Industry-specific resources for COVID-19

This post begins to collect practical resources for project companies and investors who are concerned about specific COVID-19 business impacts, stimulus effect, and economic outlook in sectors that particularly use EB-5 investment.

Commercial and Multifamily Real Estate

Hotel Industry

If you want to better understand the risks facing and help available to a particular EB-5 project, I suggest not only looking at industry-specific analysis such as the above, but also consulting resources from the state, county, and municipality where the project is located. Here in Utah, for example, state and local government and private organizations have been very aggressive and proactive in addressing the COVID-19 economic challenge, supplementing resources available at the federal level. The near-term and long-term outlook for a business will vary depending on its location as well as industry, so location and industry resources are helpful. EB-5 investment is less material to the outlook, so immigration consultants are less helpful here.

Why I-526 processing time is relevant

Another response to the announcement “USCIS Adjusts Process for Managing EB-5 Visa Petition Inventory.” Today’s question: Does timely I-526 processing really benefit, or make a difference, to everyone? What about people from countries facing long visa wait times regardless? Does someone from Vietnam care about getting I-526 approval in 2020, if he can’t expect a visa until 2024 anyway? In fact, shouldn’t he rather wait as long as possible for an I-526 decision, since his children are protected from aging out so long as the petition is pending?  Assuming he chose a good project and prepared a solid petition, why care whether the I-526 gets approved early or late?

I argue that processing time is relevant for all petitioners, and that the limited benefit of delay does not outweigh the major drawbacks.

  • Extended child status protection is indeed a benefit of extended I-526 processing time for someone with a long visa wait anyway.
    • If I’m guessing correctly about how USCIS would implement the “visa availability approach,” and near-term processing volume, USCIS may take about a year longer to adjudicate China and Vietnam I-526 than it would’ve taken under the supposed current FIFO approach. If so, that would add one more year to the time that the dependents of Chinese and Vietnamese petitioners can have their ages frozen. (I’m not contemplating the possibility that USCIS might look at Oppenheim’s visa wait time estimates, and plan to just shelve Chinese I-526 for sixteen years, and Vietnamese I-526 for seven years, regardless of rest-of-world demand. Because that would be crazy, from every angle besides helping child status protection.)
    • However, children only benefit if the immigrant petition ultimately succeeds. Delay increases the likelihood that the I-526 may be denied due to circumstances outside the petitioner’s (and often outside the project company’s) control, and the pain of such failure.
  • Adjudication timing can affect the adjudication outcome, even for investors in successful projects.
    • In a fair world, a petition that’s approvable when it’s filed should still be approvable whenever it’s adjudicated, provided that project problems don’t emerge in the meantime. In practice, USCIS sometimes denies originally approvable petitions in projects that succeed. This happens when USCIS policy interpretations shift between the time of filing and the time of adjudication. At the base of this post, I’ve compiled some specific examples of this happening, when USCIS changed thinking over time about investment structures, source of funds, and evidence requirements. (When USCIS admits a policy change, there’s protection from retroactive application, but this protection doesn’t apply when the shift isn’t officially acknowledged as a change.) Long processing times maximize vulnerability to such interpretation shifts. A petition is most likely to be judged by the standards that prevailed when it was filed if it’s adjudicated somewhere near the time it was filed. That’s a major reason to advocate for timely processing for everyone. People won’t file I-526 if they can’t predict the standards that will apply when the I-526 is adjudicated.
  • Timely I-526 adjudication has benefits, even if the visa is not yet available.
    • If the petition will be approved, it’s best to get the approval as soon as possible. I-526 approval establishes a priority date, and the protections that come with having a priority date. (For example, grandfathering under existing rules in case of adverse legislative changes.)
    • If the petition will be denied, it’s best to get the denial as soon as possible. A prompt denial decision reduces uncertainty, increases transparency, helps to catch and stop frauds, and opens the possibility for investor protections and recourse such as denial-triggered exit strategies and approval-contingent escrows.
    • If material changes could happen during the course of the visa wait, it’s best if they happen after I-526 approval. The priority date of the approved I-526 may be retained even if material change necessitates moving investment to a new project, under the priority date retention policy. If the material change happens prior to I-526 approval, there’s no recourse. Also, consular officers are less likely than USCIS to flag changes as material for hypertechnical reasons.
  • I-526 processing times can be relevant to visa wait times. For example:
    • There were enough I-526 filed in FY2012 to use the full annual EB-5 visa quota. But due to I-526 processing delays, Department of State issued less than the full quota of EB-5 visas in FY2013. Visa numbers went to waste in 2013 because USCIS didn’t move people to the visa stage in time. At recent dismal processing volumes, USCIS will have to hustle to advance sufficient India petitions to maximize annual available visas.
    • Charles Oppenheim of Department of State estimated in October 2019 (a) that Indians filing “today” faced a 6.7 year visa wait, and (b) that India could possibly be “current” in the October 2020 visa bulletin. How could (a) and (b) both be true? Answer: if most of the India backlog stays stuck at USCIS, instead of advancing to the visa stage. Currently, I-526 processing is creating the visa bulletin for India, as Department of State moves the Final Action Date depending on how many I-526 approvals for Indians come out of USCIS, and the priority dates on those approvals. The “visa availability approach” concept predicates I-526 processing priority on visa availability. The current India situation shows how visa availability results from I-526 priority. I don’t know whether USCIS has considered how to handle such a Catch 22.

Examples of how I-526 adjudication timing has been relevant even for I-526 with no project problems

Project Documents Examples

  • In 2018, IIUSA wrote a letter to USCIS that discussed problems with long processing times, including changing policy interpretations that occur over the course of the wait time. The letter noted that “IIUSA member Regional Centers report an increase in requests for evidence (RFEs) on pending I-526 petitions, even for projects with I-526 and I-924 petitions already approved.” Some RFEs simply requested updated project information, and would have been unnecessary had the I-526 been adjudicated in a timely manner, when its project documents were still up-to-date. Other RFEs suggested that USCIS was applying new internal policy guidelines. For example, bridge financing arrangements that had previously been approved were being held to unpublished new standards regarding the timing and flow of funds. “The lack of consistent adjudication, and the application of policies developed without public input or visibility, applied retroactively, threatens the viability of the entire EB-5 program: How can projects start and investors invest, based on today’s policies, only to find that the projects and investors are adjudicated based on new policies developed while the petitions wait years for adjudication?”
  • According to the precedent decision Matter of Izummi (1998), EB-5 applicants who are guaranteed repayment of their capital contributions have not made true investments. Historically, USCIS applied Matter of Izummi to prohibit only arrangements which give an EB-5 investor the contractual right to receive back some or all of her capital contribution. However, in recent years USCIS began denying I-526 based on an interpretation that redemption rights given to the new commercial enterprise are also impermissible. [Kurzban & Pratt] The case Chiayu Chang, et. al., v USCIS concerns six investors who made investment and filed I-526 between December 2013 and September 2014. Their Limited Partnership Agreements included a call option of a kind that had been standard in many EB-5 offerings, and previously been approved by USCIS. The investors received RFEs in July and August 2015 that mentioned no problem with the Limited Partnership Agreement. Then in December 2015, the investors received Notices of Intent to Deny based on the call options in their LPA.

Source of Funds Example: Currency Swap

  • Historically, USCIS accepted currency swaps as an acceptable method for transferring funds to the US, and generally did not examine the background of the party providing US dollars in the currency swap. [Hermansky]
  • In 2017, for the first time, USCIS started issuing RFEs to Chinese investors who used third party money exchangers to transfer money to the US. [Klasko] No explicit policy change was ever made, but RFEs starting in 2017 indicated that USCIS was changing its policy interpretation and adjudication practice.
  • JAN142020_02B7203.pdf is an example of a petitioner who made an EB-5 investment in 2016, using the then-accepted currency swap practice to move funds out of China. The petition was not adjudicated until 2018 or 2019, at which point USCIS applied the new policy interpretation regarding currency swaps, and requested source-of-funds documentation for the third party who facilitated the currency swap. No one knew back in 2016 that such documents might be requested, and the petitioner did not have them in hand. The third party, when approached with USCIS’s belated evidence request, “was not willing to provide any financial documentation due to concerns regarding his privacy and security.” USCIS then denied the petition for insufficient source of funds. The petitioner appealed, claiming “it was unreasonable to request [the third party’s] financial documentation because, at the time of I-526 filing, USCIS did not require a third-party exchanger to provide his or her personal banking, business, and financial records, and it was not anticipated by the [Petitioner], his parents, or the [Petitioner’s] attorney, that such a requirement was forthcoming.” AAO did not accept this argument, and dismissed the appeal. The currency swap issue that did not exist at the time of I-526 filing was the sole basis for denial. If the petition had been adjudicated promptly, based on the policy interpretation and adjudication practice that prevailed at the time of filing, it could have been approved because it had all the evidence then required. And this approval, once made, would not have been revisited later despite new policy interpretations, since source of funds are not an issue at the visa application or I-829 stages.

