,000 in FY2020.

DOS Vietnam Predictions:

  • On October 1, 2018, the Vietnam cut-off date will move up to January 2016.
  • In March 2019, the Vietnam cut-off date is expected to retrogress.
  • [Suzanne’s note: In other words, the October Visa Bulletin date moves up so that Vietnamese can get the about 700 new visas available to them in the new fiscal year. These having been issued, the March Visa Bulletin will put Vietnam back to the same cut-off date as China — i.e. in the same line as China for any leftover visas.]

Notes on visa availability:

The China backlog has the oldest priority dates in the system and thus first claim on all visas left over after the up-to-700 per country allocation. The total allocation to China depends on number of leftover visas. Countries behind China are effectively limited to about 700 visas annually. Data on visas issued for FY2018 to date indicate that Vietnam has already reached its limit for the year, while South Korea, India, and Taiwan are closer than ever before to the 700 limit. (As a reminder, total visas issued to these countries in FY2017: Vietnam 471; South Korea 195; India 174; Taiwan 188.)  DOS predicts future visa wait times for investors from these countries. (No FY2018 Q3 numbers were provided for Brazil — don’t know if that means fewer FY2018 visa applications than expected from Brazil.)

Remember that investors from one country don’t all have the same wait time.  Individual wait times vary by priority date (date of I-526 receipt). Vietnamese investors who filed I-526 in January 2016 will likely have an almost 3-year wait for a conditional green card (per Charlie’s Visa Bulletin cut-off date prediction above), while Vietnamese who filed I-526 in April 2018 will likely have a 6-year wait (per Charlie’s prediction at the IIUSA conference in April). Each of those estimates is specific to a point in time – that is, to Vietnamese investors who filed on a certain date — not for all Vietnamese.  If the number of I-526 filings from Vietnam increased in a linear manner from 2015 to the present, then the visa wait time for Vietnamese investors over that time period is also linear. As a Vietnamese investor, I’d estimate my visa wait by plotting a line through the two wait-time estimates provided by Charlie, and see where my priority date would fall on that line. (i.e. I’d estimate about a 2-year wait if I filed in 2015 and a 4-5 year wait if I filed in 2017, since he estimated 3 years for early 2016 filers and 6 years for early 2018 filers.) The demand line often isn’t linear (e.g. I expect Vietnam I-526 filings to drop in 2019, thus changing the calculation for 2019 Vietnamese investors), but still plot-able given data.

In EB-5 some people have a false sense of panic (i.e. past Chinese investors thinking Charlie estimated a 15-year visa wait for all Chinese as of April 2018, when he just estimated a 15-year wait for new Chinese investors filing I-526 in April 2018), while others have a false sense of security (i.e. current Vietnamese investors thinking an October 2018 Visa Bulletin indicating 3-year wait applies to today’s new investors, when in fact it’s just specific to people who filed by January 2016 and at the visa application stage in October 2018.) The misunderstandings both result from forgetting to think of the visa wait as a waiting line problem, with the wait for any one investor as a function of that investor’s place in a priority-date-ordered queue (subject to country limits, but not in undifferentiated pools by country). Generally, the longer ago you filed I-526, the shorter your total wait for an EB-5 visa. Chinese investors who filed I-525 four years ago are receiving visas today (four year wait), while Chinese investors filing I-526 today will have longer to wait.  The EB-5 waiting line problem extremely complex but not impossible, considering the process we know and the fact that we have at least some data. (FYI my spreadsheet of backlog-related data is currently under revision as I try to think out a simpler presentation with clearer country-specific analysis. And I really wish we could get updated per-country I-526 data!)

Misconceptions about visa availability were evident in several promoters who spoke at the conference about demand  potential. The EB-5 quota and per-country limit mean that each non-China country can get only about 700 visas i.e. accommodate only about 230 investors annually.   (10,000 visa quota * 7% per country + 0 visas leftover after the China backlog) * 1 investor/3 visas = about 230 investors per country, sustainably. Meanwhile, thousands of investor I-526 * 3 visas/1 investor * 1 year/700 visas = many years visa wait for any country that falls for the siren song of big projects. India especially, take note.  CanAm alone boasts of securing 200 Indian investors this year – almost a year’s worth of visas to one regional center operator – and I hear about multiple other projects each seeking hundreds of Indians. Investors should be vigilant, and EB-5 promoters consider their long-term interests and watch the activity of other promoters.  No market can replace China; raising too much in any one market will simply spoil it. That is, unless the EB-5 visa quota changes.

Will the EB-5 visa quota change, and who will advocate for change? I was reminded at the conference that the industry has conflicting interests. On the one hand, we cannot keep raising money or creating jobs at historical levels without visa relief. Long wait times would ruin the market going forward. Either EB-5 visa numbers increase or EB-5 economic contributions fall.  On the other hand, long visa waits result in the golden gift of billions of dollars in past investment free to be redeployed for 10+ years longer than expected with little investor input and no new job creation requirement. Some companies with large amounts of EB-5 money already in pocket may not be motivated to press for change. But a majority of industry players do want change, as do investors of course.  A new lawsuit pressing the 10,000 EB-5 visas-for-investors argument has maximized its slim chance of success by being entrusted to rockstar Ira Kurzban. (The 10,000 EB-5 quota has been historically interpreted to include family members, thus making it effectively a 3,300-investor quota.) If Kurzban can’t argue this, no one can. People at the conference seemed to think the lawsuit is, at least, a significant and productive gesture. (Update: here is the complaint.) A new organization has been formed just to advocate for backlog problems: EB-5 Visa Relief Group. We shall see where all this leads. This year the draft EB-5 reform legislation did not touch EB-5 backlog problems, while larger immigration bills offered to increase visa numbers for every EB category except EB-5. I welcome more pressure and lobbying on behalf of EB-5 visa relief.

Based what I heard from panels and in conversation at the conference, I would be willing to bet money on the following predictions:

  • The regional center program will get another short-term reauthorization with no changes by the next sunset date of September 30, 2018, as part of the funding bill for FY2019.
  • Another EB-5 bill with longer-term regional center authorization and some EB-5 reforms will be introduced following the midterm elections. The bill will not go anywhere, unless finalized regulations motivate the EB-5 factions to consult with each other, accept painful compromises, and figure out a minimum broadly-beneficial platform that Washington can count on being thanked for enacting. In other words, the bill will not go anywhere.
  • The EB-5 modernization regulations will be finalized in 2018, probably right when I wanted to focus on pumpkin pie and Christmas shopping. The investment amount increases and priority date protections may be modified from the original draft regulations. Litigation around the rollout may come out of New York City.
  • The total number of I-526 filings will fall gradually through 2018, and drop significantly in 2019 as a result in of the regulations and new Visa Bulletin cut-off dates. Because I predict a fall in demand overall, my projections for China visa numbers are more optimistic than Charlie’s. I think that rest-of-the-world demand will fall after 2019, leaving more visas left for China.
  • When new Visa Bulletin cut-off dates are imposed in 2019, many people will express surprise that the cut-off dates and associated visa wait effect people who invested back in 2017 and 2018. If the visa cut-off dates come earlier than expected as a result of more/faster-than-expected I-526 approvals, people will be surprised by that too.
  • With increasing pressures and alternatives, many regional centers, real estate companies, and service providers (and some past investors) will look to exit EB-5 in 2019.
  • Litigators will keep busy, cashing in on questionable interpretations by USCIS and investor frustration with wait times, issuer redeployment decisions, and project progress.
  • I-526 processing times will improve significantly with the fall in I-526 receipts. EB-5 will become a fast track again for investors from low demand countries, escrows contingent on I-526 approval will become feasible again, and new types of projects will find opportunity in EB-5.

FY2018 Q2 EB-5 Form Processing Statistics

USCIS has updated its Immigration and Citizenship Data page with statistics on forms received, processed and pending in the second quarter of FY2018 (January to March 2018). Form I-526 and I-829 are in the Employment Based subsection, and Form I-924 is in the Forms subsection in the “All Forms Report.”

My charts below summarize FY2018 Q2 data compared with previous quarters, and highlight trends. A few notes:

  • IPO processed a few more forms in FY18 Q2 than ever before. It’s nice to see processing trend in a positive direction, and a new record set. Once could wish for more dramatic improvement. The chart of quarterly processing volume over the past three years shows a very gradual upward trend. I-526 and I-924 volume (approvals+denials) improved significantly in Q2, but net improvement remained low when considering reduced I-829 volume.
  • Form receipts at IPO reflect a gradual downward trend, driven by falling I-526 receipts. However I-526 receipts remain unsustainably high. The 10,000 annual quota of EB-5 visas means that the program can accommodate about 830 I-526 per quarter on average (assuming about 3 visas per investor). FY18 Q2’s unusually low 1,607 I-526 receipts is still almost twice the sustainable average: one quarter’s filings sufficient to claim half a year of visas.
  • Form I-924 receipts and processing were both significantly elevated in FY18 Q2. No wonder I-924 processing times look better than expected. I-924 denial rates remain high.
  • I-829 receipts grew in FY18 Q2, even as processing volume fell again, with fewer I-829 processed in Q2 than in any of the previous three quarters.
  • If we could predict processing times by dividing number of pending forms in Q2 by number forms processed in Q2, then I-526 would take 17 months, I-829 36 months, and I-924 16 months. This prediction differs from the month ranges currently in the USCIS Processing Times Report: 20-26 months for I-526, 30.5-39.5 months for I-829, 19.5-25.5 months for I-924. I tried several equations with the pending and volume numbers, and (unlike last quarter) didn’t find one that neatly replicates the USCIS processing time calculation.
  • In case I-829 petitioners didn’t have enough to worry about already, the I-829 data doesn’t look right. The FY18 Q2 report reviews Q1 data, as follows: 694 receipts, 6,251 pending. But the Q1 report published in May had quite different numbers for Q1: 1,046 receipts, 6,673 pending. To where did those 352 receipts and 422 pending petitions from Q1 disappear? Or maybe they didn’t disappear, but joined other petitions of unknown origin, since the number of petitions reported pending at the end of Q2 (7,447), is higher by almost a thousand than what one would expect from taking Q1 pending petitions plus Q2 receipts minus Q2 approvals and denials. Hope USCIS can soon modernize beyond paper and counting sticks for keeping EB-5 records. Or am I missing something?

Updates (I-829, Ombudsman, debt arrangements, PM, conference, Vermont, RC list changes)

Processing Times
The USCIS page to Check Processing Times was updated last week with minor tweaks to the I-526 and I-924 time calculations, and bad news for I-829. Someone can inquire today about an I-829 petition “outside normal” processing times if he or she filed the I-829 petition 1,175 or more days ago. Statute mandates the service to make a decision on the I-829 within 90 days of the filing date or interview, but it’s currently taking three to four years to make a decision. IPO faces pressure from increased volume of filings and an increasingly tough process. Conditional green cards maxed out the limit starting in 2014/2015, and that surge began maturing to the conditions removal stage in 2016/2017. Even as I-829 filings increase in number, IPO has implemented several time-consuming integrity measures: in-person interviews of all I-829 petitioners, and site visits to 100% of job-creating entities in I-829 petitions. IPO attempted to address processing times problems in 2017 by creating a new team of economists and adjudicators specifically to handle I-829, but this team obviously needs help now. (This post copies emails sent by USCIS last month regarding I-829 receipt notices.)

The USCIS processing times report has received three significant updates since it launched in March. (The report has a daily minor update: to add one more day to the Case Inquiry Date.)

2018 Ombudsman Report

The CIS Ombudsman’s 2018 Annual Report to Congress is a well-researched, well-presented document that I’d be proud to have written. The 2017 report made waves in EB-5 because it mentioned the 10+ year visa wait for Chinese investors, and many people in the industry found it expedient to imply that we didn’t know about the wait before that report. The 2018 report offers fewer occasions for real or feigned surprise, but does provide a solid summing up of the EB-5 program history and current status (page 48-56). I hope that Congress reads this report, as it gives a fair picture of challenges to EB-5 program effectiveness and integrity, and solid description and analysis of the substantial past, present, and planned steps taken to handle those challenges. Regarding the proposed EB-5 regulations, the Ombudsman makes a good point: “It remains to be seen whether these reforms will be sufficient to reassure those concerned about the increased oversight, or if they will have a chilling effect on participation.”

For anyone who has had problems with USCIS case processing and thought of contacting the Ombudsman for help, pages 3-5 of the report gives a nice explanation of how the Ombudsman handles inquiries. And I appreciated the detailed discussion of background checks on pages 28-32 and 57-58.

