EB-5 Reform Act: the Good
March 14, 2018 53 Comments
This post summarizes points in favor of the proposed EB-5 Reform Act. Its details and compromises won’t please everyone, as discussed in my previous post, but it is a piece of EB-5 legislation currently without a better alternative. Here are some reasons for stakeholders be happy if it gets included in the spending bill due by March 23.
- People who already invested and waiting for a green card: Although they would bear downside of this bill’s most painful compromise – visa set-asides – they will suffer more if the regional center program loses authorization. At least under current policy, the process will simply be over for RC investors awaiting conditional permanent residence if the RC program is deauthorized long-term. The RC program will sunset on March 23 unless something is done, and this EB-5 Reform Act appears to be the only thing that can be done. I’d love to see another short-term extension to give time for Congress to draft more fully-baked and inclusive legislation, but after three years of short-term extensions that’s a lot to hope for. (Update: another short-term extension has now emerged as a possibility.)
- All EB-5 investors: The bill gives desperately-needed protections and options for investors in case of change with projects and regional centers, and improves and compresses the process for removing conditions.
- Future investors: The new investment amounts are high, but much lower than they could’ve been, or will be if the regulations are finalized instead. Visa set-asides offer hope (if no more) to potential investors from backlogged countries. Future investors will benefit from new process improvements, investor protections, and integrity measures.
- Regional Centers: A more difficult and expensive life under the EB-5 Reform Act is better than death from loss of RC program authorization. The five-year program extension will provide much-needed stability. The moratorium and transition period will be rocky at first, but should result in a more-clearly-defined program eventually. The visa set-asides will help with marketing, at least for awhile, and the new incentive categories broaden the kinds of projects that may be viable to market. The new investment amounts are not so high as to kill demand entirely, unlike in the regulations. And the bill opens up a new category of potential demand: investors who already filed with someone else but now want to switch projects and/or regional centers — something not previously allowed.
- People who want program integrity: This bill proposes integrity measures that mostly appear possible to implement (unlike previous drafts that would have made good-faith compliance near-impossible in practice, and thus not been effective in weeding out bad players either). And it offers funding, personnel, and official authorization for effective compliance initiatives already started by USCIS.
- People who want to tighten TEA incentives: This bill puts responsibility for incentive-area designation with USCIS, which will be more narrow, rigorous, and consistent than states. It’s naturally difficult to incentivize investment in significantly distressed and remote areas, and such areas would be at least as competitive under the EB-5 Reform Act as they are now.
- Investor Program Office: Although this bill gives them more work, it also exempts
mostsome of their decisions from judicial review. (I oversimplified — see MF’s comment.)
It’s too late for major changes and amendments if the EB-5 Reform Act is to get into the omnibus at all, but if I could propose one amendment it would be this: a period of at least weeks before the provisions take effect and the filing moratorium begins. Most stakeholders haven’t even seen the bill text yet, and it will be very hard to comply instantly if it goes into effect instantly.
Other commentary on this bill:
- Grassley: Big Money Interests Again Block Reforms for Corrupt EB-5 Visa Program Senator Grassley (3/19/2018)
- Imperfect EB-5 Bill? Perfect, We’ve Arrived (3/16/2018) Carolyn Lee, Miller Mayer
- New EB-5 Law Likely to Pass (3/16/2018) Mona Shah
- Summary of the Draft EB-5 Reform Act (3/19/2018) Saul Ewing Arnstein & Lehr
- ILW Discussion (3/16/2018)
- 10 Things to Know about the New EB-5 Reform Act (3/13/2018) Wolfsdorf Rosenthal
- Live Discussion of the Proposed EB-5 Bill [webinar recording] (3/12/2018) Klasko Law
EB-5 Updates 
You didn’t mention the visa set asides for rural and urban distressed. Do you think these will have no significant value? It would seem these would be very helpful in terms of evening the playing field…
I just fear that the set-asides will be quickly stripped of value in practice due to volume of petitions and the number of people in the backlog who could potentially redesignate. But I could be wrong! Certainly the promise of a shorter line is an extremely attractive incentive, if only that promise can be realized.
in your previous post you said:
“3,100 visas annually will be removed from the pool of generally-available visas and set aside for incentive categories defined in the new bill: rural (1,450 visas), priority urban investment (1,450 visas) and infrastructure projects (200 visas). People who judge that the projects in their previously-approved I-526 could qualify for the new incentive categories may be able to redesignate their TEAs to take advantage of set-asides. Otherwise, the set-asides will primarily benefit new petitioners and old petitioners will be in line for fewer visas”
will these 3100 visas be removed as soon as the bill becomes law or after the 120 day period ?