Source of Funds Example: Indebtedness (fact pattern described in Zhang v. USCIS)

  • The EB-5 regulations have long specified that “capital” invested in an enterprise can include indebtedness secured by assets owned by the alien entrepreneur, provided that the investor is personally and primarily liable, and that NCE assets are not used to secure the indebtedness.
  • On December 23, 2013, Mr. Huashan Zhang made a $500,000 cash investment in an EB-5 NCE. He obtained the invested cash via a loan from a company that he owns, secured by his undistributed profits held by the company.
  • In a stakeholder meeting on April 22, 2015, IPO Deputy Chief Julia Harrison expressed an interpretation of the regulations that, for the first time, introduced a “collateralization test” on the value of assets used to secure cash obtained from third party loans.
  • USCIS made a decision on Mr. Zhang’s I-526 on May 28, 2015, and denied the I-526 based on a finding that Mr. Zhang’s loan was not properly secured, as expressed in the collateralization test stated the April 22, 2015 stakeholder meeting.
  • In June 2015, Mr. Zhang and another petitioner filed suit in district court on behalf of themselves and all other investors who had filed I-526 prior to 2015, and subsequently denied based solely on the ground that the loan used to obtain the invested cash fails the collateralization test described in the 2015 IPO remarks. They claimed that the 2015 interpretation was erroneous, put out without proper notice and comment, exceeded authority, and wrongly applied to their I-526 filed before the interpretation. The court agreed with them, resulting in the class action decision Zhang v. USCIS, No. 15-cv-995. This decision was issued on November 30, 2018, and subsequently appealed by USCIS on January 28, 2019.
  • To review, then, the condition of I-526 filed in 2012/2013 if they had one common factor — investments including cash based on indebtedness – but were adjudicated at different times:
    • If the I-526 was adjudicated promptly in 2013/2014, it was probably judged based on policy interpretation at the time of filing. Mr. Zhang’s petition could’ve been approved.
    • If the I-526 was adjudicated 2015 to 2018, it faced the collateralization test first defined in 2015. Mr. Zhang’s 2013 petition was denied in 2015 for a factor not applied to earlier adjudications. (The log of AAO appeals include other examples – for example NOV092016_02B7203, a petitioner who invested and filed I-526 in 2012, and was denied based on the 2015 policy interpretation when her case was finally adjudicated in 2016.)
    • If the I-526 was adjudicated in December 2018, it could be approved with no limitation from the “collateralization test” thanks to the Zhang v. USCIS
    • If the I-526 had still not been adjudicated by January 2019, when USCIS appealed Zhang v. USCIS., it is currently still on hold at USCIS. Whether and when it can eventually be approved or denied depends on the outcome of the appeal.

In summary: timely I-526 processing is important and relevant. Let’s fight for it for everyone!

Other Reactions

Here’s my full agenda for posts in response to the announcement “USCIS Adjusts Process for Managing EB-5 Visa Petition Inventory.”

  1. Argue that when USCIS has proven capacity to give timely processing to all I-526 currently pending, it should not be reducing capacity, necessitating policy to restrict who gets timely processing. [Addressed in last week’s post.]
  2. Discuss how and why I-526 processing time is relevant even for petitioners from high-volume countries who still face a visa wait following I-526 approval. [This post.]
  3. Discuss what a visa availability approach could mean for petitioners from low-volume countries, and calculate the potential processing time impact of the change. [Coming later this week.]
  4. Discuss how and why I-526 processing time makes a practical difference for USCIS, and how delays impact the nature and quality of adjudications. [Coming soon.]
  5. Define questions that I’d like USCIS to answer regarding how it would implement the visa availability approach. [Coming soon.]
  6. Discuss the significance of processing times and processing order for businesses that use EB-5 investment. [Not sure if I’ll have time for this, but someone should write it.]

The topic is important, because the viability and integrity of the EB-5 program depend on fair and efficient processing.

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The decade in review

January 2020 marks the 10th anniversary of this blog, and 12 years since I started writing business plans for immigrant investment. I’ve been looking back on years of work and EB-5 reporting, picking out significant milestones on the path that led us to today.

This post is long, because each of the past ten years brought major developments to the EB-5 drama – a drama involving the real-life fate of billions of dollars, thousands of businesses, and tens of thousands of immigrant families.

(Note: I wrote this post without links, but have references for all points. The blog archives are open, named articles can be Googled, and my consulting service is available to people seeking specific detail and evidence related EB-5 developments over the years.)

2010

  • EB-5 was still small, in 2010. The year began with 75 regional centers nationwide, and ended with 104 approved RCs plus about 200 applications pending. The new Form I-924 with filing fee took effect for the first time on November 23, 2010, and the deadline encouraged a surge in regional center proposals.
  • About 2,000 I-526 petitions were filed in FY2010, with the top countries being China (66%), South Korea (8%) and Iran and Taiwan (3% each). Fewer than 2,000 EB-5 visas were issued for FY2010, a fraction of the available quota. 41% went to China.
  • USCIS had an “established processing target” of five months for Form I-526 and Form I-829. The California Service Center stayed within one month of meeting those targets. The magic words “visa fast track” appeared frequently in EB-5 promotions, and held true through about 2013.
  • The regional center program was riding on a three-year authorization through 2012, with proposals to make the program permanent.
  • USCIS began holding quarterly EB-5 stakeholder engagements that provided substantive information and answered questions. (The Meeting Log page off the Resources tab on this blog links to notes from all EB-5 engagements since 2009.)
  • Reuters picked up “Special Report: Overselling the American dream overseas,” an investigative report about the emerging EB-5 market. This report helped to raise awareness about integrity issues, and likely contributed to some subsequent denials and litigation. The term “Wild West” frequently appeared in industry conversations in those days, as we discussed the rapidly-growing and not-yet-quite-civilized EB-5 frontiers.
  • A majority of the EB-5 business plans I wrote were for shopping center developers. Tenant jobs could be counted.

2011

  • USCIS Director Alejandro Mayorkas prioritized the EB-5 program, and pushed for more professional staff, accelerated processing, and better communication between USCIS and stakeholders. In 2011, USCIS began hiring economists, business analysts, and economic development specialists to improve EB-5 adjudications.
  • There were 211 approved regional centers by the end of 2011, and 3,805 I-526 petitions were filed in FY2011 (both about double the previous year). Demand from China increased 130% in one year. A factor in this growing usage was the partial shutdown and then major price increase for Canada’s immigrant investor programs, which had been popular in China. (Previous experience with the Canadian programs contributed to misconceptions in the China market about the level of US government control over EB-5 regional centers and projects.)
  • The House Judiciary Committee held a hearing titled “The Investor Visa Program: Key to Creating American Jobs” in which all speakers praised EB-5. The Senate also held a generally positive hearing on extending the regional center program.
  • Stakeholder meetings and RFEs questioned whether or not a census tract group qualifies as a “geographic area” for TEA designation. RFEs challenged regional center applicants to justify the size of the geographic areas for which they were applying.
  • USCIS released a first draft of the EB-5 Policy Guidance memo that would eventually be finalized two years later. Existing EB-5 policy guidance was sparse.
  • The industry site now called EB5news.com published the article “Huge Chicago EB-5 Multi-Hotel Project Under Scrutiny by Investors.” This scrutiny proved wise, as the Chicago Convention Center project went on to become, in 2013, the target of the first major SEC enforcement action in EB-5.
  • Regional centers filed I-924A Annual Reports for the first time.
  • The regional center directory at uscis.gov was reformatted to remove regional center contact information and business detail, leaving names only. I had to work harder to update the blog RC List page.
  • A majority of the EB-5 business plans I wrote in 2011 were for new regional center applicants, many of them Chinese Americans.

2012

  • Senators Grassley and Leahy co-sponsored a bill to grant permanent authorization to the “successful, job-creating” regional center program. Leahy’s press release proudly noted that EB-5 had “brought economic development and job growth to Vermont since 1997.” President Obama eventually signed S.3245 (sponsored by Senator Leahy), giving the Regional Center program another three-year authorization. This was the last time the regional center program got an authorization that was more than a few months long, and not part of an appropriations bill.
  • USCIS Director Mayorkas announced the creation of a “new dedicated program office” for EB-5 designed to ensure that “this important and complex program is appropriately resourced and managed under a single leadership structure.” Hiring began for the new Immigrant Investor Program Office (IPO) in Washington D.C.
  • The “tenant occupancy” issue emerged. We had heard about petitions and applications “on hold at USCIS headquarters pending resolution of an issue,” and gradually discovered the nature of the issue as RFEs began to question counting jobs associated with tenants in buildings constructed with EB-5 capital. By the end of the year, USCIS released Operational Guidance for Tenant Occupancy that made it effectively impossible to get credit for tenant jobs.
  • I-526 filings jumped to 6,041 in FY2012, with 87% filed by people born in China.
  • The December 2012 Visa Bulletin announced that due to volume of demand, there would likely be a cut-off final action date for China-born EB-5 investors as early as June 2013. The EB5 Insights blog noted that “Ultimately, this could stymie the demand for EB-5 visas by Chinese nationals and have an adverse impact on regional center operators.” This fact was not well-publicized in China, however. EB-5 demand at the visa stage was still well under quota in FY2012, with 6,628 visas issued worldwide.
  • With the tenant occupancy problem discouraging EB-5 investment in retail developments, I found myself writing many business plans for new hotels.