Debt Arrangements
USCIS continues to deny I-526 petitions based on finding that they include impermissible debt arrangements, while the industry continues to fight back to clarify what “invest” and “at risk”  mean. This article presents arguments and distinctions that will be helpful to anyone in midst of the battle:

Other relevant resources that I’ve previously linked here:

Conference
Suzanne Lazicki will be at the 2018 EB-5 Investors Conference in Los Angeles next week. I’ll be speaking on a panel at 1 pm on July 23 (“The Right Fit – How Current and Future EB-5 Projects are Changing with the Market”), and available to meet in-person on July 23 and 24. Look for me to chat, or use this calendar to fix a time.

Policy Guidance
In a new Policy Memorandum dated July 13, 2018, USCIS Updates Policy Guidance for Certain Requests for Evidence and Notices of Intent to Deny. The memo, which will become effective on September 11, 2018, “provides guidance to USCIS adjudicators regarding their discretion to deny an application, petition, or request without first issuing a Request for Evidence (RFE) or Notice of Intent to Deny (NOID) when required initial evidence was not submitted or the evidence of record fails to establish eligibility.” This isn’t a major change, and not exclusive to EB-5, but a good reminder. Petitioners need to establish eligibility at the time of filing, and may not be able to depend on correcting major omissions in response to RFE.

Regional Center Termination
To date, USCIS has terminated 244 regional centers, mostly for inactivity, or for not filing the I-924A annual report. A handful have been terminated in connection with problems, including, last week, Vermont Agency of Commerce and Community Development. I’m particularly interested in the Vermont RC case, because it’s hard to imagine anyone doing more than Vermont has done to try to compensate for and recover from the oversights that allowed project fraud to occur under its watch. Vermont’s response to the Notice of Intent to Terminate challenged USCIS to be more precise about a regional center’s responsibilities for monitoring and oversight, and pointed out all the positive and responsible things the RC has done — including a plan to wind down the RC in an orderly manner that protects existing investors and prevents future problems. In response, USCIS makes that responsible plan a major plank in the denial decision: no future projects means failure to actively promote economic growth. Vermont plans to appeal. For more detail, see this VTDigger article, which ends with a link to the full USCIS termination notice.

Regional Center List Changes
Additions to the USCIS Regional Center List, 06/05/2018 to 7/16/2018.

  • Allstates QSR Regional Center, LLC (Connecticut, District of Columbia, Massachusetts, New York, Pennsylvania)
  • American Dream Group, LLC Regional Center (Washington)
  • Art District Los Angeles Regional Center, LLC (California)
  • Beresford Regional Center (California)
  • Best Tire Center Regional Center, LLC (Texas)
  • BridgeForth Southeastern Regional Center, LLC (Florida, Georgia, South Carolina, Tennessee)
  • Gateway South Florida Regional Center, LLC (Florida)
  • Keystone Great Lakes Regional Center, LLC: www.keystoneeb5.com (Illinois, Indiana, Wisconsin)
  • Retail Equity Partners Regional Center Texas, LLC (Texas)
  • U.S. Immigration Fund – CA, LLC (California)
  • Xocolatl Xperience Regional Center, Inc. (Florida)
  • Zhielo, LLC (Florida)

New Terminations:

  • Charter Square Regional Center, LLC (California) Terminated 7/10/2018
  • RGV EB-5 Regional Center (Texas) Terminated 7/10/2018
  • Vermont Agency of Commerce and Community Development (Vermont) Terminated 7/3/2018 USCIS Termination Notice
  • Idaho State Regional Center LLC (Idaho) Terminated 7/3/2018
  • White Lotus Group Regional Center (Iowa, Nebraska) Terminated 6/26/2018
  • Rota EB5 Regional Center (Commonwealth of Northern Marianas Islands) Terminated 6/21/2018
  • AmerAsia EB5 Regional Center SF, LLC (California) Terminated 6/11/2018
  • Utah Invest Regional Center, LLC (Utah) Terminated 7/3/2018
  • California Pacific Regional Center, Inc (California) Terminated 6/7/2018

Constructive IIUSA response to bridge finance and other challenges

During the Q&A period at the EB-5 stakeholder meeting on November, 7, 2017, Carolyn Lee questioned IPO Deputy Chief Julia Harrison about recent adjudication of the bridge financing policy.

[transcription of time 01:01:27 – 01:10:11]
Ms. Lee: …We are concerned because we have been seeing what we think is a pattern of adjudications where qualifying bridge finance structures structured under the current written policy manual appear to be found to not qualify. …This comment is directed to urge you to please ensure that your examiners are trained on this policy, and are applying it correctly, because we have seen some very troubling NOIDs in this respect.

Ms. Harrison: Yes, thanks for that. I appreciate that you’re getting NOIDs that … there’s always going to be times when maybe we don’t agree. That happens. But if you are seeing something where you feel we may have messed up, follow the standard protocols to do the formal response. You can send an email to our customer service box and say we would appreciate it if the leadership team would take a look at this. It’s really hard for us… I mean I could take that back and have conversations with my team and say “Are you guys having some challenges with bridge financing? Have we done something different?” And they would all say “no.” Right, because they’re doing what they think is the right thing to do. And maybe they are. But it’s really hard for me to really kind of take a look into that unless you send me some examples. So I don’t want you guys to all flood me. Don’t go crazy. But, if you have a couple that you think are good examples of where you think we’ve gone astray – I’m not saying I’m going to agree with you, but I’m going to have some conversations with my team.  Please, though, do not take that as instruction to not follow the formal process.

Ms. Lee: Absolutely. Can we take that as an invitation to some sort of dialogue on these very complex issues?

Ms. Harrison: We can’t do that. We can’t go crazy. We can’t have a dialogue. [Laughs] We don’t want to violate any of the FACA rules. But, I will take a look at it and discuss with my team.

Finally after seven months, the industry has followed up on this exchange with a letter from IIUSA to USCIS regarding Major Issues Facing the EB-5 Industry. The letter starts by reopening the possibility of dialogue by addressing what FACA does and does not prohibit, and goes on to analyze six specific bridge financing challenges, as well problems associated with processing delays, third party guarantees, project financing structures, site visits, and redeployment.

This letter exemplifies what we should do regularly: respond constructively to misunderstandings at IPO with solid and documented clarifications based on our collective knowledge and resources. If examiners at IPO know little about bridge financing beyond what’s in Black’s Law Dictionary, and make incorrect determinations accordingly, that’s partly our fault. They have tough jobs and can’t be expert in every area of law and finance. The industry does have a comprehensive array of expertise, if only we organized to share it. IIUSA was late drafting this letter, and even later involving industry, but the product is solid. Anyone struggling with challenges to financing agreements and structures can use and build on this letter’s in-depth analysis. And I hope USCIS listens to the important points about processing delays, site visit missteps, and ambiguity around redeployment.

Senate Judiciary Committee hearing on EB-5

The Senate website now has video of of today’s Judiciary Committee hearing on EB-5, as well as a statement from Senator Grassley and written testimony from USCIS Director L. Francis Cissna. I’ve uploaded my recording, and transcribed below the major news from the hearing: that EB-5 regulations are not actually close to being finalized, and the reason is not conspiracy but honest ineptitude. Hanlon’s Razor proves right again. I should’ve known better than to repeat rumors attributing delays to interference. It’s so plausible that, as Cissna says, CIS would be still reviewing public comments, slowed by a complex process and competing demands.

I listened to the hearing for hints that anyone plans to do anything about EB-5, and noted few such hints. The Democrats on the committee sent the message that they care about immigration law/policy that hurts children, and can’t be bothered about immigrant investment right now. Most did not even mention EB-5 in their statements or questions, instead changing the subject to undocumented migrants, and the administration’s zero tolerance policy and resulting family separations. Two senators (Feinstein and Durban) called for a kind of action — termination — but didn’t actually talk about EB-5. They discussed a mythical program that allows people to “buy their way to the front of the line” and purchase legal status as a commodity, apparently simply ignorant of basic facts: that EB-5 investors enter the back of a long waiting line with no premium processing option and must put capital at risk but can only acquire status based on job creation, not money. Senator Cornyn was the one person who spoke as if he might still have EB-5 legislation in mind. Senator Grassley granted the necessity of legislation, but complained about how he’d been stymied in the past and focused on calling for regulations (which “can probably do better than legislation”), attacking Director Cissna for not having finalized regs yet. Grassley definitely seemed to be trying to pass the buck on EB-5 program changes from Congress to USCIS. Cissna, meanwhile, tried to pass the buck back, telling the committee that he doubted his department could finalize regs before September 30, and urging Congress to either manage legislative reforms or let the program expire. Meanwhile, it wasn’t clear that anyone present really grasped what’s in the EB-5 modernization regulations, or how the regulations or the last legislative proposal would affect the real world of EB-5. I appreciate that at least Grassley and Cissna tried to do their homework, but clearly still operating with some basic misconceptions that won’t help yield good law or policy. Sigh. So much education remains to be done in EB-5. If our lawmakers and regulators do not know what’s mostly right or what’s actually wrong with EB-5, how can they direct it effectively?

On the positive side, Director Cissna’s testimony clarifies that EB-5 does not operate the way it did 25 years ago. The department has made major strides in its efforts to administer the program, particularly in the past couple years. Mr. Cissna reviews operational enhancements that have been implemented, even without reform legislation or regulations.

Transcript of a Q&A between Chairman Grassley and Director Cissna (starting at minute 47:30 of the Judiciary Committee hearing)

Grassley: In your written testimony, you say that the department is still, still, reviewing comments, but you plan to move forward as expeditiously as possible. Those last four words are yours. Do you have a sense of when the EB-5 Modernization regulations will be finalized, and how quick is “as expeditiously as possible.”

Cissna: It’s not soon enough. I want those regs out as quick as humanly possible. And from the moment I got sworn in back in October, I have been pushing and pushing and pushing for those regs to be completed. There is a process that all regs have to go through, often very lengthy, and I’ve been doing everything I can, from where I sit, since October to ensure those regs get out very fast.

Grassley: Are you getting the help of the Secretary?

Cissna: Yes. The Secretary is aware of the urgency of this and she is committed to getting the regs–       ….

Grassley: Do you anticipate the Modernization regulations being finalized before the expiration of the Regional Center program September 30?

Cissna: I don’t know. That would be hard to pull off. I think it might be tight.

Grassley: More time, hmm?

Cissna: I think so.

Grassley: Have you or Secretary Nielsen received political pressure from anyone to delay or halt the Modernization regulations?

Cissna: No. That I can say with certainty. No one’s been pushing us or telling us to drag our feet or delay this reg in any way.

Grassley: If anyone ever does that, will you tell this Committee?

Cissna: Oh yeah.

Grassley: If the Modernization regulation is not finalized before the expiration of the Regional Center program, do you support letting the program expire?

Cissna: I believe that if the program is not fixed in a way that addresses all these problems that we’re going to talk about today then yes, I think that it should expire.

I-526 and EB-5 visa wait times; country-specific effects of potential changes

I’ve written separately about I-526 processing time and the EB-5 visa wait time, but find that people get confused about how those times interact. How does I-526 processing time affect the total time to get an EB-5 visa? From what point do we calculate the visa wait? What factors and potential changes could compress or expand the full process from priority date to green card for people from different countries?  This post addresses such questions.

Note that the path to conditional permanent residence has two separate, sequential steps (Step 1 and Step 2 in Figure 1), but we usually calculate timing for each step from the same starting point (Time A and Time B in Figure 1).  An immigrant investor’s priority date – the date that USCIS received his I-526 petition – marks his place in line for I-526 processing (which is first-come-first-served in principle) and also his place in line for a visa. An investor must wait for I-526 approval before he can take the next step and submit a visa application or file for status adjustment.  But once he gets to the visa application stage (Step 2), his place in the queue for a visa doesn’t depend on the date he finished Step 1 (I-526 approval) but on the date he started Step 1 (I-526 receipt). This is so because anyone who files I-526 is effectively putting herself in the visa queue, even though she hasn’t progressed yet to the point of being qualified to file the visa application or I-485.  INA 203(e)(1) stipulates that available EB-5 visas are issued to eligible immigrants in the order in which the immigrant petition was filed. So when Charlie Oppenheim at the Department of State Office of Visa Controls estimates a two-year wait time for Country A, he is talking about two years from priority date to visa availability, not two years from I-526 approval.  To estimate wait times for new applicants today, it’s necessary count both chickens (documentarily-qualified applicants currently ready to file for a visa) and eggs (people who have filed I-526 petitions that may eventually hatch and yield visa applications). Therefore, with reference to Figure 1:

  • For an investor of any nationality, Time B is, at minimum, longer than Time A, because an investor isn’t qualified to apply for a visa until after I-526 approval.
  • For investors from countries without excessive demand, Time A can be the major factor determining the length of Time B. I-526 processing times have tended to be lengthy for all countries (averaging around 2 years). But once having received I-526 approval, the investor from a country with no cut-off date will have a visa number available right away and can progress straight to the visa application or status adjustment process to claim that visa. Only investors from countries over or near the annual per-country limit need to worry about waiting years for a visa number, making Time B very much longer than Time A.
  • For an investor from a country exceeding the annual 7% per-country limit, Time A becomes relatively insignificant (personally) because Time B will be long regardless of the individual’s Time A. As a Chinese investor, I may not care about the timing of I-526 approval if  have a decade to wait for conditional permanent residence regardless. The visa queue is ordered by priority date, not date of I-526 approval, so an expedite in Time A doesn’t expedite Time B for investors from significantly oversubscribed countries.
  • Because the visa waiting line technically starts with priority date, we have to look at I-526 receipts, not just I-526 approvals or current visa applications, to estimate Time B. Prospective Indian investors may wonder why there’s already an informal visa wait time estimate for Indians filing today, even though India shows as current in the Visa Bulletin. That’s because today’s Visa Bulletin just reflects what’s currently happening in Step 2. The prospective investor needs to predict how the Visa Bulletin will look in the future, when he can progress to Step 2. And that future Visa Bulletin will depend on what’s happening in Step 1 now, and the volume and nationality of people entering the system and receiving priority dates.