I haven’t figured out how to interpret what’s said about effective dates, but I’ll report when someone explains this point.
It also includes EB-5 investors under INA Sec. 245k, which currently only applies to EB-1 through EB-4. INA 245k allows individuals who have failed to maintain lawful status or violate the terms of their status for up to 180 days – if otherwise eligible – to nevertheless apply to adjust status. Under current law even one day of unauthorized employment or a one day gap in status renders EB-5 applicants ineligible to adjust status. See Sec. 7 (b) (1)
It would also allow for concurrent filing of I-526 Petitions and I-485 Adjustment of Status applications, if visas are immediately available under the Visa Bulletin. See Sec. 7 (b) (2)
As for judicial review, our read is it doesn’t strip jurisdiction over all I-526 denials or revocations, but could incentivize USCIS to include a ground of fraud, misrepresentation, criminal misuse, national security or public safety. The jurisdiction stripping of regional center designation, amendment, exemplar, denials/revocations, and suspension, termination, and debarment decisions is unlimited. AAO review is allowed. Regional center amendment decisions could be taken to the court of appeals, bypassing district court.
Thank you!
“It would also allow for concurrent filing of I-526 Petitions and I-485 Adjustment of Status applications, if visas are immediately available under the Visa Bulletin. See Sec. 7 (b) (2)”
Does this mean that people from India who are currently waiting for i-526 approval can immediately apply for I-485,without waiting for I-526 approval?
Not now, but upon enactment of the legislation as it is written, I would argue yes, but there is no guarantee how USCIS would view this. The proposed legislation says “if the approval of a petition for classification under section 203(b)(5) would make a visa immediately available to the alien beneficiary, the alien beneficiary’s application for adjustment of status under this section shall be considered to be properly filed whether the application is submitted concurrently with, or subsequent to, the visa petition.” Visas are currently available in the India EB-5 category, so if the law were effective today, my reading is that otherwise eligible individuals chargeable to India with a pending I-526 Petition could file an I-485 Application to Adjust Status.
“As for judicial review…” I will wait for the first case challenging the constitutionality of the limitation in case of anyone who was already admitted on a conditional basis living in the US awaiting the removal of the conditions. The termination ground is as vague as can be – National Security or Public Safety. A good reason to wait as long as possible until the removal of the condtions before permanently settling in the U.S. (also since any benefciaries of the applicant, e.g. spouse or children, are also automatically terminated)..
Do you think there will be any reforms taking care of the backlog, especially for Chinese investors? Is the backlog currently a problem under consideration or being ignored? Thank you!
You may be interested in this article: https://millermayer.com/wp-content/uploads/2018/01/AILA-White-Paper-Legislative-Solutions-to-EB-5-China-Backlog.pdf
Thanks!
I am wondering whether there will be amendments after the enactment. By far I see no good news for Chinese investors, who are almost 80% of the total investors. Then the next question is whether investors can get capital back legally on time to minimize the loses. I don’t think a waiting line for 20 years is attractive and the redeployment funds to other projects as “an investment” is too risky from my perspective. We could lose the capital in a risky, less supervised project in a blink. This upcoming bill might function to kill the whole program slowly (if no changes) and when that happens, our investors may face a bigger issue: no visa/green card and no money back, which have happened before and we all have seen how the state government dealt with that. Suzanne, I am wondering if there is any previous cases regarding transferring/withdrawing funding from the Eb-5 program/RC if giving up the application and accept the sinking costs. I myself is an investor in a TEA Eb-5 program but I do sense danger in the upcoming changes.