2013

  • By April 2013, the Investor Program Office in Washington DC was open and adjudicating I-924 applications. USCIS Director Mayorkas continued to hold many EB-5 stakeholder meetings and to fight for more resources, professionalism, and transparency for EB-5 adjudications. The political backlash hit when he was nominated as DHS Deputy Secretary, and subject to investigation over his EB-5 efforts.
  • I-526 processing was reported at about one year through 2013, and Director Mayorkas stated a goal to reach 90-120 day processing times for all EB-5 forms. (If we believe current USCIS processing times reports, IPO is still, to this day, processing I-924 filed back in 2013.)
  • President Obama announced immigration objectives that included making the regional center program permanent. EB-5 legislation got a chance as part of S.744, the Border Security, Economic Opportunity, and Immigration Modernization Act that passed the Senate. This comprehensive immigration reform bill would have increased EB-5 visa numbers, among other improvements, but it died in the House.
  • The May 30, 2013 EB-5 Adjudications Policy Memo took effect, providing the first comprehensive collection of EB-5 policy guidance. This memo finally settled the census tract group issue, stating that USCIS should defer to state determinations as to TEA area. In a surprise twist, the memo freed regional centers to sponsor projects outside of pre-approved focus areas. (This freedom was later curbed just as abruptly in 2017 with a stakeholder meeting comment on an I-924 form revision.)
  • The Chicago Convention Center SEC complaint dropped, the first major SEC enforcement action in EB-5. The SEC held a joint stakeholder engagement with USCIS about EB-5 securities issues, and published an investor alert “Investment Scams Exploit Immigrant Investor Program.”
  • The Office of Inspector General conducted an audit which found that “USCIS cannot administer and manage the EB-5 regional center program effectively.” OIG particularly recommended additional authority for regional center termination and more SEC coordination. Prior to this report, there had been five regional center terminations and one EB-5 SEC action.
  • IIUSA first published a list of recommended best practices for regional centers, and industry produced many due diligence articles such as “Protecting the integrity of the EB-5 investment market” (Butler) and “Perspectives on EB-5 Due Diligence” (Klasko).
  • By the end of the year, there were 424 approved regional centers. I-526 filings totaled about the same in 2013 as in 2012, with 83% from China.
  • When visa demand was lower than expected (i.e. the many pending I-526 petitions got approved more slowly than expected), Department of State indicated that China might not, after all, reach the per-country limit in 2013. The EB5 Insights blog reported this in February 2013 with the comment “This means that Chinese EB-5 applicants may continue to file EB-5 petitions without being subjected to a backlog.” (In fact, a couple more months of Chinese I-526 filings avoided backlog. China remained current in the visa bulletin until May 2015. But the first final action date for China, when posted in 2015, went back two years to cut off at May 1, 2013.) Industry articles on the retrogression issue in 2013 include “The myths of retrogression of the visa numbers in the EB-5 program” (Greenberg Traurig) and “The impact of Chinese quota retrogression on EB-5 investors and EB-5 investments” (Klasko).
  • In addition to regional center work, I started writing many business plans for direct EB-5 investment in new franchises. Meanwhile, I was pleased to see investors in my first EB-5 business plans start to receive I-829 approvals in 2013. Once upon a time, the entire EB-5 process could fit within five years.

2014

  • I-526 and I-829 adjudications were gradually transferred from the California Service Center to IPO, which had a staff of 94 by the end of 2014.
  • USCIS began collecting stakeholder input for proposed new EB-5 regulations. This process eventually resulted in a proposed rule in 2017 and a final rule in 2019.
  • USCIS started regional center termination efforts in earnest, issuing over 50 notices of intent to terminate in 2014. These notices began to result in actual terminations in 2015, primarily for inactivity or missing an annual report. Increased SEC activity become evident with five complaints targeting EB-5 projects in 2014/2015. The new IPO office included a 15-member Fraud Detection National Security Team with plans to expand site visits and compliance reviews.
  • Recognizing a growing problem in processing times, I started to record monthly USCIS processing times reports in the Excel log that I continue to update to this day. Through 2014, processing times averaged 13 months for I-526 and 9 months for I-829. We thought that was too long.
  • I-526 filings nearly doubled again, with 10,950 filed by the end of FY14 (88% from China). Meanwhile, growing demand finally reached the visa stage, and EB-5 hit its annual quota for the first time with over 10,000 visas issued in FY2014.
  • The industry continued to discuss the problem of visa availability for China, with articles such as “IIUSA VP Robert C. Divine on Saturday’s Announcement of EB-5 Visa Unavailability for China for Remainder of FY-2014” (IIUSA blog), “FAQs on EB-5 Quota Backlog by H. Ronald Klasko” (IIUSA blog), and “Surviving and Thriving in Times of EB-5 Quota Backlogs” (Klasko). China remained current in the Visa Bulletin, as most future visa applicants were still waiting for I-526 approval.
  • USCIS first promised to work on a guidance memo for retrogression issues. (There was, at that time, no redeployment policy.)
  • Hotels and restaurants continued to provide a significant amount of my EB-5 business plan work, and for the first time I had more ethnic Indian than Chinese clients.

2015

  • The decade’s peak EB-5 demand came in FY2015, with 14,373 I-526 petitions filed, 85% of them from China.
  • The I-526 surge clustered around the sunset of the regional center program authorization that had been in effect since 2012. Over 6,000 I-526 petitions were filed in the quarter leading up to the original sunset date of September 30, 2015, and another 6,000 in the quarter ending in December 2015, when Congress finally granted EB-5 a one-year clean extension instead of enacting proposed changes. This volume has not been equaled since. (And IPO is still, to this day, adjudicating I-526 filed in 2015.)
  • The 2015 regional center program sunset date brought a rush of legislative activity, with five bills proposed that would’ve increased the minimum EB-5 investment amount (with $1.2M or $800K in a TEA being the most common proposal) and tightened TEA rules. Language from Grassley and Leahy’s S.1501 reportedly nearly became law in December 2015. But instead, “the legislation was defeated by a group of lawmakers led by New York Democrat Chuck Schumer, who argued that security improvements were a good idea, but the way the reform was written would unfairly hurt investments in his home state.” This story was to be repeated yearly for the rest of the decade.
  • Friedland & Calderon published “A Roadmap to the Use of EB-5 Capital” that included a Large-scale Projects Database profiling 25 EB-5 projects – of which 19 were in New York, mostly Manhattan. While regional center projects in 2013-2015 had an average 15 EB-5 investors each program-wide, according to DHS data, the top ten projects in Friedland & Calderon’s 2015 database averaged over 600 EB-5 investors each. These large-scale projects helped fuel the surge in I-526 filings in 2014 and 2015. They also fueled political controversy, as billions of EB-5 capital concentrated in a few high-profile urban projects that used the TEA incentive.
  • China began to have a cut-off date in the May 2015 Visa Bulletin, and advanced through most 2013 priority dates by the end of 2015. But the massive filing surge in late 2015 dramatically worsened the China visa backlog problem. Robert Divine’s article “The Realities and Implications of Chinese EB-5 Investors’ Wait for Visa Numbers” (IIUSA blog) noted that Chinese filing I-526 as of the end of 2015 likely faced at least a six-year wait for visa availability.
  • USCIS first raised the redeployment issue in August 2015, releasing a draft memo of “Guidance on the Job Creation Requirement and Sustainment of the Investment for EB-5 Adjudication of Form I-526 and Form I-829.” This memo was never finalized. (Two years later, in June 2017, some redeployment language finally became policy through addition to the EB-5 section of the USCIS Policy Manual.)
  • The Government Accountability Office published “Immigrant Investor Program: Additional Actions Needed to Better Assess Fraud Risks and Report Economic Benefits” and DHS Director Jeh Johnson wrote a letter to Senators Grassley and Leahy that recommended EB-5 changes. These two documents strongly influenced subsequent legislative efforts, particularly by Senator Grassley.
  • My mix of EB-5 business plan work started to include more apartments and assisted living facilities. And I wrote a record number of direct EB-5 plans for franchise businesses.

2016

  • EB-5 demand fell in FY2016 but not by much, thanks to another I-526 filing surge ahead of the September 30, 2016 regional center program sunset date. A total 14,147 I-526 were filed, with somewhat fewer from China (77%) and more from Vietnam and India (3% each). Charles Oppenheim estimated a seven-year wait for new Chinese applicants as of the end of the year.
  • 2016 saw more EB-5 bills introduced and a lot of open discussion in Congress, with two EB-5 hearings in the Senate and one in the House. Unlike the generally positive tone of 2011, the 2016 hearings included some negative voices, and particular concern over perceived abuse of the TEA incentive. However, the new EB-5 bills progressively negotiated down the TEA incentive, and in the end no changes were passed.
  • The SEC filed a complaint in 2016 alleging fraud in EB-5 offerings sponsored by Vermont Regional Center. Vermont Senator Leahy, formerly an EB-5 champion, declared that “Without reform, I believe the time has come for the program to end,” and legislative efforts became more difficult.
  • The OMB and DHS Secretary Jeh Johnson averted us to possible new EB-5 regulations in 2017.
  • USCIS began to deny I-526 petitions based on finding loan proceeds to be nonqualifying capital, call options to be impermissible redemption agreements, and RC sponsor termination to be material change. These findings were not based on stated policy. Lawsuits eventually ensued, with some success so far.
  • The EB-5 chapter of the USCIS Policy Manual was released on November 30, 2016, and became effective the same day. Though nominally a handy compendium of existing policy and guidance documents, in fact the PM also introduced new policy related to material change, regional center applications, regional center amendments, and regional center termination.
  • The trend of sprawling multi-state regional centers began to emerge, as USCIS surrendered the founding logic and very definition of a “regional center” – that it have jurisdiction over a geographic area limited for the purpose of concentrating pooled investment. (By the end of the decade, a five-state “regional center” was unremarkable.)
  • Hotels and restaurants continued to account for a significant number of my EB-5 plans.