How long is Time B, for various countries? The latest rough estimates (as of early 2018) suggest the following time between priority date and visa availability for new investors from different countries filing today: China, 15 years; Vietnam, 6 years; India, 5 years; Brazil and South Korea (and maybe Taiwan), 2 years. Times for everyone else are just based on estimated petition processing times, assuming no wait for a visa number. (There’s a potentially significant time factor between visa availability and actually getting a conditional green card, depending on how busy the appropriate consulate or service center happens to be, but this time is so variable that I haven’t tried to account for it in my Time B calculation.)

Many factors could change the estimates for Time B, or cause the reality to be longer or shorter for people of various nationalities who have entered the EB-5 process.

Possible Change: USCIS improves I-526 processing, increasing volume of adjudications and reducing I-526 processing times.

  • Likelihood of this change: High. IPO processed 30% more I-526 in FY2017 than FY2016, and hopes to continue to improve performance
  • Impact of this change, if it occurs:
    • China: Negative effect. More approved I-526 means more approvals for countries other than China, which means more visa applications from outside China and fewer leftover visas available to the China backlog. Fewer leftover visas annually means longer Time B for Chinese investors.
    • Vietnam, India, Brazil, S. Korea, Taiwan: Mixed effect. These countries are or will be too new in the backlogged category to compete for leftover visas in any case (since China has enough older backlogged applicants to claim all leftover visas for years). An increased volume of rest-of-the-world applicants may not hurt countries that can’t expect more than their personal allotment of 700 visas a year regardless. However, more and faster I-526 approvals could mean that India, Brazil, and possibly South Korea and Taiwan get cut-off dates sooner than expected. (Charlie Oppenheim knows that they’re already probably oversubscribed, based on counting eggs, but he doesn’t set cut-off dates until the eggs actually hatch into chickens, i.e. until immigrant investor petitioners are documentarily qualified to apply for a visa.)
    • Rest of the world (any countries well below 250 investors per year): Positive effect. So long as a country doesn’t risk generating over 700 visa applications in a year, its investors can only benefit from improved I-526 processing time/volume. With no hold-up to wait for a visa number, short Time A means short Time B.

Possible Change: Legislation removes the per-country numerical limit for the EB-5 category, such that individual countries aren’t limited to 7% of EB-5 visas when the category is oversubscribed.

  • Likelihood of this change: Possible. Border Security and Immigration Reform Act of 2018 (H.R. 6136), the compromise immigration legislation just introduced by House GOP leadership, proposes this change in Sec. 2102 (page 192).
  • Impact of this change, if it occurs:
    • China: Positive effect. With no per-country limit, the visa waiting line would simply be in order by priority date. Having been held back with cut-off dates for years, Chinese applicants have the oldest priority dates in the system. Thus, with no per-country limit, the huge pool of backlogged China-born investors would move to the front of the line for visas. Based on the number of old Chinese applications in the system, they could take 100% of available visas for the next 2-3 years, and be on equal footing with contemporary applicants from other countries thereafter. Time B for a China-born investor with priority date from 2014-2016 would decrease dramatically. Time B still wouldn’t be short for a China-born investor filing today (about 9+ years unless many previous applicants drop out, as they might), but that’s much better than the current estimate of about 15 years.
    • Vietnam, and any soon-to-be oversubscribed countries (India, Brazil, etc.): Negative effect. The per-country limit means that each backlogged country can expect to get at least about 700 visas annually. Without the per-country limit, all more recent applicants would find themselves in line behind tens of thousands of China-born applicants with earlier priority dates. Time B (currently estimated at 5+ years for new investors from Vietnam/India and 2+ years for Brazil/South Korea) would likely expand to 9+ years for all new investors regardless of country, in absence of per-country limits.
    • Rest of the world: Negative effect. The per-country limit currently protects low-volume countries from the effects of excess demand for EB-5 visas. Even with a decade of current/potential visa applications already in the system, new applicants from low-volume countries can expect a visa promptly because high-volume countries get held back. With no country-specific limits, new investors would join a line that’s about a decade long without regard to nationality.

 Possible Change: Legislation increases the number of EB-5 visas available annually.

  • Likelihood of this change: Possible. We need this change so badly, and advocacy dollars should focus on this issue. But I haven’t seen EB-5 visa number increases in any recent legislative proposals – not even in H.R. 6136, which proposes additional visa numbers for every EB category except EB-5.
  • Impact of this change, if it occurs: Positive for all past and future EB-5 investors from all countries.

Possible Change: Legislation or regulations implement higher minimum investment amounts that significantly depress new demand for EB-5. (Or other factors significantly depress new demand: e.g. investors in potentially-high-volume countries get discouraged by wait times, the U.S. becomes a less attractive destination for immigration or investment, EB-5 becomes a less attractive financing option for U.S. companies.)

  • Likelihood of this change: High. All legislative and regulatory proposals include higher investment amounts. The most imminent proposal – regulations possibly on schedule to be finalized in August 2018 – have investment amounts high enough to kill demand almost entirely, many EB-5 promoters say. Even if investment amounts do not increase, or increase only moderately, EB-5 has plenty of challenges and complications with potential to moderate future demand.
  • Impact of this change, if it occurs:
    • China: Positive effect. Fewer incoming immigrant investors means less competition from rest-of-the-world for available visa numbers
    • Vietnam, and any other high-demand countries: Positive effect. Reduced demand reduces risk for investors already in the system that their countries will become or stay oversubscribed.
    • Rest of the world: Neutral. Low future demand does not improve wait times for people already in the system from countries with no cut-off date.

Possible Change: Demand for EB-5 grows, and countries besides China produce a sufficiently high volume of EB-5 petitions to exceed the per-country limit.

  • Likelihood of this change: Fairly high. The Department of State already predicts cut-off dates in the next couple years for five to six countries in addition to China. And media reports indicate aggressive EB-5 promotion outside of China, particularly in India and Brazil.
  • Impact of this change, if it occurs:
    • China: Positive effect. Time B for China-born applicants depends primarily on the number of visas leftover each year from the “rest of the world” with no cut-off date. As soon as another country exceeds the per-country limit and gets a cut-off date, it’s removed from and reduces the size of that “rest of the world” pool, thus leaving more visas on the table for older China-born applicants.
    • Vietnam, and any other countries to be oversubscribed: Negative effect. Time B expands dramatically for a country as soon as it’s oversubscribed. Vietnam and subsequent countries don’t benefit the way China does from each additional country to get a cut-off date, because these countries don’t have applicants old enough to compete with China for visas leftover from the rest of the world.
    • Rest of the world: Positive effect. Each additional country to get a cut-off date reduces competition for available visa numbers.

Possible Change: Demand for EB-5 diversifies, with more investors coming from outside China, but spread out so that few individual countries exceed the per-country limit.

  • Likelihood of this change: Moderate. It’s much easier to raise a lot of EB-5 money from one country than from many countries, so concentration has been the rule to date in EB-5. But data has suggested a trend toward diversification.
  • Impact of this change, if it occurs:
    • China: Negative effect. Time B for China-born applicants depends primarily on the number of visas leftover each year from the “rest of the world” with no cut-off date. As that “rest of the world” pool grows, visa availability for China shrinks, and wait times grow.
    • Vietnam, and any other countries to be oversubscribed: Neutral effect. They aren’t competing for “rest of the world” visas anyway, thanks to China’s earlier priority dates.
    • Rest of the world: Negative effect. Each new applicant with no cut-off date increases competition for available visa numbers.

Possible Change: People already in line for an EB-5 visa despair about Time B and withdraw in large numbers from the EB-5 process. (Or other attrition factors come into play: more petitions get denied, more projects fail, more deaths and divorces occur, children age out or don’t get born.)

  • Likelihood of this change: Moderate. On the one hand, current wait time estimates are devastating for some investors (especially, China-born investors in the past couple years), undermining their immigration objectives and their investment projects. This could precipitate voluntary withdrawal, not to mention attrition from children growing up and more time for divorce and death and project failure. On the other hand, EB-5 investments are major and real at-risk investments, committed regardless of the immigration process. Giving up is not easy. Also, many people do not read my blog and are not well-informed about timing issues.
  • Impact of this change, if it occurs:
    • China: Positive effect for some. Each China-born applicant who withdraws from the process reduces the time that more recent China-born applicants have to wait for a visa.
    • Vietnam, and any other countries to be oversubscribed: Mixed effect. Mass exodus of past investors would reduce competition for available visas, but also involve collateral damage to the EB-5 program as a whole (in terms of public relations and damage to companies deploying EB-5 investment, not to mention the human cost for the prospective immigrants involved).
    • Rest of the world: Mixed effect. Countries without cut-off dates do not compete with the backlog anyway, so reducing the backlog has little effect on timing for these countries. But large-scale failure of previous EB-5 applications would damage the EB-5 program as a whole.

Other related posts:
Visa Numbers (FY2018 Q3 and conference update) July 27, 2018
How Long Does I-526 Take? (III) May 18, 2018
Visa Numbers (China, Vietnam, India, Brazil, S. Korea, Taiwan) April 23, 2018
EB-5 Visa Waiting Line and Visa Allocation April 8, 2018
EB-5 Timing Issues and Visa Wait: Process and Data October 13, 2017

Benefit from this blog? Please support the effort behind it. As the EB-5 industry changes, your contribution can help preserve this space for conscientious and freely-available EB-5 reporting. Contributions go to Lucid Professional Writing, a for-profit business, to fund work on this blog. Thank you!

Senate hearing, legislation, I-829 receipt notices (updated)

Senate Hearing

Mark your calendars for 10 am EST Tuesday, June 19, when Chairman Grassley will host a Senate Judiciary Committee hearing with the provocative title Citizenship for Sale: Oversight of the EB-5 Investor Visa Program. So far the only announced witness is USCIS Director L. Francis Cissna. As background for the hearing, I recommend my 2015 post Immigrant investor program comparison, which explains how EB-5 fits in the continua of investor visa programs around the world, and the risks and challenges for government oversight inherent in the fact that it’s specifically not a “citizenship for sale” program.

Legislation

The House will reportedly vote next week on immigration legislation: Bob Goodlatte’s H.R. 4760 Securing America’s Future Act, and another to-be-announced bill dealing at minimum with DACA and border security. H.R. 4760 as written would not affect EB-5. (It covers DACA, border security, family reunification, and diversity visas, and proposes reallocating diversity visas to reduce backlogs in EB-1, EB-2, and EB-3 only.) The second bill (available in discussion draft) would affect EB-5 by removing the per-country limit on visa numbers for the EB-5 category. (This would be good news for backlogged China and bad news for all other countries, which would then share the burden of oversubscription equally with China.) In an apparent slight to EB-5, the discussion draft bill would increase total visa numbers for every EB category except EB-5.

I-829 Notices

And a nice email (followed up by another email with qualifications) for people facing long I-829 waits.

From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com>
Sent: Tuesday, June 12, 2018 9:02 AM
Subject: Update to Form I-797 Receipt Notices for Form I-751 and Form I-829

As of June 11, 2018, petitioners who file Form I-751, Petition to Remove Conditions on Residence, or Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status, will receive a Form I-797 receipt notice that can be presented with their Form I-551, Permanent Resident Card, as evidence of continued status for 18 months past the expiration date on their Permanent Resident Card.

We are making the change from 12 to 18 months because current processing times for Form I-751 and Form I-829 have increased over the past year.

Additionally, we will issue new Form I-797 receipt notices to eligible conditional permanent residents whose Form I-751 or I-829 was still pending as of June 11, 2018. Those Form I-797 receipt notices will also serve as evidence of continued status for 18 months past the expiration date on petitioner’s Permanent Resident Card.