In the Klasko Law webinar on this bill (linked on my Washington Updates page), they anticipated that the draft bill would likely be included in the omnibus, if at all, as-is, with few to no amendments. Not sure about the potential for changes after enactment. So far as the immigration service is concerned, you are free to withdraw from the program any time and withdraw your petition. In that case, what happens to your money ceases to concern them and becomes your personal investment matter. Then it’s no longer an immigrant investment, just an ordinary investment. The PPM or other agreement that you signed when investing will explain exit options. As a practical matter, if the enterprise really used your money to fund a real project, then it’s been spent and will take time to recoup – not an instant exit strategy. But those arrangements are just between you and the enterprise — the government doesn’t interfere in repayment except to say that people still in the immigration process can’t get repaid too early. But as a TEA investor, you might wait and see what happens with the visa numbers — the wait might not be as bad as some calculations suggest. Also, the Reform Act includes process changes and amendment options that may reduce/eliminate the redeployment problem. I haven’t thought this part through yet.
Thanks very much! That is very helpful.
Hi Suzanne,
Could you tell us what the investment amounts currently discussed are?, for both investment through regional center and without.
Thank you
See this post for a summary of practical details: https://wolfsdorf.com/blog/10-things-to-know-about-the-new-eb-5-reform-act/
The investment amounts would be the same for direct and regional center investment.
Very impressive progress on petition processing reported today…
Yes! Nice that they prioritized I-924, so more people could have approvals/exemplars in advance of any changes.
With all the new rules, I expect to see processing slow down again, if that’s possible 😉
Suzanne, thank you for this great blog. I find it very valuable source of information about EB-5. I wonder, could I-526 processing times also leap forward within next several months, considering they were so slow recently? I don’t ask much, even 2-3 months would be nice.
I expect that they will leap forward, considering the leap backward. Also, if this reform bill passes, and if there can be no new-petition adjudications until IPO has new policy and forms ready, then adjudicators would have time and motivation to quickly address the backlog of pending petitions. Once adjudicators are handling pre-law and post-law petitions at once, if that happens, I don’t like to think of the effect on processing times.
Thank you very much for clear and detailed reply, Suzanne. Your opinion and explanations are very helpful.
Suzanne, do you think there could be any impact on those that have filed I-829 petitions and are waiting for their permanent Green Cards?
Hi Suzanne..
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After installing telegram app, click on the following link –
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You are welcome to join as well 🙂
HI Suzzane,
Thanks for the update…but will you please explain in a simple language that what effect would be for the investors whose petition is approved and waiting at NVC? Plus I am an Indian investor whose petition is approved and visa is current? So what would be effect of all this on my petition? Your explanation is highly appreciated and obliged.
Please revert,
Reagrds
You are far enough in the process that this should not change your visa wait time. Once you have the visa, this bill may give you additional protections and create a few additional risks, but I haven’t thought this through completely yet. I will do more detailed analysis if the bill passes, but right now I’m rushing to finish business plans for clients ahead of possible changes.
Average processing times for january 31st is out – I 526 moved 15 days to 3rd nov 2015…..I 829 moved 50 days ahead to 3rd jan 2016 and I 924 application moved 10 months to aug 1st 2016
i expect nothing to happen. Congress is too old and lazy to get anything done. Status quo
From a public policy perspective, a “good” bill would be a bill that helps achieve the goals of the general public. Most people would agree, that the main goal of the reform is to redirect money from affluent area to rural, urban priority, and infrastructure area. It is not only just because the EB-5 program was originally intended that way, but also because it is what this country needs. These are the projects that may not be very profitable, but with positive externality to the general public. They would develop underutilized land resources in urban and rural area, benefit families and individuals who are struggling to make a living, or provide public amenities such as environment and transportation.
At first glance, the set-aside seems work towards that goal. However, a set-aside program actually works against the goal. Here is why:
1. Existing demand including re-designation and new designation is likely to create a 10-year visa backlog of the set-aside, within 1-2 years, making the “fast-lane” (set-aside projects) unattractive. Who would want to wait for such a long time, if investors don’t need to wait in the regular line, and probably with more choices and safer (at least in the eyes of unsophisticated investors) investment?
2. If we want to make the “fast-lane” more attractive, and take the risk of infuriating 85,000 already upset Chinese investors, and decide to remove their re-designation privilege, 5 years’ set-aside inventory might still be absorbed by a new group of Chinese investors within 2 years. Indeed, 15,500 visa is just 5,200 investment units, which is slightly more than 1/3 of the sold units in FY2016. Within 4 years, backlog would probably grow to 10 years again for the set-asides.
3. Even if we take a step further, and tell the “fast-lane” investors that they can pay the set-aside price but don’t need to wait in the slow set-aside lane, then the “set-aside” is no longer a “set-aside” program, it’s merely a 100K discount. Why bother set it up in the first place?