2017

  • DHS published a Notice of Proposed Rulemaking for the EB-5 Modernization Regulation in January 2017, with comment period closing in April. The proposed reg introduced a new source of deadlines for potential EB-5 changes. The OMB anticipated Final Action in February 2018. I submitted a comment arguing that the TEA threshold should be reduced from the proposed $1.35M to $900,000.
  • 2017 saw continued struggles with EB-5 legislation, and five regional center program sunset dates followed by short-term authorizations.
  • A New York real estate titan took office as U.S. President, but defied expectations that he would give favorable (or indeed, any) attention to the investment-promoting and job-creating EB-5 program. Other immigration concerns took center stage, and a period of DHS leadership changes and staff attrition ensued.  DHS lost Secretary Jeh Johnson, replaced by soon-to-be-lost John Kelly, replaced to by soon-to-be-lost Kirstjen Nielsen. USCIS got soon-to-be-lost Director Lee Cissna. IPO lost Chief Nicolas Colucci.
  • USCIS finally made an official EB-5 redeployment policy in June 2017. The policy raised questions that have yet to be answered. Meanwhile, revised editions of Form I-526 and Form I-924 introduced new requirements, and I-526 RFEs implied unannounced new policy on currency swaps.
  • The 2017 CIS Ombudsman report noted that the EB-5 visa wait for China had likely reached over ten years. Apparently this report, unlike earlier cautions, did get some publicity in China. New China I-526 filings dropped by 2,000 from the previous year.
  • Overall, I-526 filings dropped 13% in 2017. There were still filing surges ahead of legislative deadlines in April and December, and increased demand from India and Vietnam (with over 500 I-526 filed from each country).
  • IPO improved processing volumes, but reported processing times continued to increase despite the concurrent fall in receipts. USCIS reported average pending time of 19 months for I-526 and 28 months for I-829 in FY2017.
  • In 2017, I wrote an increasing number of EB-5 business plans for projects sponsored by an unaffiliated “rented” regional center.

2018

  • We spent the year thinking that regulations were just about to double or triple the EB-5 investment amount, with successive OMB agendas predicting a Final Rule in February, then April, then August, then November. But nothing happened, yet.
  • The regional center program faced six sunset dates and briefly lapsed twice in 2018. No EB-5 legislation was officially introduced, but negotiations occurred and faltered behind the scenes. Meanwhile, the legislative effort to eliminate the per-country cap on EB visas picked up steam, and remained a factor through 2019.
  • Charles Oppenheim of Department of State continued to make presentations about EB-5 visa availability, and increased the level of detail provided. His 2018 visa wait time estimates looked serious for Vietnam and India as well as China (14-15 years China, 6-7 years Vietnam, 5-6 years India). The Vietnam and India estimates reflected I-526 volume in 2016/2017, while the China estimate reflected increasing rest-of-the-world demand. (These estimates were somewhat downgraded in 2019.)
  • Vietnam got a cut-off date starting from the May 2018 Visa Bulletin. India, whose filing surge occurred slightly later, stayed current until 2019.
  • Overall, EB-5 demand tumbled in 2018, in response to news about visa waits and associated redeployment challenges on top of political uncertainty. I-526 filings in 2018 were 50% fewer than in 2017, and 70% fewer than in 2015. Chinese apparently filed fewer than 1,500 I-526 in 2018 (about the same number as in 2010, in fact), while demand from Indians surged ahead and resulted in over 850 I-526 filings.
  • USCIS made four updates to the USCIS Policy Manual, to modify previous guidance regarding regional center geographic area, tenant occupancy, redemption agreements, and documentation for conditional permanent resident status.
  • Under Acting Chief Julia Harrison, IPO broke the tradition of holding quarterly stakeholder meetings, but processed a record number of EB-5 forms (over 18,000 total forms adjudicated in FY2018). With about 23,000 forms left pending at year-end, the IPO backlog looked possible to clear in just over a year. (If only that processing volume had continued or improved!)
  • Sarah Kendall took over as IPO Chief in June 2018, and held the year’s first stakeholder engagements in October.
  • The IPO customer service mailbox made its best-ever response in October 2018, when it provided a breakdown of I-526 petitions pending by nationality and priority date. This document gave us power, for the first time, to make our own visa timing predictions, and proved extremely valuable for program integrity. (Alas, this transparency has not been repeated since.)
  • My EB-5 business plan clients felt a sense of urgency that this was, truly, the last chance to raise funds under the investment amount and TEA rules set in 1990. I wrote difficult blog posts to report and interpret EB-5 developments, and added a PayPal button to the blog (to which 56 kind readers responded with a contribution).

2019

  • The final rule for the EB-5 Modernization Regulation was published in July 2019, and took effect in November 2019. The promised investment amount increase to $1.8M ($900,00 in a TEA) spurred a flurry of marketing activity and rush to file I-526 ahead of the November deadline.
  • We do not yet know how much of a demand surge occurred in 2019, as USCIS has still only published data through June 2019. What exactly happened with I-526 from July to December will have major implications for the future of EB-5, and for visa wait times.
  • Charles Oppenheim from Department of State provided visa backlog estimates in April and October, with the October estimate being unexpectedly lower than previous estimates. This assumes a combination of changed assumptions about I-526 receipt volume, I-526 denial rates, and family size.
  • India EB-5 visa demand hit the per-country limit for the first time in 2019. But the Visa Bulletin final action date for India progressed more quickly than expected and filing dates became current, due in part to slow I-526 adjudications.
  • IPO experienced some kind of meltdown in 2019, with exponential decreases to processing volume, and major increases to processing times, denial rates, and pages of RFEs issued. Processing times exceeded 2-4 years for each form. This has variously been credited to new training, new guidance, staff reshuffling, staff turnover, and overall political pressure to decimate legal immigration. We clung to the memory of much better performance in 2018, and prayed for a turnaround.
  • Having long hoarded EB-5 data points, I started a timing estimate service to help interpret and apply the data to individual circumstances. The service eventually had to go on hold as USCIS and DOS became more stingy and slow with data updates, disorder increased, and too many variables became unknown.
  • Despite USCIS, EB-5 investors won a number of victories for fair and efficient adjudication thanks to lawyers taking unreasonable denials and unreasonable delays to court, and winning.
  • Regional center terminations exceeded approvals for the first time in 2019. The decade, which began with 75 regional centers, ended with 794 regional centers on the approved list, and 394 on the terminated list.
  • The regional center program faced four sunset dates during the year. December 2019 brought a clean 9-month reauthorization – the longest authorization since December 2015. Two EB-5 bills remain active in the Senate.
  • Expectation that EB-5 regulatory changes might be blocked by litigation or superseded by legislation proved unfounded in 2019. The investment amount increases and TEA changes took effect on schedule. Industry vowed to continue efforts to keep EB-5 viable into the 2020s. Many urgent fronts present themselves, including renewed legislative efforts, more litigation, visa relief, policy clarifications, processing reform, and processing time improvements.
  • I continued to write EB-5 business plans (but fewer than in previous years), assisted with many project updates for I-526 RFEs, and added more E-2 business plan and non-immigration work. I worked hard to track and interpret EB-5 developments for this blog, received support from 47 blog readers, and considered future changes. The blog closed the decade with 127,000 annual visitors and 1,134 followers – a fair share of the total market for tough technical detail about a minor immigration program.

To the readers of this blog, I hope I have been of service through a decade full of challenges and opportunities. And I appreciate your company as we face the future. Stories that started in the 2010s will continue to unfold for years to come.

Targeted Employment Areas from November 21

The EB-5 Immigrant Investor Program Modernization Regulation Final Rule took effect on November 21, 2019, and  changed USCIS Policy for Targeted Employment Area (TEA) definitions and process.  Rather than reacting with questions and complaints, I carefully review the specific content of current TEA policy, place changes in context, and address the theoretical background and practical implications. This simple post took a great deal of work and thought.

POST AGENDA

A. Who is affected by the new TEA rules?

B. What areas can now qualify as a TEA?

C. What data can now be used to qualify a TEA?

D. Who determines TEAs, and how and when?

DISCUSSION

A. Who is affected by the new TEA rules?

New TEA rules apply specifically and only to all I-526 petitions filed on or after November 21, 2019. (The final rule for the EB-5 regulation gave a 120-day implementation/transition period: that period started upon publication of the final rule on July 24, and ended when the rule took effect on November 21.)

“Applies to Form I-526 filed on or after Nov 21” is a hard and fast rule. This is very clear in the final rule text, and confirmed by subsequent comments.  The new TEA rules apply to every I-526 filed from 11/21 – no matter if the project had previous investors or an Exemplar I-526 approval pre-11/21, and no matter if the investor is seeking to retain a pre-11/21 priority date when filing the new I-526. The new TEA rules do not apply to any I-526 filed before 11/21, even if the investor funds had not been fully invested in the NCE or deployed to the JCE before 11/21. IPO Chief Sarah Kendall reassured the IIUSA conference that her staff have been trained to adjudicate each pending I-526 based on the rules in place at the time that I-526 was filed. People who filed I-526 before 11/21/2019 are only indirectly affected by the new TEA rules, to the extent that open offerings must now be amended. But policy specifies that such conforming amendments will not count as material change for past investors.  As always, TEA qualification is not an issue at the visa application or I-829 stages.

While the new EB-5 regulation applies to all I-526 filed going forward, it does not apply entirely new rules. Rural areas, for example, have the same definition before and after November 21. The standards for a high-employment MSA TEA are no different now than they were under previous policy. Data recommendations remain unchanged. This post goes on to review what is and is not new.

B. What areas can qualify as a TEA?

The old rules gave the states authority and flexibility to designate geographic areas for TEAs. The new rules instead specify a limited list of possible TEA areas defined by DHS. From now on, a job-creating entity is in a TEA if it is in one of the following defined areas:

  1. A rural area, defined as an area that is not in a standard Metropolitan Statistical Area as defined by the Office of Management & Budget, and not within the outer boundary of any city or town having a population of over 20,000 or more based on the most recent decennial census; or
  2. A high unemployment area, defined as an area that has experienced unemployment of at least 150 percent of the national average rate. For high unemployment, “area” can only mean:
    1. A Metropolitan Statistical Area (MSA)
    2. A county within an MSA
    3. A county that contains a city or town with 20,000+ population
    4. A city or town with population of 20,000+ or more which is outside an MSA
    5. A single census tract, and/or
    6. A group of census tracts comprising the census tract where the job-creating entity principally does business, plus any or all directly adjacent census tracts (PDF p. 11-12 of the NPRM illustrate specifically what DHS has in mind.)