As a reminder, conditional permanent residents who plan to be outside of the United States for a year or more should apply for a reentry permit by filing Form I-131, Application for Travel Document, before leaving the country. Read more information on our Green Card webpage.

To learn more, visit our website.

From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com>
Sent: Wednesday, June 13, 2018 10:21 AM
Subject: Form I-751 Data Entry Delay at California Service Center

USCIS’ California Service Center (CSC) is experiencing a delay in initial data entry for Form I-751, Petition to Remove Conditions on Residence. Since initial data entry has to be completed before a receipt notice can be issued, some petitioners and their dependents may experience a delay in receiving a receipt notice for a Form I-751 submitted to the CSC.

If you submitted a Form I-751 to the CSC in May 2018 and you have not received a receipt notice, do not file a duplicate Form I-751 unless you have received a rejection notice or have been instructed to do so by the CSC.

The CSC is working to complete data entry of these petitions by the end of June 2018, and will issue another web alert once initial data entry has returned to normal. Petitioners will receive a receipt notice once their data is entered into USCIS systems.

If your 2-year green card has expired, you should call the USCIS Contact Center at 1-800-375-5283 (TTY for people with hearing or speech disabilities: 1-800-767-1833). The USCIS Contact Center will setup an appointment for you and any eligible dependents at your local field office. If possible, bring evidence that you sent your Form I-751 via USPS or courier service, such as FedEx.

For more information, visit our website.

Processing Report, Terminations, Regulations, RC List Changes

Processing Time Report Update

The processing times reports for EB-5 forms were updated on May 31, 2018 with new Estimated Time Ranges and new variables for calculating the Case Inquiry Date. Until this update, the reports had been constant since March 23, 2018.

Form I-526 Processing Time:
* Estimated Time Range changed to 20-25.5 months (previous report: 25-32.5 months)
* Case Inquiry Date changed to today’s date minus 761 days (previous report used -971 days)

Form I-829 Processing Time:
* Estimated Time Range changed to 29-37.5 months (previous report: 23-30 months)
* Case Inquiry Date changed to today’s date minus 1,121 days (previous report used -893 days)

Form I-924 Processing Time:
* Estimated Time Range changed to 19.5-25 months (previous report: 17-22.5 months)
* Case Inquiry Date changed to today’s date minus 746 days (previous report used -663 days)

My theory, supported by an informed-sounding blog commenter, is that USCIS recalculated the time ranges based on a dramatic drop in I-526 receipts and dramatic rise in I-829 receipts over the past few months. (The Immigration Data page has not yet been updated with FY2018 Q2 or Q3 data, so I’m not sure.) Alternatively, IPO might have decided to reallocate resources away from I-829 to I-526 adjudication, or the I-526 team might be on fire while the I-829 team struggles with something.

But it’s tough to interpret these reports. A processing time estimate could be either (1) forward-looking, “the average time it will take a petition filed today to get adjudicated” or (2) backward-looking, “the average time that petitions being processed today have been waiting.” It can’t be both because 1 and 2 are very different numbers, thanks to dramatic fluctuations in receipt numbers and changing processing capacity over time. But we don’t know which we’re getting with the USCIS processing time report. The “Case Inquiry Date” would logically be backward-looking, while the “Estimated Time Range” is forward-looking if, as I suspect, it’s calculated by dividing currently-pending petitions by current average rate of adjudication. But the report says that the Case Inquiry Date is based on the Estimated Time Range. But calculating a backward-looking estimate from a forward-looking estimate would be nonsense. So I don’t know what to think. (For everything else I know/don’t know about processing times, refer back to the post How Long Does I-526 Take? (III))

Considering the ambiguity (and the fact that the report, however it’s calculated, can evidently suddenly change by six months or more), better not rely on USCIS processing time information for major decision-making. Just one thing is clear: EB-5 petition processing times are too long, and fuel a number of the political and integrity threats that face EB-5 today.

Regional Center Terminations

The USCIS website has been updated with some additional termination notices for regional centers terminated through May 2017. I added the letters to my Termination Log, summarized in the following table.

The recent termination letters mainly cite failure to file a Form I-924A annual report and/or inactivity (i.e. no EB-5 investors in the last 3-5 years) as reasons for termination. They rarely mention derogatory evidence as a reason.

Examples:

Regulations

The indefatigable Senator Grassley continues to nip at the heels of the EB-5 regulations. Today he sent a letter to President Trump with this complaint: “As I mentioned to you yesterday afternoon, certain EB-5 interest groups are telling investors they have ‘bought off the White House’ and that your Administration will never allow the EB-5 regulations to take effect. These comments are very disturbing, and undermine the American people’s faith in your ability to restore integrity to our immigration system.” Earlier this week he sent a letter to DHS urging “It is past time for your Department to publish the modernization rules. I have received reports that certain industry groups believe the White House will never allow the regulations to go into effect. Please confirm or deny this allegation, provide my office with an update on the status of these rules, and any impediments to their finalization.” (FYI I don’t know to which”certain industry group” Senator Grassley refers. To the extent that I’ve observed questionable marketing around the regulations, it’s people trying to hustle prospects into investing now by claiming that the possible August 2018 date for final action on regulations is actually a hard and firm August 2018 deadline to invest under current rules — while omitting to mention that final action date doesn’t mean effective date, and the OMB Unified Agenda dates are not guaranteed.)

I used to read between the lines of Senator Grassley’s legislative proposals that he wished to make EB-5 safe, legal, and rare, but now he seems ready to settle for just making it rare. Because the proposed EB-5 regulations (at least, the RIN: 1615-AC07 possibly on schedule to be finalized in August) do not in fact address the integrity or security concerns that the Senator raises in his letters; their major impact would be to dampen demand by increasing investment amounts.

I keep watching the OMB website to see when/whether the EB-5 regulations progress to the OMB review stage, but that hasn’t happened yet. Any status changes will be recorded on my Washington Updates page.

Regional Center List Changes

Additions to the USCIS Regional Center List, 05/25/2018 to 06/05/2018

  • 900 Regional Center LLC (Hawaii)
  • American Lending Center Arizona, LLC (Arizona): usa-rc.com
  • Birmingham Alabama Regional Center, LLC (Alabama)
  • Discovery California, LLC (California)
  • Gladstone Regional Center, LLC (California)
  • Golden Gateway Regional Center LLC (California)
  • Napa Valley Regional Center (California)
  • Northeast EB5 Regional Center, LLC (District of Columbia, Maryland, New Jersey, New York, Pennsylvania)
  • Principal Regional Center, LLC (Washington)
  • Southeast EB5 Regional Center, LLC (Alabama, Florida, Georgia, Louisiana, Mississippi)
  • West Coast EB5 Regional Center, LLC (California, Oregon, Washington)

New Terminations:

  • Encore Wash D.C. RC, LLC (District of Columbia, Maryland, Virginia) Terminated 5/25/2018
  • Colorado Headwaters RC, LLC (Colorado) Terminated 5/24/2018
  • Faustus Capital LLC (California) Terminated 5/24/2018
  • Marianas EB5 Regional Center (Commonwealth of Northern Marianas Islands) Terminated 5/29/2018

AAO Decisions (termination, exemplar approval, bridge financing), Other Updates, RC List Changes

AAO Decisions

The Administrative Appeals Office continues to issue non-precedent decisions on appeals of denied EB-5 petitions and applications. The cases give insight into recent USCIS thinking on sensitive topics: material change, deference to prior approvals, regional center oversight responsibilities, regional center activity requirements, bridge financing, and evidentiary requirements.

  • MAY032018_01K1610 (Matter of L-V-E-I, LLC) dismisses the appeal of a regional center that USCIS terminated for inactivity. The applicant successfully demonstrated that its principals have remained actively engaged in seeking EB-5 projects, have been carefully reviewing potential proposals, and have participated in EB-5 conferences and networking. However, the applicant has not received any capital from EB-5 investors since its designation in 2011, and has not offered documentation confirming any currently-active EB-5 projects. AAO concluded that “in light of the above positive and negative indicators, the Applicant has not established that, on balance, it is continuing to promote economic growth.”
  • APR032018_01K1610 (Matter of A-G-R-C, LLC) and APR022018_01K1610 (Matter of W-F-R-C, LLC) sustain the appeals of two regional centers seeking exemplar approval for a project. USCIS cited multiple reasons for denying the exemplar requests, but the core concern seems to have been discomfort with the involvement of two regional centers in the same project (with a portion of EB-5 investors in the project sponsored by one regional center, and remaining investors by the other regional center). However, AAO countered that “The record included a sponsorship agreement that contained sufficient detail to explain how responsibilities and investors would be allocated amongst the two RCs.” AAO went on to determine that USCIS made several mistakes in its denial:
    • USCIS cited Form I-924A information in the denial, but “neither the regulations nor the form instructions predicate the adjudication of an amendment to a regional center’s designation upon a demonstration of consistency or accuracy in its own Form I-924A filings or in relation to those of another regional center.”
    • When USCIS determined that funds were not at risk in the JCE, it erroneously identified the JCE as the project DBA, which is just a name, not an entity.
    • USCIS concluded that EB-5 funds were not spent to develop the project because its site visit inspectors did not see construction underway, but AAO accepted that “applicant has provided permits and records indicating that the project has undertaken meaningful business activity.”
    • USCIS questioned the terms of non-EB-5 capital commitment, but AAO found that “Funds provided from sources other than EB-5 investors are not subject to the at-risk requirements in the regs.”
    • USCIS “opined that it was unlikely that NCE would raise the total amount of required foreign investor capital. He does not cite any evidence in the record to support this contention, nor do the regulations require the Applicant to demonstrate this ability.”
    • AAO agreed that the applicant overcame USCIS concerns about working capital as an input to the economic model, and inflation affecting the revenue estimate.

These cases reflect inconsistencies in EB-5 adjudications. USCIS denied exemplar I-526 amendment requests after having already approved eight investor I-526 petitions with the same project and documents (not to mention having reviewed the project in context of an initial regional center approval). Apparently, deference in EB-5 only goes one way: from exemplar to I-526, not the reverse. We wish that an approved actual I-526 petition could serve as de facto exemplar for future petitions involving the same project, but apparently it does not.

  • APR252018_01K1610 Matter of E-B-F-N-Y concerns a regional center whose amendment request for exemplar project approval was denied, based in part on a bridge financing arrangement. AAO agreed with USCIS and dismissed the appeal. The bridge financing arrangement was found to be unacceptable because the funds were made available to an entity other than the JCE entity, and therefore “The record does not show that the EB-5 capital would go towards the construction that the Applicant claims would provide the job creation required for foreign investors, violating the holding of Mauer of lzummi and the USCIS policy on bridge financing.” Moreover the arrangement did not qualify because it was not sufficiently “temporary,” since the loan in which the investors participate is a construction-to-perm loan that will eventually be considered permanent financing. The applicant attempted to clarify matters by providing new loan agreements, but AAO countered that “the Applicant’s introduction on appeal of new loan documents between the NCE and the JCE may constitute an impermissible material change.” USCIS’s emerging and as yet undeclared new policy on bridge financing has major implications for many EB-5 offerings. For additional discussion, see: A tide change in EB-5 bridge financing policy (April 23, 2018) by Kristal Ozmun and Adam Schaye and EB-5 Bridge Financing: A Study of Market-Driven Applications & Definitions (April 2018) by David Hirson, Nima Korpivaara, Phuong Le
  • APR242018_01B7203 (Matter of H-T-B-) concerns a regional center investor petition that was denied based on problems with the business plan: specifically, failure to link the plan to reality. USCIS doubted the project’s job creation potential because the plan was not grounded in evidence such as supply contracts, lease agreements, construction bids, permits, loan agreements, or analysis of competitors. Lacking such evidence, the plan was not considered comprehensive, credible, or  “any more reliable than hopeful speculation.” This is why the business plans I write bristle with footnotes citing verifiable sources.
  • MAY032018_01B7203 (Matter of Z-Y-) and MAY032018_02B7203 (Matter of W-W-) deny direct EB-5 petitioners who apparently had not read EB-5 policy.  USCIS/AAO remind them of longstanding rules: direct EB-5 investment and job creation must be in a single enterprise (the JCE must be the same entity as the NCE, or its wholly-owned subsidiary), part-time positions cannot be combined to create full-time positions, qualifying investment must be a contribution of capital directly from the investor personally, and job preservation claims require documenting the pre-investment financial condition and employment records of a business that meets the policy definition of “troubled.”  (FYI my Direct EB-5 FAQ page summarizes policy specific to direct EB-5.)