Great points!
Happy,
I remember you mentioned that you post in wechat. Do you mind sharing your wechat ID here? Thanks.
One point to keep in mind is that the “set-aside lane” isn’t entirely separate from the regular lane. For example, under current law there is a “set-aside” of 3,000 visas for investors in regional centers, but obviously regional center investors haven’t been limited to those 3,000 visas. The set-aside just reserves 3,000 visas for them. In practice, it’s a limit on how many total visa numbers are left for direct EB-5 (quota-3,000), not a limit on how many can go to regional centers. That’s why we’ve hardly noticed that this particular set-aside exists, because direct EB-5 demand has never been large enough to press up against the limit.
Suzanne,
Thank you for the great work! This place is invaluable to anyone interested in EB5.
I have a question about concurrent filing of I-526 and I-485. If these two can be concurrently filed on the basis that jobs have already been created when the I-526 is filed, then will there be no need for I-829 in such cases?
Concurrent filing of I-526 (immigrant petition) and I-485 (status adjustment) is just a way to avoid the I-485 processing time. It can allow someone to receive conditional permanent residence promptly upon I-526 approval, if a visa number is available at that point. Proving job creation is still a separate step to be completed two years after admission as a conditional permanent resident, with the Form I-829.
Yesterday, a group of Chinese investors posted a petition on the white house website: https://petitions.whitehouse.gov/petition/over-15-million-american-jobs-jeopardy-upon-change-eb-5-rule-must-re-define-limitations-visa
The goal is to get 100,000 signatures. Although it seems a large number, it is completely possible, as there are around 100,000 people waiting on the waitlist, not including many industrial stakeholders & volunteers who may be interested as well. Even if 100,000 is not obtainable, it’s good to speak out and potentially get attention from stakeholders that past investors should not be forgotten. More than 1,700 people have signed in the past two hours, it would be a great honor to have you take a look at it and let us know how to move forward. Chinese investors have extremely limited resources as most of them are not physically in the U.S., but it is important to let them speak out about their concerns as this unfriendly legislative environment personally impacts their lives and investments.
I want to voice my support here. Originally I didn’t support this because I don’t think this is going to work. Most people in this country may give more sympathy to kids from the DACA families than aging-out kids from wealthy families of a foreign country. Indeed, the DACA kids grew up and have lived here for a long time, so they just like one of us. On the other hand, economy is doing well so job creation is still important but isn’t as important as 5 years ago.
From the Chinese investors’ perspective, however, they have good reasons to be sympathized.
First, they are legal, and the legal language (investor vs families) in the EB-5 bill is ambiguous
Second, they were misled, and in many cases, lied about expected wait-time. In early 2016, when we were told that Chinese investors would need to wait for 6 years at EB-5 investor conference, most Chinese investors were told it would take only 3 years by agents. Now, we know that even 6 years is too optimistic. It is likely to be much longer, set-aside or not. At that time, nobody cared to share their projection model which Incorporates the fact that demand from other countries have increased sharply or Chinese Student Protect Act of 1992.
If they were told about the truth, over 50% or more wouldn’t invest because the investment is almost useless. They thought they could move here to build/grow a family in this great country at the peak of their life. Now, they have to wait until they are near retirement age. To rub salt into wound, they were told that they are not allowed to bring their kids with them because the kids over 21 are considered adults. They were told an adult kid should be independent so it is acceptable that the kids can live in a separate country for the rest of their life.
Third, they are being forgotten as limited partners and our clients. As far as I understand, the EB-5 industry was asked to give opinion about the drafted legislation. The legislation contains almost nothing to protect them (investors). Instead, the bill includes set-asides that would worsen their situation. Because this bill is in the best interest of the industry (lower investment amount, more flexible TEA, and longer extension), so the industry unanimously supported it.
Of course I understand the industry is challenged, but there might be a better way to handle investor relations. Now investors feel they are being betrayed. Many start to question about the fundamental belief that this is a country with more fairness and opportunities, the belief that motivated them to become our clients in the first place.
This petition is not likely to work. Most investors are aware. The whole purpose of this, is probably to tell us, that investors are very unhappy. This voice should prompt us to look into this. Why does this happen? Is there something wrong with the current underwriting/capital raise process? Why do so many investors feel regretted about their investments? Should we continue to turn a blind eye to this because we are getting more investors in the short run?