Option 2.4 and 2.6 were revised by the regulations; other options match previous policy. The new list of geographies that can qualify excludes several areas that states were willing to designate as TEAs: census blocks, census block groups, and sprawling groups of census tracts.

As before, the EB-5-funded job-creating entity must principally do business and create jobs within the TEA area.

If you have an EB-5 project in mind, how can you find out the potentially qualifying “areas” to which it belongs?  You can get a quick sense of geography just by looking up the city/town name on Wikipedia, which will tell you to what county and MSA (if any) the place belongs, and give ballpark population data. From there I’d go and enter the project address in the government’s FFIEC mapping system, which will identify the census tract for that address, show the directly adjacent census tract numbers, and confirm whether or not the address is in an MSA. Once having identified the possible geographic areas for a TEA determination, you’re ready to think about data.

C. What data can be used to qualify a TEA?

Since November 21, USCIS does not automatically approve any particular unemployment dataset for TEAs. Before November 21, USCIS also did not offer deference for unemployment data and methods. Regarding TEA data, the regulation simply repeats language that was introduced back in the May 30, 2013 EB-5 Policy Memo, and that has been included in (6)(G)(2)(A)(5) of each Policy Manual iteration since: “USCIS will review determinations of the unemployment rate” and “acceptable data sources for purposes of calculating unemployment include U.S. Census Bureau data (including data from the American Community Survey) and data from the Bureau of Labor Statistics (including data from the Local Area Unemployment Statistics).”  BLS data was specifically identified as acceptable in the December 2009 Neufeld Memo. By 2012, USCIS clarified that it would accept ACS data with census share methodology for subareas not covered by BLS. The point of this history lesson: we are not standing on new ground now, regarding data.  USCIS only changed its deference to state designations of TEA geographies — there never was deference for the data portion of TEA analysis, and suggested data sources remain unchanged. In fact, TEA requirements are, if anything, clearer now than they used to be.  To quote from discussion in the regulation final rule related to acceptable data:

  • The regulation “does not provide one specific set of data from which petitioners can draw to demonstrate their investment is being made in a TEA. Rather, the burden is on the petitioner to provide DHS with evidence documenting that the area in which the petitioner has invested is a high unemployment area, and such evidence should be reliable and verifiable.” [Consistent with previous policy.]
  • “The data necessary for the TEA designation determination is publicly available from the Bureau of Labor Statistics or U.S. Census Bureau. A TEA designation request alternatively can be supported with other data, public or private, provided that DHS can validate that data.” [Consistent with previous guidance.]
  • “Regardless of which reliable and verifiable data petitioners choose to present to DHS, the data should be internally consistent. If petitioners rely on ACS data to determine the unemployment rate for the requested TEA, they should also rely on ACS data to determine the national unemployment area to which the TEA is compared.” If considering state data, the rule cautions that “petitioners may not be able to compare the state census tract data to a national unemployment rate that utilizes the same methodology.”
  • To calculate the weighted average for a group of census tracts, the Final Rule opts to keep the cumbersome method described in Footnote 41 of the NPRM, except specifying that civilian labor force rather than total labor force should be used: (1) divide the labor force of a census tract by the labor force of the entire TEA area; (2) multiply this figure by the unemployment rate of that census tract to calculate a weighted unemployment rate for that tract; (3) repeat Steps 1-2 for each tract in the TEA area; (4) sum the weighted unemployment rates for all tracts in the group to calculate a total that can then be compared with the national unemployment rate.

The final rule optimistically states that the TEA process can be “easily navigated by any petitioner–whether associated with a regional center or not–for little or no cost,” because “unemployment data is readily available by which they can determine if an investment in a particular area satisfies applicable TEA designation requirements.”

The person who wrote the rule clearly never tried to pick an address, venture online, and find and interpret appropriate unemployment data for that location at the MSA, county, city, and census tract levels. It’s not easy.  In practice, most people will have to pay qualified consultants to help with the data portion of TEA determinations. But if you still want a sense of what’s available to the public, a few links:

  • Guidance for Labor Force Statistics Data Users, published by the U.S. Census Bureau, reviews the types and sources of unemployment data available for different types of geographic areas. The EB-5 regulation merely acknowledges that “no one dataset is perfect for every scenario”; Census Bureau guidance explains which dataset to use for which scenario.
  • The Bureau of Labor Statistics publishes monthly and annual unemployment data for the nation, MSAs, and counties. TEA designations have traditionally referenced the annual data –  one doesn’t want to update the TEA analysis every month, and annual data facilitates apples-to-apples comparisons across geographies. To find the annual average employment rate for an MSA or county, open the BLS Local Area Unemployment Statistics page to the section on Tables and Maps Created by BLS. Within that section, scroll down to the “Annual Average” subsection, and within that subsection to “Metropolitan Area Data” and “County Data.” (This link jumps directly to annual average county data.) Alternatively, perform a search using the Featured LAU Searchable Database. Either way, you will be directed to a table crammed with data that’s ugly and not convenient to print and share, but reliable and verifiable.  The nationwide annual average employment rate, for comparison, is on this page. Monthly data is less workable for TEA purposes, but has a benefit of coming in focused and print-friendly reports.  For county data, I like the BLS reports linked to the Geographic Information > Economic Summaries page. They’re in PDF format, and handily compare county unemployment with nationwide unemployment, as required for TEA designation. If my project were in a clear high-unemployment county covered by one of these reports, I’d consider this resource.  (Just keeping in mind that BLS refreshes these reports every month, and does not archive older versions, so they’re not directly verifiable over time. Archives of monthly MSA data can be found here, but monthly county data archives are tougher to locate.)
  • The U.S. Census Bureau’s American Community Survey comes in because BLS does not collect or report unemployment data at the census tract level, or for cities outside MSAs. One can search for ACS data for employment by geography, including at the census tract level, using the advanced search function in the old factfinder.census.gov or the new data.census.gov. The census bureau search functions are not friendly to casual human users, and their employment data is relatively outdated. State TEA designations would frequently update ACS employment data for census tracts with reference to the more recent BLS unemployment data at the county level using a method called census share (as described here by BLS and here in the EB-5 context, for example). But I don’t recommend trying this at home. You’ll want an experienced professional to crunch data for any TEA below the county level. But in the meantime, to get a preliminary sense of unemployment at the census tract level, try using one of the free mapping tools for EB-5, such as by IIUSA and Impact DataSource.
  • State workforce agencies also publish labor market information, as part of a nationally designed LMI infrastructure that connects BLS, the Census Bureau, and each state. Such state-reported data should also be acceptable, as it’s linked to the BLS and ACS data specifically name-checked by DHS as evidence that “should be reliable and verifiable.” The challenge is to determine which national unemployment rate is comparable to the state unemployment rate. (For example, should use the BLS national rate if the state is referencing BLS data or ACS data updated with census share methodology, the ACS 2017 5-year estimate unemployment rate if the state’s numbers are based on ACS 2017 5-year estimates, etc.)

D. Who determines TEAs, and how and when?

We’d gotten comfortable thinking about TEAs determined in advance by state agencies, via designation letters.  That TEA letter comfort was useful for marketing, but somewhat of an illusion.  In fact, TEA determinations were never fixed as of the date of a letter, because policy has required TEA status to be determined for each investor based on the date of investment or I-526 filing (whichever came first). As discussed above, state letters were not granted automatic deference; USCIS reserved the right to question the timeliness, data, and methods. We’ve long had to work with a degree of uncertainty and case-by-case discretion by USCIS when it comes to TEAs.  The new situation is not necessarily more ambiguous, just different.

Determining the geography component of TEAS

The regulations depart from previous practice primarily by eliminating state designation of TEA geography. The power to designate an “area” now lies with DHS, and DHS has made the geography determination once and for all in advance by specifying a limited and strictly defined list of possible areas in the final rule.  Petitioners just have to pick one of the defined area types (see the list in Section B above), and provide unemployment data for that area.

DHS intended for the new reg to eliminate ambiguity and individual discretion from the geography element of TEAs, and apparently succeeded.  There’s no need for anyone to “designate” the geography portion of a TEA; a list of acceptable geographic areas has already been defined.

Determining the unemployment data component of TEAs

As discussed above, the process for data remains unchanged in theory. Whoever provided the TEA data, USCIS has always reviewed and assessed that data in context of each investor petition, and determined as part of I-526 adjudication whether TEA requirements were met.

In the past, we’ve used letters from state agencies as a vehicle for presenting unemployment data to USCIS. Nothing in the regs would prevent us from continuing to do this. DHS has relieved state agencies of the extraneous responsibility of drawing boundaries for EB-5 incentive areas. DHS has not stripped state workforce agencies of their own mandate to supply workforce data.  State agencies may or may not be amenable to continued requests from EB-5 users for unemployment reports customized to DHS-defined areas. But state letters are a tidy and convenient vehicle for reliable unemployment data, and it doesn’t hurt to ask. State workforce agencies are subject to uniform, nationally-designed standards for Labor Market Information (LMI) reporting, so USCIS couldn’t suspect the agencies of being idiosyncratic or inventive with the data portion of a TEA determination.  At least, I would try the state workforce agency, before downloading hundred-column spreadsheets myself from the internet, and before requesting unemployment analysis from some former Uber driver Joe Smith now d/b/a TEA Designations, LLC.