Other Updates

Regional Center List Changes
Meanwhile, I have hard work to update my regional center list as USCIS continues to designate and (mostly) terminate regional centers. 76 regional centers have been terminated so far in 2018, presumably mostly for inactivity. (But we don’t know for sure, since USCIS hasn’t updated the Termination Notices page since 2016.)

Additions to the USCIS Regional Center List, 04/10/2018 to 05/25/2018

  • Auric Ventures International Regional Center (Connecticut, New Jersey, New York, Pennsylvania): www.eb5rc.org
  • Formosa Gardens Regional Center, LLC (Florida)
  • Greystone EB5 Northwest RC (Oregon, Washington): www.greystoneeb5.com
  • Greystone EB5 West RC LLC (California, Nevada): www.greystoneeb5.com
  • K-Stone LLC (Connecticut, New Jersey, New York, Pennsylvania)
  • LD Capital SE Regional Center, LLC (Alabama, Georgia, Tennessee): ldcbtusa.com/regional-centers/
  • Midwest Investment Fund, LLC (Indiana, Kentucky, Ohio)
  • My Life California and Nevada, LLC (California, Nevada)
  • Pan Enterprises Regional Center (California)
  • Seattle Tacoma Area Regional Center, LLC (Washington)
  • Strategic Capital Regional Center, LLC (Connecticut, New Jersey, New York)
  • Te-Enterprise LLC (Texas)
  • Texas Expanse, LLC (Texas)
  • Utah Global Investments, LLC (Utah): utahglobalinvestments.com

Regional Center Terminations, 04/10/2018 to 05/25/2018

  • Silver State Regional Center LLC (Nevada) Terminated 4/11/2018
  • LIGTT Regional Center (Louisiana, Mississippi) 4/18/2018 Terminated
  • Commonweaith of Puerto Rico Regional Center Corporation (Puerto Rico) Terminated 4/25/2018
  • SAA Cedisus EB-5 Projects – SW Indiana Regional Center, LLC (Indiana) Terminated 4/18/2018
  • Art District Los Angeles Regional Center Terminated, LLC Terminated 4/16/2018(California) Terminated
  • SPG Regional Center, LLC (California) Terminated 4/26/2018
  • Global America Regional Center (California) Terminated 4/27/2018
  • California Bond Finance Regional Center, LLC (California) Terminated 4/12/2018
  • Colorado Growth Fund, LLC (Colorado) Terminated 5/15/2018
  • Home Paradise Texas Regional Center, LLC (Oklahoma, Texas) Terminated 4/17/2018
  • Global Century (Houston) (Texas) Terminated 4/12/2018
  • American International Venture Fund – Oregon, LLC (Oregon) Terminated 4/19/2018
  • Central California Regional Center, LLC (California) Terminated 4/13/2018
  • ADC Colorado Regional Center, LLC (Colorado) Terminated 5/1/2018
  • East Coast Renewable Regional Center, LLC (New Jersey) Terminated 4/9/2018
  • Midwest Regional Center, Inc. (Kentucky) Terminated 4/5/2018
  • Ohio Lakeside Regional Investment Center (Ohio) Terminated 5/1/2018
  • TBC Washington DC Area Regional Center, LLC (District of Columbia, Maryland, Virginia, West Virginia) Terminated
  • American General Realty Advisors Regional Center (California) Terminated 4/20/2018
  • Liongate Regional Center, LLC (Washington) Terminated 4/27/2018
  • Altura Regional Center, LLC (California) Terminated 4/9/2018
  • Florida East Coast EB5 Regional Center LLC (former name United States Growth Fund, LLC) (Florida) Terminated 4/10/2018
  • Cornerstone Regional Center, Inc. (Alabama, Florida) Terminated 4/6/2018
  • New England Center for Business Development, LLC (Maine) Terminated 5/9/2018
  • Reside in America Puerto Rico, LLC (Puerto Rico) Terminated 5/1/2018
  • Greystone EB5 Southeast Regional Center LLC (former name Greystone Florida Regional Center LLC) (Florida) Terminated 4/13/2018
  • Washington Foreign Investment Management Group, LLC (Washington) Terminated 4/26/2018
  • QueensFort Capital Texas Regional Center, LLC (Texas) Terminated 4/27/2018
  • Landy Resources Management, LLC (North Dakota) Terminated 5/1/2018
  • Encore S. CA RC, LLC (California) Terminated 4/18/2018
  • One World Development Fund, Inc. (Texas) Terminated 4/12/2018
  • Encore Boston RC, LLC (Massachusetts) Terminated 4/18/2018
  • Pacific Northwest Regional Center (Washington) Terminated 4/5/2018
  • North Atlantic Regional Center, LLC (New Jersey, New York, Pennsylvania) Terminated 5/1/2018
  • Tacoma EB 5 Regional Center (Washington) Terminated 5/2/2018
  • Collegiate Regional Center LLC d/b/a Texas Collegiate Regional Center (Texas) Terminated 5/15/2018
  • QueensFort Capital California Regional Center, LLC (California) Terminated 4/12/2018
  • Ark of the Ozarks LLC (Arkansas) Terminated 4/5/2018
  • Energize-ECI EB-5 Visa Regional Center (Indiana) Terminated 5/9/2018
  • Iowa Department of Economic Development (IDED) (Iowa) Terminated 4/19/2018
  • 5 Starr Regional Center LLC (Oklahoma) Terminated 4/5/2018
  • South Dakota International Business Institute (SDIBI) (South Dakota) Terminated 5/11/2018
  • Regional Economic Development & Investment Group (California) Terminated 4/5/2018
  • New Energy Horizons Regional Center (California) Terminated 4/12/2018
  • Liberty EB5 Regional Center (Pennsylvania) Terminated 5/1/2018
  • American YiYo Regional Center (Georgia) Terminated 4/12/2018
  • Encore Washington/Oregon Regional Center, LLC (Oregon, Washington) Terminated 4/18/2018
  • Amaxi Regional Center, LLC (California) Terminated 5/1/2018

How Long Does I-526 Take? (III)

This post combines, updates, and replaces my two previous posts on I-526 processing times. I’ve divided the post into five sections:

How much time does USCIS take to process an I-526 petition? The short answer: usually between 3 and 33 months. The rest of this post provides the long answer.

Interpreting Official USCIS Processing Time Information

USCIS addresses the processing time question on the EB-5 filing tips page:

How long does USCIS take to process a Form I-526 petition?
For current estimates, see USCIS Processing Time Information. However, processing times can vary depending on the circumstances of each case. These include factors such as the time it takes to complete a background check and whether we need to request additional evidence.

Since, March 23, 2018, the USCIS Processing Time Information page for I-526 has looked like this:

The report claims that “We generally process cases in the order we receive them,” and provides two pieces of information: an estimated time range, and a case inquiry date.

  • What “Estimated time range” means:  This month range gives a theoretical average processing time and an upper limit. The lower number (25 months) is an average that’s calculated by dividing the number of I-526 petitions pending at IPO by the average number of petitions that IPO has been processing in a month. The higher number (32.5 months) is “generally” the lower number multiplied by 1.3. Cases that take longer than 32.5 months to process have exceeded an arbitrary “upper limit” for “normal” processing times, and considered outliers. The month range provides a reasonable theoretical estimate for I-526 processing times. However, we have no evidence that the dates broadly reflect the actual ages of cases currently being adjudicated at IPO. Quite the contrary, in fact, as discussed below. (Source of my interpretation: USCIS’s More Info page, which says that we “continue to use our old method to calculate processing times” for non-pilot forms such as I-526, combined with an Office of Inspector General report exposing the “old method” for calculating processing times in the I-485 context, and corroborated by reproducing USCIS’s presumed time range calculation using public data on I-526 pending petitions and volume of adjudications.)From March 23, 2018 to May 18, 2018, the Processing Time Information Report Estimated Time Range for I-526 has remained unchanged: 25 to 32.5 months. Since the Estimated Time Range appears to be a broad theoretical calculation, not dependent on fluctuating reality, I expect it to remain unchanged in the report indefinitely, regardless of what’s happening on the ground at IPO. [Update: on 5/31/2018, the report was updated to show 20-25.5 month range for I-526.]
  • What “Case inquiry date” means: As the Processing Time Information page explains,

    We have posted a Case Inquiry Date … to show when you can inquire about your case. If your receipt date is before the Case Inquiry Date, you can submit an “outside normal processing time” service request online.

    From March 23, 2018 to May 18, 2018, the Case Inquiry Date for I-526 has remained constant: today’s date minus 971 days. (I spot check the webpage periodically, and log the reports in my IPO Times file.) The webpage claims that the report gets updated “around the 15th of each month,” but that has not been true yet.

    Like the Estimated Time Range, the Case Inquiry Date appears to be merely theoretical and functional. It’s more-or-less simply the upper end of the Estimated Time Range, converted from a month into a calendar date. It does not claim to be the date of cases that IPO is processing now. It’s just the cut-off date that IPO has set for complaints – and naturally IPO would choose to put that date back as far as possible. If you want to estimate when you may start to complain, add 971 days to your priority date. But your I-526 will get a decision before that date, unless it’s an outlier. And I predict that variable currently set at 971 will be adjusted downward eventually, assuming that IPO continues to improve processing speed. [Update: on 5/31/2018, the report was updated to show I-526 case inquiry date of 761 days ago, rather than 971 days ago]

Predicting Average Processing Times

Average processing time is theoretically a function of inventory (number of pending petitions) and flow rate (rate at which IPO approves and denies petitions). You can get the input data for this equation from the USCIS Immigration and Citizenship Data page, which posts quarterly reports for I-526 and other forms. My I-526 Time spreadsheet turns the quarterly data into a prediction model that estimates average processing times as a function of petition volume at different points in time (with some assumptions about future trends). The last quarterly report indicated 24,627 I-526 pending at IPO in December 2017 and an average of 2,954 petitions processed per quarter over the last four quarters. 24,627/2,954 = 8.3 quarters to process the pending petitions (estimated average). So an I-526 petition filed in January 2018 would be theoretically likely to wait 8.3 quarters (25 months) for processing, other factors being equal. That’s consistent with the Processing Times Information page, which starts the Estimated Time Range at 25 months. But unequal reality leads to some petitions being processed more quickly.

Understanding Variation in Processing Times

Here’s what IPO has said about I-526 time variation (summarized from communications copied in my log of IPO communications on processing times).

  • DHS estimates that the average Form I-526 gets 6.5 hours of touch time.  That means an adjudicator spends less than a day handling the case —  the remaining (and most variable) processing time is queue time and time spent waiting for additional evidence or supervisory approval.
  • IPO has at least three queues going for I-526 petitions: (1) a queue for direct EB-5 petitions; (2) a queue for regional center petitions based on investment in projects that haven’t yet been reviewed; (3) a queue for regional center petitions based on investment in projects that have Exemplar I-526 approval or previous I-526 approvals.  The following chart illustrates my understanding of IPO Deputy Chief Julia Harrison’s description of the process.

    IPO indicates that each queue has dedicated staff working on it. Petitions within each queue are ordered by earliest filing date. A regional center petition for a project not previously reviewed must wait in Queue 2 (for project-specific adjudication) and then again in Queue 3 (for investor-specific adjudication). RC petitions for previously-approved projects advance straight to Queue 3. IPO encourages communication between team leaders on the Queue 1 and Queue 2/3 side to ensure that direct and RC petitions filed at the same time move forward concurrently. With this complex process, it’s unsurprising that IPO appears far from its intention to process cases more-or-less in the order in which they are received.
  • Factors that can speed I-526 processing per IPO:
    • Investing in a project with an approved Exemplar and/or previously-approved I-526
    • Having a clear, high-quality petition (this is important when evidence requests and supervisory approval are the major variables — besides queue time — in overall processing time)
    • Having an approved expedite request (this shortens the queue time, not the adjudicator touch time)
  • Factors that can slow I-526 processing per IPO:
    • Having a petition that’s poor-quality, unclear, problematic, or otherwise inspires IPO to request additional evidence
    • Filing with/after a surge of other people who filed poor-quality petitions
  • Factors that don’t affect I-526 processing time per IPO:
    • The investor’s nationality. (IPO does not currently sort petitions by nationality. There is no hold-up for China-born petitioners at the I-526 stage, as there is at the visa stage. However, IPO asks whether they should change that — considering that fast I-526 approval doesn’t help China-born investors facing a long visa wait regardless. Stats show that I-526 denial rates are much higher for some countries than others, which makes me suspect that IPO finds some countries’ source of funds and background checks more challenging than others – which could naturally be associated with longer processing times. So even if the process is FCFS for all nationalities, it’s probably not FIFO for all nationalities.)
    • Whether the petition is for a direct or regional center investment. (IPO claims that they try to move direct and RC petitions forward concurrently. However there may be some regional center advantage in practice since direct petitions are often the first in a project and cannot take advantage of Exemplar approval.)
    • Project size. (IPO reports that they do not privilege petitions for big projects with many investors. But some anecdotal evidence suggests otherwise.)
    • TEA status. (Some legislative reform proposals have suggested offering quicker processing to petitions based on investment in a Targeted Employment Area, but IPO does not report having any such policy now.)