I think Chinese investors should just stop doing EB-5 cases so our great Congress doesn’t have to pass any bills.
Suzanne ,
If I-526 concurrent filling is allowed , shall they also make it same by overseas investors ( the focus group ) be paroled in Usa with temp visa and EAD to make it level playing filed ?
It looks very unfair to the other class .
Parole would be fair, but unfortunately that’s not in the bill — at least not the version I saw.
Hi Suzanne, thank you so much for all the updates. Would you please tell me the pros/cons of visa-aside rule for Chinese EB-5 investors? Is the this visa set-aside rule will impact on Chinese EB-5 investors who already got I-526 approve, still waiting for date for filling I-485 or priority date? Another question is , as you mentioned before there is a general waiting line, but is there a short line for EB5? thanks!
The set-aside rule would impact most investors in line for a visa number, particularly those early in the process (recently filed I-526). For many investors it would reduce general EB-5 visa availability by 30%, and thus make the wait time for an EB-5 visa number 30% longer. For Chinese investors, already facing a 11-13 year wait time, that 30% increase would be especially painful. The “pro” would be for new investors who qualify for set-asides, or past investors who can redesignate as qualifying for a set-aside — so long as they’re among the first to do so. Those people can get into a line that’s very short because it’s a brand new line. But set-aside visa numbers are limited too, so the fast lane may not be fast for long. I’ll write a full post about this when I have time, because the details are quite complicated.
thanks for the information Suzanne. That sounds very upset since most of the investors are expecting the new eb-5 regulation will speed up the line. and personally I feel it doesn’t make sense at all since Chinese investors are already facing a 11-13 year wait time and it would reduce even more by 30%. do you know anything about filling the I-485? what about for Chinese investors who already got I-526 approved, and still waiting for filling the I-485? thanks!
Mitch Wexler likes this
Robert K. Whyte
Managing Partner at Whyte & Co. – “a Global EB5 Investment Bank”
5h
PLEASE SAY IT IS NOT SO… The proposed EB5 regulations before the House are a VERY WORKABLE solution. No more kicking the can down the road! What are they doing in DC?
Thank you Martin Lawler for your email:
EB-5 Newsletter March 16, 2018
For investors, regional centers, developers, financiers and others involved with EB-5
Breaking EB-5 News – EB-5 Program Will Probably Be Extended to September 30, 2018, With No Changes
The news from Washington, DC is that the latest attempt to change the current EB-5 law to increase the minimum investment amount from $500,000 to $925,000 and make many other changes to the EB-5 program has failed. A revised bill also will not be considered and the current law will be extended to September 30, 2018 with the continuing resolution, which is expected to pass by March 23, 2018.
It is always possible that the senators will come to a last-minute compromise on a bill, but this appears unlikely.
Now there will be pressure on the USCIS to issue new regulations, which may increase the investment amount substantially.
UGH…..
Good Day,
I have heard the similar comments from the managing group of my EB5 project that is the EB5 program will be extended to September 30, 2018 with no changes.
Cheers.
Hi Suzanne,
I am a Korean who is waiting for I-526 approval (Filed Aug 2016) and am in the US currently with an F-1 status.
With this bill passed, would it effect any way for me to get I-526 approved? Using your Excel, it looked like I should be getting I-526 approved end of this month, but USCIS Processing Time is saying I should be processed in about November 2018 (my RC just got I-924 approved this January though). I would have to re-enroll for school this fall again if that happens, but I am wondering if this will have a negative impact in my time to get my I-526 approved which will also impact my status to stay here since I have to file for I-485.
Your insight would be greatly appreciated. Thanks.
Also, I filed my EB5 through one of the prominent regional center program who has had a long track of record in EB5. I am really wondering if this bill reform will retroactively affect my I-526 furthermore I-829.
Most likey nothing will pass. Status quo is the way – Congress works.
That is a relief, at least that I will probably have my I-526 adjudicated soon.
when was your i-526 filed ?
Aug2016
latest post on the draft bill for March 23rd https://www.jdsupra.com/legalnews/summary-of-the-draft-eb-5-reform-act-75523/
The legislation bill will not be included in the Omnibus bill per IIUSA email. I wonder when and if ever USCIS will bring out its tougher EB-5 regs.