In the past, we’ve used consultants, particularly EB-5 experienced economists, to help identify TEAs and approach states for letters. Now, we can ask those same consultants to prepare letters with unemployment analysis to present to investors and USCIS. We should demand that the consultant’s work product meet these standards: (1) define the geographic area with specific references to the latest EB-5 policy/regs, (2) identify the sources for population and employment data with sufficient specificity to allow the reader to go online and find the publicly-available data referenced, (3) show all the steps in any calculation, (4) explain, with references to the EB-5 regulation and BLS and/or Census Bureau guidance, why the analysis is reasonable. If you, as a reader, can verify the data and see that the analysis aligns with authoritative guidance, odds are the USCIS adjudicator will likewise find it reliable and verifiable. I’d demand more detail and footnotes from a consultant report than from a state letter. Compared with the Georgia Department of Labor, Joe Smith has a hurdle to prove his data and methods.

Whoever wrote the regulation seems to think that people can easily go online and get appropriate unemployment data to print out as evidence.  As briefly discussed above, BLS and ACS data is not that easy to navigate or interpret (or even print, for that matter), and info from third party mapping programs and other sources may or may not be up-to-date, reliable, and verifiable. It takes some expertise even to accomplish a simple task like choosing a national unemployment rate that’s internally consistent with a given local area unemployment rate. And it takes considerable expertise to bolster a TEA analysis with references and explanations that leave no crack for USCIS questions.  So I think we’re still in a world of securing TEAs using letters and reports – the only question is: who prepares them.

Some wondered whether DHS itself could start providing TEA designations in advance of investor petitions. The regulation states that “this rule does not establish a separate application or process for obtaining TEA designation from USCIS prior to filing the EB-5 immigrant petition and USCIS will not issue separate TEA designation letters for areas of high unemployment.” The regulation offers that a regional center may seek TEA determination by filing an exemplar petition, and “If the exemplar application is approved, the approval (including the TEA determination) will receive deference in individual investor petition filings associated with that exemplar in accordance with existing USCIS policy (for example, absent a material change in facts affecting the underlying favorable determination or its applicability to eligibility for the individual investor).” However, this offer is 100% useless and void, unless USCIS can start providing exemplar approvals in less than the time that it takes unemployment data to expire, and thus become inapplicable to individual investor eligibility.  The currently posted I-924 processing time is 62 to 115 months. No investor can claim TEA status at the time of investment or I-526 filing based on a TEA determination calculated five to ten years previously.

Regarding timing, the regulations do not imply a change from past practice.  A TEA determination has always needed to be valid at the time of an EB-5 investor’s investment or I-526 filing, whichever comes first. A TEA determination has always been valid so long as the underlying data is the most current available. Most state letters were effective for up to a year because they calculated unemployment rates from annual average data that is, naturally, updated just once a year. The regulations do not change what unemployment data is available, or when BLS and the Census Bureau publish updates. The regs do not suggest that DHS had a problem with the unemployment data and methods that states have used all these years, only a problem with how states were willing to gerrymander geographies. So I do not see any new policy or new ambiguity, when it comes to timing of TEA determinations.   When a consultant creates a TEA analysis, just be sure to specify the validity period for the underlying data, and point out that this defines the shelf life of the TEA determination.

Insights from AAO Decisions (debt arrangements, currency swap, diverted capital, regional center activity, project progress)

So far in 2019, the Administrative Appeals Office has published 80 decisions on I-526 appeals and motions, and 16 decisions on I-924 appeals. As someone who prepares documents for USCIS review, I read the AAO decisions to keep up with current adjudication trends and unspoken policy. This post highlights a few EB-5 cases of particular interest.

Debt Arrangements

In MAY302019_01B7203 and MAY302019_02B7203, the AAO reopened previously dismissed appeals and approved the I-526 petitions based on the USCIS Policy Manual October 2018 correction regarding redemption agreements. I wonder if this offers hope for other I-526 that were denied in 2017 and 2018 due to suspected debt arrangements that USCIS has since clarified are acceptable.

Currency Swaps and SOF Investigations

A number of recent appeals focus on the recently-controversial issue of currency swaps. In a currency swap, the EB-5 investor sends local currency to the local account of an intermediary, and the intermediary then wires an equivalent amount in US dollars to the investor’s offshore account.  In late 2016/early 2017 USCIS started questioning this previously-accepted practice, and began requesting source-of-funds documenation for the intermediary (as discussed for example by Hermansky and Klasko). Lawyers questioned USCIS’s reasoning, and embattled cases are now reaching the AAO decision stage. JUL052019_01B7203 is particularly interesting, because AAO sustained the appeal. “Here, the Chief has not questioned the validity of the agreement with ___ nor identified discrepancies or irregularities in the record…. Without any identified negative considerations, we find the evidence in the record sufficient to establish, by a preponderance, that the funds transferred to ___ originated with ___’s lawful business activity, and relatedly, that the Petitioner had invested the minimum amount of required capital.” In the following cases, however, AAO agreed with USCIS that source and path of funds were not sufficiently documented in currency swap scenarios: OCT252019_01B7203, OCT172019_02B7203, OCT152019_01B7203, OCT112019_02B7203, OCT012019_02B7203, SEP192019_01B7203, AUG302019_02B7203. These cases were denied for lack of evidence that the intermediary was legally able to make the exchange, lack of evidence that the intermediary used lawful funds to make the exchange, and timing problems. Distaste over an arrangement “designed to circumvent local banking regulations” also appears to be a factor.

AUG302019_01B7203 is another rather interesting source of funds case, being a denial based on information that emerged when “In October 2017, USCIS officials conducted an overseas investigation during which they interviewed the Petitioner and others regarding the source of funds used in his investment.”

Recovering from Fraud

In the wake of SEC activity to weed bad actors out of EB-5, we’re left with the question of whether viable projects, innocent investors, and any good partners/successors of the bad actors can possibly recover and get back on track after a fraud incident.

OCT172019_01B7203 Matter of W-Z- tests the question of whether a petitioner can, after I-526 filing, make additional investment to replace diverted capital. The petitioner had invested $500,000 in the NCE, but $185,000 of that amount never made it to the project thanks to a rogue principal. With that principal out of the way, the petitioner offers to replace the diverted capital with another $185,000, so that the project has the full amount of investment and can proceed with job creation. But AAO says no, because “the foreign investor must show that his or her investment of at least $500,000, in its entirety, has been made available, without interruption, to the NCE for job creation.” The operative words in this statement are “without interruption.” AAO says that this statement rephrases this Matter of Izummi/policy requirement: “the full amount of funds made available to the businesses most closely responsible for creating the employment upon which the petition is based.”  But that doesn’t look like a simple restatement to me. Is “without interruption” really intrinsic to the Matter of Izummi analysis? The AAO indicates that for the petitioner’s additional $185,000 investment to qualify, he would have to establish that he had invested or was actively in the process of investing that additional amount before he filed I-526. “The replacement of EB-5 capital with other funds does not equate to a return of the original capital attributed to the investor, even if both originate from the same source. His intention to replace the diverted funds, thus, does not establish that $500,000 of his capital has been made available since 2015, without interruption, to the NCE for job creation purposes.” Does the EB-5 “at-risk” requirement actually justify this hard “without interruption” line?  The decision goes on to give additional reasons for denial, but speaks against supplementary investment as if it’s wrong in principle, regardless of other circumstances.

SEP252019_01K1610 Matter of V-A-O-C-A-C-D-R-C- tests the question of whether a regional center with the most reputable of operators (State of Vermont) can recover from the bad actions of previous partners. The state fought hard, on behalf of past investors and on-going projects, to keep designation at least long enough to complete current EB-5 projects and implement an orderly wind-down of operations. But AAO dismisses the appeal of Vermont Regional Center’s termination. Ironically, the determinative reason seems to be the state’s responsible intent to not sponsor any new EB-5 projects. The unspoken rule seems to be, new I-526 filings = promoting economic growth, while no new I-526 filings = no longer continuing to promote economic growth.

Regional Center Activity

USCIS claims that “When determining whether a regional center continues to promote economic growth, we consider the totality of the circumstances, weighing positive and negative factors to reach a conclusion.”

However, as pointed out in one of this year’s termination appeals, it appears that in fact “USCIS has, sua sponte, determined that the only acceptable evidence of promotion of economic growth is the filing of Form I-526 petitions by investors in projects affiliated with a regional center within three years of receiving its designation.” This is evident from my log regional center terminations, which shows that 103 regional centers have been terminated so far for not having had any I-526 filings during a period of time (the metric varies by decision – most often three years, sometimes two, four, or five years). The appeal MAR152019_01K1610 pointed out that “this temporal requirement does not appear in any statute, regulation, or USCIS policy guidance,” which makes it a bit unfair, and that “the statute and regulations related to termination of a regional center’s designation are impermissibly vague.” But the AAO spends no time on this procedural issue, merely saying that the Applicant didn’t make a constitutional point, and if he had, constitutional points are outside AAO jurisdiction.

Instead, the AAO decisions on termination appeals tend to follow this shape: (1) review the applicant’s evidence of activity in developing projects and promoting investment opportunities, and (2) conclude yes, that’s positive activity, but there haven’t been any recent I-526 filings for this regional center.  No investor petitions means no data on EB-5 investment resulting in increased export sales, improved regional productivity, job creation, increased domestic capital investment, or other positive indicia of promotion of economic growth. The regional center is not promoting economic growth in the only way we can measure – I-526 filings – and therefore must be terminated. It starts to feel petty and hyper technical. In AUG302019_01K1610, A-G-C-R-C got terminated (1) because the I-924A filing fee amount was written on the check as “three thousand three hundred thirty five,” not “three thousand thirty five” (and USCIS was not able to accept a check with the corrected lower amount because it post-dated the filing deadline), and (2) because no I-526 had yet been filed within 21 months of the regional center’s designation. A-G-R-C applied to be a regional center in 2014 and didn’t get approved until 2016. USCIS didn’t even give the RC as much time to secure investors as it gave itself to review the application.