Individual Processing Time Experience

Individual processing time variation means that some people wait longer than the theoretical average 25 months for I-526 approval, while others receive approval much more quickly.

My best evidence for faster-than-average approval is priority dates for pending visa applications. If all I-526 take 2 years to process, then Department of State should have been receiving applications in 2017 from people who filed I-526 in 2015. In fact, as of October 2017 Department of State reported having over 1,500 pending visa applications based on I-526 petitions filed in 2016 and 2017. Assuming an average 3 visa applications per approved petition, that reflects about 500 I-526 petitions approved and advanced to the next stage within a year of filing. And the DOS report only mentioned pending applications for five countries, not counting all applications for the year. I-485 inventory statistics likewise show many pending status adjustment applications with recent priority dates.

I set up a Google Form to collect reports of processing time experience from individual investors. (Entries still welcome!) In the very limited sample of entries so far (which appear in this Google Sheet), I-526 approvals in 2017/2018 that were reported to me had an average processing time of 19 months, with standard deviation of 7 months. The following tables summarize results reported in my Form so far.

Resources for Investors

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5/15 Policy Manual Update (tenant occupancy)

Update: for more in-depth analysis, see USCIS Evicts Tenant Occupancy Job Counting from EB-5 by Robert C. Divine, Baker Donelson Bearman, Caldwell & Berkowitz, PC and R.I.P. Tenant Occupancy Jobs? An Economist’s Perspective By Jeffrey B. Carr, Economic & Policy Resources, Inc.

–ORIGINAL POST–

USCIS has made another revision to the EB-5 section of the USCIS Policy Manual, this time to rescind its former guidance on counting jobs associated with tenants in a new building funded by EB-5 investment. Now, the tenant occupancy policy formerly in 6 USCIS-PM G Chapter 2 (D) Section 6 has been deleted and replaced with a section in which USCIS explains why the previous policy was wrong. Old policy in a nutshell: We concede the possibility of demonstrating acceptable nexus between investment and tenant job creation, under certain very restricted conditions. New policy in a nutshell: there is no acceptable nexus between investment and tenant job creation. In other words, what was previously only effectively nearly impossible is now definitively impossible, officially.

FYI this document compares the deleted section with the new section. Once again, I copied the 5/15/2018 PM in its entirety into a new document, and used Word’s Compare function to confirm that nothing else changed between the 5/15 and 5/2 versions of Volume 6 Part G. And indeed, no other significant changes. FYI, here’s my folder with all distinct versions of 6 USCIS-PM G.

I don’t know whether to laugh or cry about this change. We’ve been desperately, urgently waiting and begging for clear policy on redeployment, among other issues, and they spend time fiddling with tenant occupancy? How many people have even tried counting tenant jobs since 2013? How is this an issue now? Last year I deleted a bunch of old tenant occupancy-related posts and most of my informational page on the TO question because I thought it had become irrelevant. If indeed TO is not involved in any recent or current offerings, then USCIS is guilty of shameful waste of time. Or if by chance any recent/current offerings do involve TO, relying on guidance that’s been consistent since 2012, then shame on USCIS for sending out a Policy Alert today literally saying that the policy is rescinded as of yesterday.

The new PM language on tenant occupancy states that “a direct financial connection between the EB-5 capital investment and the job creation is necessary to determine a sufficient nexus between the two.” I wonder what USCIS thinks “direct financial connection” means exactly, and the implications beyond tenant occupancy.

Apparently we get until May 29 to comment on the policy change, though it’s effective as of May 15.

On the bright side, two EB-5 policy updates in a month! It’s nice to see the policy process moving. I could just wish for better updates.

Also, FYI there is a change to Volume 7 on adjustment of status that can affect EB-5 among other visa categories.

 

Regulations Update (8/2018?)

The OMB Spring 2018 Unified Agenda has been published, with new estimated dates on action for EB-5 regulations.

  • Estimated Final Action in August 2018 for RIN 1615-AC07 (EB-5 Immigrant Investor Program Modernization), which proposed investment amount and TEA changes. (The Fall 2017 Agenda had previously anticipated Final Action in February 2018.)
  • Estimated Notice of Proposed Rule-making in March 2019 for RIN 1615-AC11 (EB-5 Immigrant Investor Regional Center Program), which dealt with regional center designation and the exemplar approval process. (The Fall 2017 Agenda had previously anticipated NPRM in October 2018.)

It remains to be seen whether these new estimated action dates will be more reliable than previous deadlines. RIN 1615-AC07 is currently a Proposed Rule at Step 7 in the Rulemaking Process, and is not yet listed by the OMB as a Regulatory Action Currently Under Review for Department of Homeland Security.

[6/19 UPDATE: USCIS Director L. Francis Cissna testified at a Senate Judiciary Committee hearing on EB-5 regarding the regulations that “USCIS is currently reviewing the comments and moving forward in the regulatory process with both of these items as expeditiously as possible.” This means that the regs have not in fact advanced as far as we’d thought. When asked whether he thought the regs could be finalized before the 9/30/2018 regional center program sunset date, Mr. Cissna said he didn’t know but that would be “hard to pull off.”]

Speaking at the IIUSA conference on April 27, Kathy Nuebel Kovarik of the USCIS Office of Policy and Strategy “reinforced her department’s position that they will try to get EB-5 regulatory reform done this year, as indicated on the Unified Regulatory Agenda.” This came on the heels of a letter sent by Senators Grassley, Goodlatte, and Leahy to DHS urging the administration to finalize regulations (repeating calls previously made in 2015 and again in 2016 and again in 2017). This week, IIUSA sent an open letter to USCIS encouraging the agency to finalize the proposed EB-5 regulation, but with lower investment amounts ($1 million, or $800,000 in a TEA) than previously suggested. However, the forces against finalizing the regulations remain strong (administrative inertia, and the many stakeholders opposed to the proposed changes). We shall see what happens.

The OMB notices indicate that IPO has hired a new Chief of Policy (Edie Pearson), which is good to know.

FYI, my May 2017 post New EB-5 Regulations: Comments Discussion reviews the proposed regulations and industry response.

5/2 Policy Manual Update (CPR while I-829 pending)

The following new section has been added to the USCIS Policy Manual Vol. 6 Part G, Chapter 5:

D. Extension of Conditional Permanent Residence While Form I-829 is Pending
USCIS automatically extends the conditional permanent resident status of an immigrant investor and certain dependents for 1 year upon receipt of a properly filed Form I-829. [13] The receipt notice along with the immigrant’s permanent resident card provides documentation for travel, employment, or other situations in which evidence of conditional permanent resident status is required.

Within 30 days of the expiration of the automatic 1-year extension, or after expiration, a conditional permanent resident with a pending Form I-829 may take his or her receipt notice to the nearest USCIS field office and receive documentation showing his or her status for travel, employment, or other purposes.

In such a case, an officer confirms the immigrant’s status and provides the relevant documentation. USCIS continues to extend the conditional permanent resident status until the Form I-829 is adjudicated.

An immigrant investor whose Form I-829 has been denied may seek review of the denial in removal proceedings. [14] USCIS issues the immigrant a temporary Form I-551 until an order of removal becomes administratively final. An order of removal is administratively final if the decision is not appealed or, if appealed, when the appeal is dismissed by the Board of Immigration Appeals.

USCIS announced the addition this morning with a Policy Alert on Documentation of Conditional Permanent Resident Status for Immigrant Investors with a Pending Form I-829. The agency solicits stakeholder comments through May 15, 2018 using the procedure described on the Policy Comment page. (Scroll past the tables for instructions.)

Because I love my readers and don’t like relying on online documents, I painstakingly copied all of today’s version of the EB-5 Policy Manual chapter into a Word document, now added to my folder of Policy Manual versions. Word’s document comparison function indicates that Chapter 5 Part D is indeed the only significant change from previous versions, although there are minor unflagged tweaks in other sections (e.g. changing “See Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status” to “See Petition by Entrepreneur to Remove Conditions on Permanent Resident Status (Form I-829).”

Update: Robert Divine has published a helpful article explaining the context of this Policy Manual addition: May 2 Policy Manual Update: One Small Step for I-829 Filers; Some Giant Leaps Left for USCIS to Take

FY2018 Q1 EB-5 Form Processing Statistics

USCIS has updated its Immigration and Citizenship Data page with statistics on EB-5 forms received, processed and pending in the first quarter of FY2018 (October to December 2017). Form I-526 and I-829 are in the Employment Based subsection, and (I belatedly realize) Form I-924 is in the Forms subsection in the “All Forms Report.” (The row title is labeled “I-924/924A” for some quarters’ reports and just “I-924” in others, but it’s evident from the numbers that the data is for I-924 only, not including I-924A. I assume the row comprises initial applications and amendments.) This processing volume information provides the best picture we have of the progress and prospects for IPO processing.

My charts below summarize FY2018 Q1 data compared with previous quarters, and highlight trends. A few notes:

  • IPO processed fewer forms overall in FY2018 Q1 than in the previous quarter. The volume of I-526 and I-924 processed stayed about the same on average over the past few quarters, while I-829 volume leapt and then tumbled. I had hoped for a more positive growth trend, and was disappointed.
  • However, annual numbers trend in a positive direction, with IPO improving processing volume every year, and annual adjudications growing at a slightly faster rate than annual receipts.
  • I-526 and I-924 receipt numbers continue to correlate with regional center program sunset dates, but with smaller and smaller surges.
  • I-829 receipts increased last quarter as expected following the mysterious dips in previous quarters.
  • I-924 adjudication has been remarkable for number of denials.
  • IPO ended December 2017 with about twice as many pending I-526 and I-829 as it’s proven able to process in a year, and nearly three times as many I-924. So if we estimate processing times by dividing inventory by flow rate, that yields a 2-year processing time estimate for I-526 and I-829, and three-year estimate for I-924. That volume-based estimate matches exactly with the base month that USCIS posts on its new Processing Time Information page for I-526 and I-829, which makes me think they’re using the same equation. USCIS’s processing time estimate for I-924 is much lower, however. Maybe they plan to dramatically increase volume of I-924 adjudication, or disappear some of the pending backlog?
  • FY2018 Q1 showed fewer I-526 adjudications and more I-526 receipts than I’d expected, so I recalculated my I-526 time prediction model accordingly.

Now that I’ve chosen to spend so much time sweating over Excel and Photoshop and injuring my eyes to make this post better than it needs to be, and as helpful as possible to you, I shall recopy my Paypal plug below. (Thank you to the 26 readers who contributed to the blog since I opened the option last month.)

Benefit from this blog? Please support the effort behind it. As the EB-5 industry changes, your contribution can help preserve this space for conscientious and freely-available EB-5 reporting. Contributions go to Lucid Professional Writing, a for-profit business, to fund work on this blog. (Not a charitable contribution.) Thank you!

4/23 Visa Numbers (China, Vietnam, India, Brazil, S. Korea, Taiwan)

Visa Numbers Update

Charlie Oppenheim, Chief of the Visa Controls Office at the U.S. Department of State, spoke about EB-5 visa numbers and allocation at the IIUSA conference on April 23. This post summarizes interesting data from his slides. (The tables pictured below are also in my increasingly untidy Backlog Calc Excel file. When I have time, I’ll reorganize the file and recalculate projections.) I’m relying on a partial video recording and reports from others for this post, not having heard Mr. Oppenheim’s talk in person. When someone at the conference posts a substantial report, I’ll link it here. As always, I welcome corrections. [Update: other reports on this presentation from IIUSA and Wolfsdorf Rosenthal.]

