Retrogression Math
February 22, 2019 12 Comments
Retrogression — as people imprecisely call the visa wait times resulting from oversubscription — is my least favorite EB-5 topic. The problem threatens my market, and I’d love for it to go away. There are two ways to make the retrogression problem go away: solve it or ignore it. Solving retrogression requires convincing Congress to give EB-5 more visa numbers, or to change allocation. More visas = smaller backlogs = shorter wait times. Different allocation = spreading out the backlog impact = shorter wait times for some. But solving retrogression is hard because of Congress, so that leaves ignorance. Ignoring retrogression is easiest if one shrouds it in mystery and doubt. If EB-5 visa availability and wait times seem impossibly complicated and uncertain, then it’s natural to ignore the issue because what else can one do. But that’s not responsible. In fact, retrogression is in the realm of math, not of myth. China is exceptional (the future demand factor introduces need for a crystal ball, and results in variable/unreliable timing forecasts for China), but future EB-5 visa availability and wait times for other countries are calculable. Investors from countries nowhere near demanding 700 EB-5 visas annually need not fear retrogression. For countries that are over (Vietnam) or near (India) the approx. 700 limit, the risk from retrogression can be calculated from the accruing excess over that limit.
For India, we have ballpark figures for number of visas already spoken for as of the end of 2018, and know something of priority dates within this backlog. The fixed number of annual visas available to India simplifies the calculation for wait times implied in past and potential future demand. The math isn’t fun – especially when calculating the wait time for a particular priority date, because of course people at different places in line face different waiting times, and variables vary over time. But still, workable estimates can be made based on available data, with areas of variation and uncertainty accounted for with math plus judgment. “We just can’t know, no one can really predict” gave an alibi for China wait times and backlog buildup, but that excuse is not available for India. We can’t know exactly but we can generally predict how long someone investing today from India will need to wait for conditional permanent residence. We can predict the result of looking to India for billions of dollars in EB-5 investment, so long as fewer than 700 EB-5 visas are available per year for India.
I collect all relevant data that comes to my attention in my Backlog Calc file, available to anyone undertaking his or her own analysis. And do undertake your own analysis, because who is motivated and able to do it well for you? (Even some industry veterans have misconceptions.)
I put several analysis worksheets into my Backlog Calc file as a starting point. For example, here’s a screenshot of the India Calc tab.
This sheet breaks down the data, assumptions, and equations behind Charles Oppenheim’s estimate for the India backlog and wait time as of Q1 2019, and offers models for calculating scenarios and the impact of future EB-5 capital raises in India. Being in the realm of math, when you doubt a conclusion, you can examine the variables, trace assumptions to underlying data, rethink the equations, and test alternate assumptions. My spreadsheet is your spreadsheet. Download the Excel and play with it on the big screen. Let clients play with it and reach their own conclusions. Just don’t tell prospective EB-5 users “we can’t know, it’s a mystery,” because predictions are possible and necessary.
We must try to be realistic about timing, because EB-5 isn’t only about waiting for a visa. It’s about tying up investor capital, and putting issuers on the line to deploy and redeploy capital for as long as it takes investors to get visas. Projects care whether they have to deal with EB-5 investors for 5 years or 10 or 20. Investors care whether their life savings are deployed at risk with negligible interest for 5 years or 10 or 20. And lawmakers need to know if our current EB-5 visa limits soil the past, and gut the present and future economic potential of EB-5.
We need “real visa capacity relief,” as IIUSA says in a recent blog post. I’ll be interested to hear more about what specifically IIUSA can and will do toward visa capacity relief, which has historically not been a plank of the advocacy platform. (Not that the industry hasn’t wanted it, but that Congress hasn’t been willing to hear about it.) Certainly, the issue has become central to the long-term health of the EB-5 program.
NOTE: I’ve added a EB-5 Timing page to collect links to data and posts related to EB-5 visa availability, visa allocation, and wait times.
Dear Suzanne,
I have a question regarding risks required by EB5.
From 2014 until 2018, almost every EB5 project have more than 70% or even 80% Chinese investors. Due to visa backlog and country caps, Chinese need to wait more than 15 years to apply I829. However, other countries’ investors can apply I829 much earlier and occupy jobs and refunded money ahead of 80% Chinese in the same project. It is easy to see that in a same peoject, majority Chinese help guarantee minority others’ green card or even money. USCIS require enough risks for EB5, do these minorities undertake enough risks required by USCIS? Will their green card be rejected because of not bearing enough risks?
Thanks
Kelly
No their eb5s will not be rejected for that reason. While it is true there is more risk the longer your money is invested, there is no concept of relative risk to other investors.
Suzanne, Could u please suggest your thoughts regarding this question? Thanks
I agree with Sid. “At risk” has a very specialized meaning in the EB-5 context related to use of investment, and doesn’t refer generally to investment risk. For more about the at-risk requirement specific to EB-5, see: https://carolynleepllc.com/2019/02/06/eb-5-investment-at-risk-and-sustaining-investment-redeployment-is-not-required/
Sorry…just a picky point as I use to be an accountant, but on the schedules you presented in the post for India, Table #2, Line L I think should read 10/1/2018 to 6/30/2019. Not 6/30/2018…unless I’m reading it wrong.
Terry
Terrance P. Kelley
Chief Executive Officer
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Appreciate your sharp eye! I’ll make the fix.
Seems like lot will be clear for Vietnam, India as well as ROW when we have next VISA numbers around the I-526, I-829 inventory, processing numbers. Specially for entire 2018. Suzanne, when do you expect those to be out? Seems like it has been a while USCIS updated anything, may be slowest so far, isn’t it?
In the past Q4 numbers were published in December or January. I keep checking every day, though USCIS also made it harder to find the reports.
However, I think we can approximate Q4 receipt numbers by looking at Q4 pending numbers in this report https://www.uscis.gov/sites/default/files/USCIS/Working%20in%20the%20US/i526list.pdf
Hi Suzanne, My Priority Date is 07-DEC-16 and I am at NVC waiting for interview but it appears slow at NVC stage, I have two questions. 1. If retrogression gets applied from April or May (hypothetically) what will be first cut of date ? and how much waiting time needed to get my priority date for final action. like few months or year etc.
2. I can see China jumps 1 week every month and Vietnam jumps 1 month every month in visa bulletin dates. What should expected for India?
Patel
When India gets a cut-off date in 2019, it will be the same as for China. (Because all FY2019 visas for India have been used up at that point, so the date gets put back so far that no more India-born will qualify for the year.) When FY2020 starts in October 2019, then the India cut-off date will be moved forward enough to allow issuing 700 more visas to India-born. Charles Oppenheim predicted last year that the India cut-off date would be moved into 2017 in the October 2019 Visa Bulletin. https://blog.lucidtext.com/2018/11/05/aila-iiusa-forum-updates-kendall-oppenheim-visa-availability/ So I think you could expect a visa early in FY2020.
Are expedited projects like Tryon eligible for expedited processing of I-526 only or I-485 approval as well ?
Because, I notice some of the Tryon project’s applicants AOS were approved much earlier than other normal project AOS cases (ie FIFO not strictly being followed).
As India retrogression is fast approaching this will be a worrying matter for non expedited (ie normal) project based applicants