Many of the termination appeals in 2019 include this language: “The evidence discussed above demonstrates the Applicant’s pursuit of new projects, an action which in and of itself serves as a positive factor in determining whether the regional center continues to promote economic growth. However, it does not show that these actions resulted in increased export sales, improved regional productivity, job creation, increased domestic capital investment, or other positive indicia of promotion of economic growth.” How to make such a showing remains a challenge for regional centers that are now preparing Form I-924A, and need more time to secure investment. If USCIS doesn’t manage more nuance, its blind three-year metric will end up eliminating all the regional centers that Congress actually wants in EB-5 – the ones in rural/distressed/low-profile areas that will inevitably have relatively low volumes and long lead times. (For additional discussion, see my 2018 post on Preparing to File I-924A.)

Project Delays

Many I-526 decisions in 2018 and 2019 are associated with just a couple regional center projects with many investors who each filed all possible appeals and motions. The Arizona international trading mall case and the cellulose-to-sugar conversion factory case have a simple moral: when a project does not move forward according to plan, instead suffering multi-year delays, it’s tough to demonstrate that the plan was/is reasonable.  AAO dismissed all the appeals, denied all the motions to reopen and reconsider, and went further to revoke I-526 approvals that had been made before  project delays became apparent. I feel sorry for the investors, and envious of the lawyers who earned fees from this blizzard of repetitive AAO activity. (I’m not including links to all the cases, but open a few entries at random in the 2018 or 2019 folders of I-526 decisions, and you’ll encounter them.)

Other decisions

Other decisions that may be of interest to people who follow these topics: JUN062019_02B7203 (bridge financing problem considering the length of the bridge), SEP232019_01K1610 (remands an Exemplar project denial based on USCIS’s unreasoned claims of unreasonableness), JUL222019_01K1610 (makes an issue about source of funds for a regional center applicant), MAR152019_01B7203 (discusses material change specifically as an issue of rectifying a deficiency in the original petition).

Questions for USCIS Engagement

9/9 Update: USCIS did not answer even one of my questions in the engagement. (There was one piece of information — that IPO currently has 212 dedicated staff — but the call did not state whether these staff are currently assigned to EB-5 work, or among those temporary assigned to other agency priorities.)

From: suzanne@lucidtext.com
Sent: August 11, 2019 6:03 PM
To: ‘public.engagement@uscis.dhs.gov’
Subject: EB-5 Engagement

The following are my questions for the EB-5 Immigrant Investor Program: Listening Session, Monday, September 9, 2019.

    1. Processing Volume Questions

In the October 5, 2018 meeting with IIUSA, IPO Chief Sarah Kendall reported significant productivity improvements, which “represents that it was a good decision for the leadership here to invest additional resources in the program.” The changes to processing volume (completed adjudications) between FY2017 vs FY2018 YTD were +21.9% for I-526, +.2.6% for I-829, and +72.5% for I-924. However, productivity has fallen since then. Comparing FY2018 and FY2019 YTD (Q1 and Q2), the number of EB-5 forms processed decreased by half or more: -47% for I-526, -50% for I-829, and -76% for I-924.

Does IPO’s dramatic drop in productivity in FY2019 represent loss of resources, or a different approach to adjudications? If loss of resources, what caused this loss, and can it be remedied? (Has the large drop in EB-5 receipts resulted in reduced investment in EB-5 adjudications?) If reduced productivity is due to changes to the adjudications process or standards, what are these changes? (Has there been a change in workflow? In deference policy? In RFE standards?) Does IPO see any prospect of returning to the processing volume achieved in FY2018? If yes, when? If not, why not?

    1. Staffing Questions

In the October 5, 2018 meeting with IIUSA, IPO Chief Sarah Kendall reported that “we are fully staffed now,” with “close to 200-plus personnel at this time” including FDNS, Adjudications Management, and  a support team. What is the current staffing situation – total, and by department? How many personnel are dedicated to each type of adjudications: I-526, I-829, and I-924? Does IPO anticipate any additional hiring this year, or any reallocation of staff?

    1. Adjudication Priority Questions

The “Check Case Processing Times” page on the USCIS website says that “we generally process cases in the order we receive them.” However, the wide spread in the “estimated time range” reported on this page indicates that some cases are being processed two or more years earlier than others. Can IPO comment on reasons for this wide range in processing times? Do any of these factors result in some petitions experiencing longer wait times than others: whether direct EB-5 or regional center investment, the number of EB-5 investors in the project, the investor’s nationality.

    1. Response Time Questions

After a petitioner has filed a response to a RFE or NOID, how long should the petitioner expect to wait for a response from USCIS? What does USCIS consider a “normal” time between RFE response receipt and decision?

Considering the recent flood of Mandamus complaints, would USCIS like to suggest any additional measures short of Mandamus for petitioners with long-delayed petitions?

    1. Regulations Questions

What is IPO doing to prepare for the November 21, 2019 effective date of the EB-5 Modernization Regulation? Will Form revisions and policy manual revisions be complete by that time? Will IPO issue additional guidance regarding TEA evidence (to address ambiguities in the regulation regarding acceptable data and methodologies), and priority date retention (to address ambiguities in the regulation regarding the conditions under which the qualifying investment in a previously-filed petition can be counted toward the qualifying investment required for a newly-filed I-526).

Meanwhile, does IPO have any update or timeframe for the Regional Center Program regulation (RIN 1615-AC11) and EB-5 Immigrant Investor Program Realignment regulation (RIN 1615-AC26)?

    1. Regional Center Compliance Questions

IPO terminated 83 regional centers in 2017, 133 regional centers in 2018, and only 11 so far in 2019. Does this drop in terminations reflect a change in standards for regional center activity or compliance?

    1. Pending I-526 Data

In October 2018, IPO posted on the USCIS website a list that itemized pending I-526 by country of investor origin and priority date. This data was extremely valuable to program integrity, helping prospective investors to make informed decisions in light of the EB-5 backlog. But this list has since been removed from USCIS.gov. Will IPO publish an updated version of the list?

  1. Public Engagement

What can the industry do to best support IPO at this time? How can we help to reduce processing times? What input would be helpful from us?

We really appreciate this opportunity to engage with USCIS. Thank you!

Suzanne Lazicki
Lucid Professional Writing
(626) 660-4030
http://lucidtext.com/

Business Plans and RFE Response

Do responses to Requests for Evidence need business plans? What if the RFE for an I-526 petition includes this dread sentence “Upon reviewing the business plan, USCIS finds that the evidence in the record does not establish that the business plan is Matter of Ho compliant.” Should the RFE response submit an updated/revised business plan, or take another strategy?  Which forms of evidence will be most compelling to USCIS and most effective for the petitioner, when addressing USCIS questions and concerns related to the I-526 business plan?

The question is important, because Requests for Evidence have become so common and lengthy as to constitute, effectively, an additional stage in the EB-5 process.  The official EB-5 process includes the I-526 stage, which provides a business plan to reasonably predict prospective job creation, and the I-829 stage, which provides evidence to document actual job creation. The unofficial EB-5 process introduces the I-526 RFE stage, which preemptively asks for verification of actual job creation, masked as request for evidence that business plan predictions are reasonable.

It’s necessary to read the RFE carefully, to identify the concerns behind the requests. A statement in the RFE that “the I-526 business plan is deficient” has four possible meanings, each calling for a distinct response.

  1. “Not Up-to-Date”: The I-526 plan may be fine as a plan, but we (USCIS) are not interested in a plan anymore. Over the 2-4 years of processing delay, the business has had time to develop. Now we don’t care whether the petitioner established eligibility at the time of filing based on having a reasonable plan for the future. Rather, we want the petitioner to demonstrate eligibility as of today based on what’s already happened. Therefore we shall issue an RFE that calls the I-526 plan deficient just because it is a plan. In place of a plan and projections, we want a laundry list of evidence for past activity. For example, to quote recent RFEs: NCE tax filings to date, payroll records to date, bank records to date, and evidence for schedule milestones accomplished. This is justified by the idea that the only way to show that a business plan projection is reasonable is to prove that it already came true.
  2. “Not Complete”: The I-526 plan was deficient at the time of filing. Had we reviewed this plan promptly, while it was still up-to-date, we would still have found that it was not comprehensive and credible. The plan lacks the detail and supporting evidence that would normally be required to assess the credibility of a plan for the future.
  3. “Clarification Needed” The I-526 plan includes a few points that cause confusion — usually internal discrepancies, or discrepancies between the plan and external evidence. The RFE requests clarification on these points.
  4. Underlying Fact Problem” The I-526 plan might be beautiful as a document, but it describes a business that does not fit EB-5 requirements. Problematic elements might include prohibited debt arrangements, the wrong kind of structure, the wrong kind of job creation, unsuitable timing, failure to fit TEA requirements, or unacceptable immaturity or unpredictability.

Depending on the underlying concern, the RFE response may or may not need to include an updated business plan.