Highlights from Mr. Oppenheim’s presentation [with my commentary in brackets, and images showing my summaries of data points from the presentation]:

  • USCIS has picked up the pace on I-526 adjudication. The National Visa Center received 25% more EB-5 applicant petitions in 2017/2018 than 2016/2017. That reflects I-526 processing improvement (good news), and results in more people ready to claim available visas (bad news for the visa backlog).
  • Visas can be issued by Department of State through consular processing (for applicants residing outside the US) or USCIS through I-485 status adjustment (for applicants in the US). Historically most EB-5 visas have come through DOS, but we’re seeing a steady increase in visas through status adjustment: 991 in FY2015, 1,442 in FY2016, 1,676 in FY2017, and 952 already in the first six months of FY2018. This reminds us to keep an eye on what’s happening at USCIS as well as DOS, when tracking visa number demand.
  • Department of State has seen a dramatic increase in visa applications from people outside China. In just the first six months of FY2018, DOS issued 2,735 EB-5 visas to applicants from outside China – more than in the whole of the previous year. That increase in “rest of the world” visas can be bad news for China, because annual visas available to China depend on leftovers from the rest of the world. [My model estimates that the China line is 10 years long assuming 80% of annual visas available to China, and 15 years long if 50% of annual visas are left to China. Also, I wonder if the “rest of the world” bump could reflect IPO taking initiative to prioritize moving non-China I-526 petitions – an idea they suggested in November 2017.]
  • Based on growing demand, Vietnam, India, Brazil, South Korea, and Taiwan are on Mr. Oppenheim’s radar for potential to trigger the per-country cap and thus get held back with cut-off dates. Vietnam already has a final action date that Mr. Oppenheim expects to advance by several months in 2019 (but not make it current). He expects to set a final action date for India by June 2019 at latest, and for Brazil, South Korea, and (maybe) Taiwan in Summer 2019. The projected final action date for September 2019 is October 1, 2014 (worst case) or October 15, 2014 (best case) for China and other oversubscribed countries. [Cut-off dates for other countries is good news for China, because those countries get temporarily removed from the queue-cutting “rest of the world” pool, and instead stuck in line behind older Chinese applications for leftover visas.]
  • In the Q&A period, Mr. Oppenheim reportedly projected these EB-5 visa wait times: China 15 years, Vietnam 6 years, India 5 years, Brazil and South Korea 2 years. [This time indicates years from today to conditional permanent residence for people filing I-526 today. But these estimates are subject to change depending on future demand trends.]

Consider the lesson from China. EB-5 was still current for China throughout 2014; Chinese applicants didn’t start getting held back with a cut-off date until May 2015. But Chinese investors who filed I-526 back in FY2014 have been affected.  Applicants with 2014 priority dates started getting visas in September 2015 (per the Visa Bulletin) and will still be getting visas into 2019 (per Mr. Oppenheim’s predicted final action dates). That’s a lot of years just to issue conditional green cards to petitioners from one year.  Look at 2014, and then visualize how many years it will take to issue the visas to Chinese who filed I-526 in 2015, 2016, 2017, and 2018, unless something changes. (See my graphic for visual reference.) If Chinese with 2014 priority dates are still in line for visas into the end of 2019, how long will a Chinese with a priority date of today have to wait for a visa? That tower of past petitions is a sobering fact for China, and also any potentially high-volume countries that may end up in line behind China. The prospect of unacceptable wait times creates urgency to advocate for more EB-5 visa numbers. As things are, we can’t keep attracting every year three to four times the number of investors who could eventually get visas in a year, or depend heavily on any one country given the per-country limits.

For additional discussion of factors that could change visa wait times for various countries, see my post I-526 and EB-5 visa wait times; country-specific effects of potential changes (June 18, 2018)

EB-5 Processing Times

Since late March, I’ve been tracking EB-5 forms on the new USCIS Processing Times page. So far the month range has remained unchanged for each form, while the “Case Inquiry Date” has advanced one day per day for each form. No evidence yet of human intervention to update the information, and I rather doubt the link to reality. But for the record, here’s how the system is currently set to auto-advance the “Case Inquiry Date”:

  • I-526 case inquiry date: today’s date minus 971 days (i.e. priority date plus 971 days is the date when one can start to inquire about the petition as being outside normal processing times)
  • I-829 case inquiry date: today’s date minus 893 days
  • I-924 case inquiry date: today’s date minus 663 days

FYI, of people who’ve filled out my I-526 processing experience Google form so far, a majority of those with approvals  in 2018 had priority dates in 2016, and some even in 2017. (Form results here.)  Apparently IPO isn’t simply processing petitions from 2015, as the published Processing Time Information would suggest.

New TEA Data

The Bureau of Labor Statistics has made its annual Spring release of employment data for the previous year, which means a new data set for calculating Targeted Employment Area qualification.  Impact DataSource explains what changed. To learn more, consider signing up for a webinar.

Other Resources

Speaking of webinars, note that the Council of Development Finance Agencies is hosting a course  designed to provide a substantial practical introduction to EB-5.

New Litigation and AAO Decisions (“invest” requirements)

Appeals and litigation give a rare public glimpse into how the Investor Program Office is adjudicating I-526 petitions. It appears that IPO may be in the midst of a campaign to re-interpret/enforce the EB-5 “invest” requirements as described in 6 USCIS Policy Manual G.2  There have been a spate of denials that turn on language in the securities and transaction documents. Recent examples:

  • Guaranteed returns and debt arrangements, call option issue: CHANG et al v. DEPARTMENT OF HOMELAND SECURITY et al (Case Number: 1:18-cv-00659) is a civil action filed on March 22, 2018 by ten investors who put money into senior living project in Florida. (Here’s a summary and the full complaint.) These investors filed I-526 in 2014 and 2015 and heard nothing back from USCIS, finally making a mandamus complaint in October 2017 to compel agency adjudication. USCIS responded in February 2018, denying all investor petitions based on finding that “a call option reflected in the Partnership Agreement and the offering documents demonstrated the existence of an impermissible debt arrangement.” The investors have responded with a complaint pointing out that this issue was previously addressed by federal judges who found that a call option does not of itself constitute a debt arrangement. In previous cases, the US District Court in DC ruled that the USCIS denials could not survive review because they conflict with the plain language of the regulations, are not compelled by statutory or regulatory purpose, unreasonably stretch the rationale of precedent decisions, and run counter to evidence. Call options (buyout options) have been quite common in EB-5, and I wonder if many I-526 are being held up now behind the scenes while USCIS figures out how to deal with them (balancing newfound intent to deny such cases with the fact that the court has shredded the reasoning behind several denials so far). I’ve seen recent NOIDs based on call options, so USCIS hasn’t given in yet. I can’t see what legs the court (not to mention policy and reality) have left to the case against call options per se, and I hope USCIS accepts that soon to avoid further needless delays, disruption, and lawsuits. (UPDATE: FYI here are my notes for an ILW call on 4/17 to discuss the “invest” requirement, and new USCIS challenges to equity with debt-like features. The notes link to the relevant AAO and district court decisions, and summarize the fact patterns and arguments for each case.)
  •  “Made available” and bridge financing issues: JAN262018_05B7203, JAN302018_01B7203, FEB072018_02B7203, and MAR152018_01B7203 are decisions on the same regional center offering to invest in construction of a distribution center in Washington. After having approved 10 investors in the project, USCIS denied petitions for the last 10 investors. USCIS’s main excuses for this treatment: (1) the project having completed construction constitutes a material change of fact that prevents the last investors from relying on favorable decisions for previous investors, (2) USCIS belatedly identified a legal deficiency: that the PPM and loan agreement language don’t unambiguously obligate the NCE to make the entire amount of the petitioners’ funds available to the JCE, and (3) the reality that the investors chose a project that successfully developed and created jobs does not overcome paperwork problems. The petitioners were judged ineligible not based on reality, necessarily, but based on wording: they submitted documents that had leaky language in the loan agreement, didn’t paper up a bridge financing arrangement the way it’s supposed to be papered, and left sloppy inconsistencies in the business plan and economic impact report. Several morals from this case: People who draft transaction documents need to be mindful of the “made available” and bridge financing features of the EB-5 “invest” requirement, and write that into documents — taking particular care when it’s likely that (as often happens now considering long processing times) the project will have been completed by the time USCIS finally gets around to adjudicating I-526 petitions for investors. Prepare for the fact that an adjudicator may ask two years later: “why the JCE would still need this capital and to what use it would be put by the JCE in light of the completion of the project.” Document preparers must be very attentive to detail and careful about language, because compliant documents are apparently more determinative than compliant reality in whether or not investor petitions get approved. I keep this burden in mind as I write EB-5 business plans.
  • “Chance for gain” issue: FEB282018_02B7203,  MAR092018_02B7203, MAR162018_01B7203 are decisions on the same offering to invest in a regional center NCE to make a loan to a JCE to construct, finance, and operate an hotel. The denials rest on a finding that the LP agreement and loan agreement “do not provide the Petitioner with any rights to the NCE’s profits, whether derived from the loan interest or otherwise, and the sole opportunity for the Petitioner to generate a return on the investment is if the general partner elects to pay a 0.05% interest payment upon the NCE’s loan repayment.” USCIS will deny cases that guarantee a return, but – as we see here – can also deny cases that appear to make a return too discretionary. USCIS found in these cases that “discretionary chance for return which is unrelated to the investment does not satisfy the regulatory requirement for capital at risk under 8 C.F.R. § 204.60)(2).” Again, people drafting documents must walk a very fine line. USCIS wants to see (1) that investors have a chance for gain, (2) that the income sources to pay a return are directly related to the purpose of the underlying investment, (3) that the return is not guaranteed, (4) that the NCE general partner does not have absolute discretion to make or withhold the return. And furthermore, the documents have to be right the first time, at I-526 filing. The petitioners in FEB282018_02B7203 and MAR092018_02B7203 provided amended documents in response to NOID, but USCIS judged this an impermissible material change and refused to consider such post-filing clarifications.
  • “Business activity” at-risk issue and identified location: To meet the at-risk requirement for EB-5 investment, a petitioner must present evidence of actual undertaking of business activity, not just an idea for future activity. The precedent decision Matter of Ho cited entering a lease as an example of de minimus activity that doesn’t  itself qualify as sufficient business activity to put funds at risk. So if a petitioner hasn’t even secured a business location before filing I-526, he can expect to be challenged as having even less than de minimus activity. That happened to the petitioner in MAR162018_02B7203, a regional center case. “The Chief concluded that without a specific property, the Petitioner could not demonstrate that his funds were at risk, that the business plan was comprehensive rather than hypothetical, or that certain inputs to the economic model were valid.” (This decision also shows the importance of a quality business plan with real market analysis and financials, as it rips apart the placeholder content in the petitioner’s plan. And it shows confusion about the job creation timing requirement in the USCIS Policy Manual Vol. 6 Chapter 2(D)5. The decision seems to assume that job creation must occur within two years of filing I-526, while the PM states that the two-year job creation window is deemed to begin 6 months after adjudication of Form I-526.)

Other recent AAO decisions of note:

  • FEB072018_01B7203 is one of the rare cases where AAO decides to withdraw USCIS’s decision – in this case involving source of funds derived from loan proceeds received as a gift from the petitioner’s husband.
  • FEB152018_01K1610 upholds USCIS’s decision to terminate a regional center for this fatal error: filing Form I-924A to the wrong address.
  • FEB282018_01B7203 is yet another reminder that the new owner of a pre-existing business cannot expect that the enterprise and its new employees automatically qualify as “new” for EB-5 purposes.

Minor Investors:

Long processing times and the visa backlog have motivated families to make a teenage child to be the principal EB-5 applicant. USCIS has questioned but started approving such petitions, as reported by Wolfsdorf Rosenthal in this post and Miller Mayer in this webinar (35 minutes into the recording).

Washington Updates:

I continue to update my Washington Updates page, most recently with post-March analysis and a link to a letter from several senators to USCIS urging that regulations be finalized. Senator Grassley has made this plea multiple times since 2016; we’ll see what happens now.

Personal Update:

As EB-5 reporting and analysis become increasingly time-consuming, and less linked to my selfish purpose of encouraging demand for my business plan-writing service, I’ve decided to put up a donate option. If you can support the effort behind the blog and help keep it in business, please visit my About page and scroll down to the Paypal button, which can facilitate making a contribution through Paypal. I want to avoid a subscription model because publicly-available EB-5 information is important to my clients and the health of the EB-5 program.

Regional Center List Changes:

Additions to the USCIS Regional Center List, 03/19/2018 to 04/10/2018

  • American Capital Regional Center, LLC (Texas)
  • Borrego Development, LLC (California, Nevada)
  • Colorado Rocky Mountain High Regional Center, LLC (Colorado): www.coloradorockymountainhighrc.com
  • M5 Venture Silicon Valley RC LLC (California): www.m5venture.com
  • Mile High Regional Center (Colorado)
  • National Regional Center, LLC (California)
  • Protogroup, Inc. (Florida)
  • Texas Tilegend Regional Center (Texas)
  • Y & L Enterprises LLC (Iowa, Nebraska)

New Terminations

  • Encore Raleigh/Durham Regional Center (North Carolina)
  • Encore Alabama/Florida Regional Center (Alabama, Florida)
  • G.R.E.E.N. Regional Center (New Jersey)
  • BLMP Florida Healthcare Regional Center, LLC (Florida)
  • Michigan-Indiana EB-5 Regional Center (Indiana, Michigan)
  • Queensfort Capital Massachusetts Regional Center, LLC (Massachusetts)
  • South Pacific Regional Center, LLC (Hawaii)
  • Queens Fort New York Regional Center, LLC (New Jersey, New York, Pennsylvania)
  • Central Texas Properties Regional Center (Texas)
  • South Texas EB-5 Regional Center, LLC (Texas)
  • Pacific Viniculture (Washington)
  • California Investment Immigration Fund, LLC (CIIF) (California)
  • USA ODI Regional Center, LLC (Maryland, Virginia, West Virginia)
  • Manchester Pacific Regional Center (California)
  • Regency Regional Center, LLC (California)

EB-5 Visa Waiting Line and Visa Allocation

People who use EB-5 face some tough facts:

  • Demand for EB-5 visas (annual I-526 filings) has been three to four times higher than EB-5 visa availability since 2011, resulting in a backlog now about a decade long. (For those not already familiar with the situation, here’s a simplified explanation.)
  • New investors from most countries today can still expect to receive a conditional green card fairly promptly after I-526 approval, but only due to exceptions that will allow their applications to skip ahead of (push back) other people stuck in the backlog. (Or the overall wait could be shortened if the visa quota changes, or many people drop out of line.)

We respond to these facts by (1) advocating for backlog relief (AILA’s White Paper: Solutions to the EB-5 Visa Waiting Line gives suggestions), and (2) figuring out how the exceptions work, because investors and projects want to avoid a decade-long wait if possible.

The past few years offered a simple exception that allowed jumping much of the queue: be born outside China, since China accounts for most of the backlog and was the only oversubscribed country. Now, people from Vietnam face getting stuck in the visa wait line behind the Chinese (the May 2018 Visa Bulletin will have a Vietnam cut-off date), other countries wonder whether the same could happen to them one day, and Congress threatens set-asides and other changes to visa availability. And so we feel the urgency to understand just how visa allocation works, and relevant numbers.

First, here’s the law related to EB-5 visa allocation, with linked citations. (Or you can download my Word doc to get the text with headings to assist navigation.)

  1. The annual worldwide level for all employment-based (EB) immigrants is effectively 140,000. INA 201(d)(1)(A)
  2. At most 7.1 percent of the employment-based worldwide level is made available to immigrants in the EB-5 category. INA 203(b)(5)(A)
  3. Available EB-5 visas are issued to eligible immigrants in the order in which the immigrant petition was filed. INA 203(e)(1)
  4. At least 3,000 EB-5 visas are reserved annually for immigrants based on investment in a Targeted Employment Area. INA 203(b)(5)(B)
  5. 3,000 EB-5 visas are set aside annually for immigrants based on investment in a Regional Center. PL 102-395 Section 610(b) as amended by PL 105-119 Section 116(a)
  6. The EB-5 visas made available to natives of any one country may not exceed 7 percent of the available worldwide total. But if one or more countries gets held back by this rule, resulting in available visas with no one else to take them, then those remaining visas can be made available again without regard to per-country numerical limits for that year. INA 202(a)(2) and INA 202(a)(3) and INA 202(e) and PL 106-313 Section 104
  7. EB-5 visa numbers available to China annually under the per-country limit are reduced by 700 to compensate for cases processed under the Chinese Student Protection Act of 1992. PL 102-404 Section 2(d)(B) [Comment: It’s not obvious when this compensation is/was already complete; if the CSPA off-set does still remain in effect now, then Chinese start the year with (9,940*0.07) – 700 = -4 EB-5 visa numbers available to them.]

I imagine Charlie Oppenheim at the Department of State, sitting at his desk on October 1, 2017 with 30,000 EB-5 visa applications before him and tens of thousands more to come as USCIS approves pending I-526. How does he apply the above rules to decide who gets a visa in FY2018, and in what order? I hope he addresses this question during his keynote speech at the IIUSA EB-5 Advocacy Conference on April 23. (4/25 update: here are notes from Mr. Oppenheim’s presentation.) In the meantime, here’s my understanding of how the rules get applied in practice.

  • #1 and #2 above give the target quota for EB-5 visa numbers in one year: 140,000*0.071=9,940.
  • #3 specifies the basic rule of order: first-in-first-out by priority date (applicants with oldest I-526 priority dates are first in line for a visa)
  • #4 to #6 are factors that can override the basic FIFO order principle. The applicant with oldest priority date gets the first visa number unless she’s held back by:
    • #4) being the 6,941st+ applicant that year (9,940-3,000) who invested outside of a TEA, in which case she’s held back for any TEA-based applications to go ahead (thus far, non-TEA applications have been too few to trigger this set-aside)
    • #5) being the 6,941st + applicant that year who invested outside of a regional center, in which case she’s held back for any regional center-based applications to go ahead (thus far, direct EB-5 applications have been too few to trigger this set-aside)
    • #6) being the 696th+ applicant that year (9,940*0.07) from a single country, in which case she’s held back for any applicants from not-oversubscribed countries to go ahead (China has been oversubscribed and triggered the per-country cap since 2015, and Vietnam will as of May 2018)
  • #6 does not mean that 7% of visas get set aside annually for each country in the world. It does not mean that any one country gets only 7% of visas annually. #6 just means that any one country’s allocation gets capped at 7% so long as other countries are also competing to use up available visas. When other countries aren’t competing, then any visas still on the table get allocated to the waiting line in FIFO order without regard to per-country limits. So in 2017, China in fact got 75% of visas: 7% plus the 68% of visas that remained after numbers had been allocated to qualified applicants from other countries. (Or maybe only the remainders, if the Chinese Student Protection Act in fact took the first cut.)
  • When total demand promises to exceed total available visas for the year, then DOS looks at individual countries to see which look likely to exceed the 7% per-country cap, and sets a cut-off date or final action date for each of those countries. When a cut-off date is in place, only people from that country with priority dates earlier than the cut-off date can proceed with visa applications; others are held back. DOS gradually advances the cut-off date to release just enough people to apply for available visas.  At the beginning of the year, different oversubscribed countries can have different cut-off dates. When each country is getting its 7% of visas for the year, DOS looks at each country individually when setting the cut-off dates. When per-country caps have been met, then all oversubscribed countries are just competing together for remaining EB-5 visas left by not-oversubscribed countries. That means they are all in the same line again and will have the same cut-off date. (In practice that puts China at the head of the line for leftover EB-5 visas, since it’s been held back for years and thus its applicants have the oldest priority dates. Vietnam will start being held back in 2018, and its more recent held-back applicants will find themselves behind many longer-pending Chinese applicants. If India or Brazil get held back next, their still-more-recent applicants will find themselves behind both China and Vietnam in the competition for leftover visas. )
  • Exceeding the 7% cap is scary because it puts a country in the same line as China for leftover EB-5 visas, and near the back of that line based on priority dates and the FIFO process. The saving grace for small countries is that they can at least get 7% of EB-5 visas every year, and probably won’t exceed that cap by very much. If I’m a Vietnamese applicant held back this year, I’ll be one of the older Vietnamese applications next year and thus well-placed to get one of 700 new EB-5 visas available to Vietnam then. What I can’t expect is to get an EB-5 visa left over after not-oversubscribed-countries took what they want, since tens of thousands of Chinese have earlier claim on any leftover visas. But small excess = small backlog = small need to compete for leftover visas, thus relatively short wait time. As an Indian, I’d be a bit more concerned and vigilant. India hasn’t had high EB-5 numbers before, but the companies that helped create the China backlog with giant EB-5 raises have turned to India. If Indians flock to big raises seeking 100s of investors, then they will end up needing many more than 700 visas per year,  thus creating a significant India backlog that needs leftover visas but won’t get them for ages because behind the earlier China/Vietnam backlog plus squeezed by any new rest-of-the-world applications.
  • Visas can only be issued to people with complete visa applications ready, not to people with I-526 investor petitions still pending at USCIS. But it’s important to keep an eye on I-526 petitions – on number of receipts, petitioner origin, adjudication speed, approval rates – to estimate how many of those petitions will become visa applications, and when. New visa applications from not-oversubscribed countries immediately reduce the number of leftover visas available to pending applicants from oversubscribed countries. New applicants from a country near the 7% cap could tip the balance into cut-off dates and backlogs for fellow-countrymen already in line. A major decrease in I-526 filings or increase in denials or withdrawals would reduce incoming pressure on the visa backlog, and shorten wait time projections. Estimates are tough with all these moving parts and limited data, but we must try. The China backlog ballooned quickly and came to many investors (and their projects) as a nasty surprise. They didn’t realize how many other Chinese investors were already in the system or entering at the same time, and what that would imply for future visa wait times. A cautionary tale.

To facilitate analyzing numbers relevant to country-specific visa availability, I’ve added a tab titled “Country Focus” to my ongoing Backlog Calc Excel file. (The numbers aren’t new, but highlight significant previously-reported I-526 and pending visa data. I even made a cartoon to assist in visualizing the numbers. The thumbnail image here gives a teaser of the new Excel tab.) I don’t offer conclusions, but information to assist your conclusions.

Additional reading:

Benefit from this blog? Please consider supporting the effort behind it. As the EB-5 industry changes, your contribution can help preserve this space for conscientious and freely-available EB-5 reporting. Donations go to Lucid Professional Writing (a for-profit business) to fund work on this blog. Thank you!

RC Authorization to 9/30/2018, Processing Times, New RCs

Regional Center Program Authorization

The last time Congress voted a significant regional center program extension was 2012. Since then, the program has been extended a few months at a time, in connection with government funding. This is now happening again with H.R.1625, the vehicle for the Consolidated Appropriations Act 2018, which was signed by the President today.  The text includes regional center program authorization to 9/30/2018 on PDF page 1759, as follows:

SEC. 204. Section 610(b) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) shall be applied by substituting “September 30, 2018” for “September 30, 2015”

This language refers back to Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (Public Law 102-395) Section 610 (PDF page 47), which established the regional center program. The 2018 Appropriations Act does not include the EB-5 Reform Act, or other EB-5 changes. It just extends the borrowed time until we get a good piece of EB-5 legislation.

Processing Times

USCIS has attempted to clarify reporting for processing times, and succeeded in confusing me, at least, even more than before. Unfortunately I missed a webinar on this topic yesterday because even the emails were confusing, but here’s what I think I understand, having read the new pages at egov.uscis.gov/processing-times/ and egov.uscis.gov/processing-times/more-info, and used my spreadsheet to fiddle with the EB-5 form numbers in comparison with numbers in the old-style report.

USCIS has changed its method for calculating processing times for four forms: N-400, I-90, I-485, and I-751. The underlying method for calculating (and underlying reality behind) times for I-526, I-829, and I-924 has not changed. What’s different for the EB-5 forms is that USCIS now reports three pieces of information: a high and low month in an “estimated time range” and a “case inquiry date.” The low month in the time range corresponds to the date USCIS previously reported for “processing cases as of…” in the old-style report, while the high month multiplies that duration by 1.3, and the case inquiry date more-or-less corresponds to the high month. Apparently IPO doesn’t want people complaining that they’re outside of normal processing times until their cases are taking 130% longer than average. If you took part in the webinar and have additional insights or corrections, please share.

See also the OIG Report: USCIS Has Unclear Website Information and Unrealistic Time Goals for Adjudicating Green Card Applications

Visa Availability

The Visa Bulletin for April 2018 confirms that Vietnam is definitely up next month for a cut-off date based on oversubscription. With visa availability being the major political and practical factor for EB-5 today, I’ll be writing more about this soon.

Regional Center List Updates

Additions to the USCIS Regional Center List, 03/09/2018 to 03/19/2018:

  • 888 American Dream Projects Regional Center (California, Nevada)
  • American National Regional Center d.b.a. EB5 Financial Regional Center (California): www.anrcs.com
  • Dayton Regional Center, LLC (Ohio)
  • Delvelyn Regional Center, LLC (California)
  • Hudson Funds New York Regional Center, LLC (New Jersey, New York, Pennsylvania): hudson-funds.com
  • MGV NYC Regional Center LLC (New Jersey, New York, Pennsylvania)
  • Monterey Massachusetts Regional Center, LLC (Massachusetts)
  • Monterey Northern California Regional Center, LLC (California)
  • Monterey Southern California Regional Center, LLC (California)
  • New York/New Jersey Real Estate and Infrastructure Regional Center LLC (Connecticut, New Jersey, New York)
  • PacNW Regional Center, LLC (Oregon, Washington)
  • Propet American Dream, LLC (Washington): www.propetamericandream.com
  • RSR EB-5 Regional Center, LLC (North Carolina, South Carolina)
  • Smith Mountain Regional Center, LLC (Colorado, Oklahoma, Texas)
  • U.S. Green Capital Regional Center, LLC D/B/A Playa Vista Regional Center (California): pvcapitalmanagement.com
  • Washington American Investments, LLC (District of Columbia, Maryland, Pennsylvania, Virginia)

New Terminations:

  • Chen Roberts Regional Center (Oklahoma)
  • Regency Regional Center LLC (California)