  1. Responding to the “Not Up-to-Date” RFE: In this type of RFE, USCIS does not identify problems with the original business plan as such, but requests evidence for implementation of the original plan. The petitioner could respond fully to this RFE by simply providing the specific evidence documents requested, such as tax, payroll, and permit records. This RFE does not ask for a revised business plan, because business plans treat the future and this RFE wants to know about the past. If actual performance closely followed the original business plan, and if the evidence documents speak for themselves, then an updated business plan would be needless and distracting. An updated plan can be helpful if actual performance has departed or will depart from the original plan.  In that case, a business plan is a good venue for putting new evidence in context, telling a coherent story that bridges the gap between the original plan and current conditions, and making a case for fundamental continuity despite non-material changes. Such an updated business plan must be written with great care and sensitivity to EB-5 requirements, to give the petition its best chance to demonstrate ongoing eligibility while avoiding material change problems. My RFE response service covers this type of business plan. (If actual performance has departed significantly from the original plan, then even the most expert business plan update may fail. But a slim chance of success can be maximized with a plan written by someone who is thoughtful, strategic, and intimately familiar with how USCIS has handled material change policy.) Note that one fair response to the “not-up-to-date” RFE would be “this RFE should not exist at all.” Most petitioners will want to comply instead of argue, to minimize risk and because this RFE response helps prepare the way for I-829, at least.  But arguments exist. USCIS is unreasonable to use an RFE to demand evidence that does not implicate eligibility at the time of filing (because such evidence did not exist at the time of filing), that would not have been requested had the petition been adjudicated promptly rather than delayed for many years, that belongs to the I-829 rather than I-526 stage, that appears to be fishing for material changes to provide denial pretext, and that slows adjudications to a crawl for everyone by doubling/tripling I-526 evidence. And it is impossible to write a business plan that will avoid this RFE. The mere passage of time due to USCIS delays creates  the “deficiency” of being not up-to-date, and of being a reasonable plan for the future rather than evidence of past performance.
  2. Responding to the “Not Complete” RFE: This type of RFE points out that the original business plan is deficient as a plan, suffering from content omissions. The RFE response has options: (a) provide the specifically-identified missing content as an amendment to the original plan, or (b) provide an updated business plan that includes the missing content plus takes opportunity to bring the entire original plan up-to-date. For an example, if the RFE just notes the lack of a hiring schedule, then a hiring schedule can be provided in the form of a business plan amendment. If the RFE just complains about lack of credibility due to unsupported market analysis, then a well-documented market analysis can be provided as additional evidence. A completely updated business plan may be called for if the RFE asked more wide-ranging questions, or if the positive factors in a business plan update look likely to outweigh the risk that unsolicited new information could open new questions and be labeled as material change.  Again, drafting such responses requires great care and significant EB-5 expertise. The very fact that USCIS decided to issue an RFE, instead of exercising its right to deny the petition outright for incompleteness, is a good sign for the petitioner. Value the second chance offered by the RFE, and make every effort to take advantage of it.  My RFE response service also covers these types of business plan amendments and updates.  (And note that unlike the “not up-to-date” RFE, the “not complete” RFE can be avoided. My business plan writing service and review service aim for business plans that are sufficiently comprehensive and credible to comply with Matter of Ho from the beginning.)
  3. Responding to the “Clarification Needed” RFE: This type of RFE asks for detail clarifications that often do not need a full business plan to answer. “The square footage is 32,000 on page 5 and 33,000 on page 10 of the original plan – which is correct?” A question like that can be answered in a few sentences and with the approved drawings as evidence. No need to revise the entire plan for the purpose of reconciling a few minor discrepancies and clearing up minor ambiguities. (But note to fellow business plan writers – even a tiny discrepancy can lead to months-long processing delay. Implement methods to avoid such errors in the first place.) “The original plan is for a McDonald’s but Google Maps currently shows a KFC at the project address – explain the discrepancy.” That kind of clarification may occupy a full business plan update.
  4. Responding to theUnderlying Fact ProblemRFE: This type of RFE points out underlying fact problems that would make the petitioner ineligible at the time of filing. For example, suppose the original business plan indicated that the petitioner made a loan to the NCE, while EB-5 eligibility requires equity. Pursuant to material change policy, such an eligibility problem at the time of filing I-526 cannot be fixed post-filing. Unless it’s possible to argue that the apparent problem did not really exist. Maybe the original business plan document was not written with care by Lucid Professional Writing, but by someone in a rush who made template errors and typos. Maybe the NCE’s operating agreement and tax filings clearly demonstrate that the petitioner’s funds were always in fact equity in the NCE from the beginning, and thus any reference to debt in the original business plan reflects a slip-up by the plan writer, not a problem in the reality upon which the petitioner’s eligibility depends. A business plan update or amendment in the RFE response can make such a case. But if a debt arrangement really existed at the time of filing, the most beautiful business plan revision cannot help. Again, it’s important to think strategically and realistically about what kind of RFE response is worthwhile, considering the facts.  (And for those just starting the process, be sure to get your EB-5 business plan written or at least reviewed by a careful expert.  Because once that business plan has been filed with USCIS, it’s difficult to fix document problems and almost impossible to fix reality problems.)

When thinking about RFE response strategy, I keep in mind the words that USCIS uses to conclude every RFE.

USCIS has determined that the record does not establish eligibility for the benefit sought. Accordingly, USCIS has requested evidence to address the issues outlined above. Petition is not precluded, however, from submitting evidence in addition to the evidence requested by USCIS that the petitioner deems relevant to address such issues. Petitioner must prove by a preponderance of the evidence – in other words, that it is more likely than not – that Petitioner is fully qualified for the benefit sought.

If Petitioner submits updated or revised documents, please note that “[a] petitioner must establish eligibility at the time of filing; a petition cannot be approved at a future date after the petitioner becomes eligibility under a new set of facts. See Matter of Katigbak, 14 I&N Dec. 45, 49 (Comm. 1971). Therefore, a petitioner may not make material changes to a petition that has already been filed in an effort to make an apparently deficient petition conform to [USCIS] requirements.” Matter of Izummi, 22 I&N Dec. 169, 175 (Assoc. Comm’r 1998); see also 8 C.F.R 103.2(b)(1).

This conclusion makes several key points:

  • The issue in every RFE is this: to establish by the preponderance of the evidence that the petitioner is eligible for EB-5 benefits. Thus:
    • Any evidence requested by USCIS, or provided by the petitioner in response, should be relevant to that single purpose.
    • The fundamental strategy question is not so much which specific evidence items does the RFE request, but which eligibility factor does USCIS think has not been established. The petitioner should identify that factor, and think about which evidence would best support eligibility in that area. The most compelling evidence may include items not mentioned in the RFE.
    • RFEs usually request sufficient evidence to prove every claim beyond a reasonable doubt, but such a standard is not required for approval. I-526 decisions are to be made based on a preponderance of the evidence standard.
  • The RFE exists to give an opportunity to supplement the record with new information and updated and revised documents. But the opportunity comes with a warning: new facts and corrections will actually make the petition un-approvable, if they appear to make any “material” changes to the original petition. This is the rocket science of RFE response: to prepare additional evidence that supports current eligibility without undermining eligibility at the time of I-526 filing.

For additional reading:

Retrogression Math

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.

2018 in Review

A reader asked me this question a couple weeks ago: Is EB-5 still a choice?  Can it be a good option today for project companies or prospective immigrants? The answer: yes, though it’s complicated. In 2018, we felt the sting of legislative, regulatory, and policy uncertainty, and the pressure of limited visa numbers and associated wait times. Limited visas mean that EB-5 is no longer a good choice for the ones who used it most in recent years: China-born immigrants and mega-projects. EB-5 can still work well today on a small scale – for immigrants from not-backlogged countries (or not in a hurry), and for projects that don’t rely on massive EB-5 raises. Uncertainty remains an issue, as regional center program authorization depends on Washington’s ability to pass funding bills, and basic EB-5 program terms are subject to change from new regulations and policy. This post looks back at major developments reported by this blog over the past year.

Regional Center Program Authorization

EB-5 itself is permanent, but the regional center program was established in 1992 with an initial five-year term, and has required reauthorization since then.  Authorization has typically been attached to appropriations bills — a blessing when the appropriations process goes smoothly, and a curse when it doesn’t. Congress did not intend to harm the RC program in 2018, but drama over government funding meant that the RC program faced five sunsets this year, and temporarily lost authorization twice: with the 3-day government shutdown in January 2018, and with the current shutdown since December 22. The choppy history of RC program authorization is really just the dismal history of appropriations bills and Washington’s struggle to agree on government funding.

The regional center program needs permanent or at least long-term authorization to put it on a stable footing, no longer vulnerable to every unrelated funding dispute over health care or abortion or The Wall or whatever. IIUSA has been advocating this since 2005, but without significant success so far. There was one stab at EB-5 legislation in 2018 – the “EB-5 Reform Act” negotiated behind closed doors by Grassley, Goodlatte, Cornyn, and Flake, and revealed in draft form to the industry in March 2018. I saw the bill as flawed and pandering to New York City interests, but reportedly the NYC interests didn’t like it either and prevented its inclusion in the March appropriations act. The EB-5 Reform Act would’ve given the RC program a welcome five-year authorization, but also made the program broadly unusable. We missed that opportunity and dodged that bullet. Since then, I’ve heard no report that anyone in Congress is working on EB-5 legislation. When the Senate Judiciary Committee held a hearing on EB-5 in June, most senators ignored EB-5 and just talked about the southern border. Senator Grassley, previously a force behind EB-5 legislation, turned his energy to writing letters urging action on regulations. At least until border security and DACA are out of the way, we apparently can’t depend on Congress to go beyond the minimum for EB-5: to keep regional center program authorization in the funding bills. (1/3/2019 Update: IIUSA says in its Year in Review post that “We are working productively with the EB-5 Investment Coalition (EB5IC) to further a true ‘industry bill’ that, when introduced in the 116th Congress, will provide for a full five-year reauthorization of the EB-5 Regional Center Program.”)

Changes to EB-5 Requirements

We spent all of 2018 thinking that DHS was just about to finalize new regulations increasing the EB-5 minimum investment amount and changing TEA rules. The OMB Unified Agenda anticipated a Final Rule by 02/00/2018, and then by 11/00/2018, but neither of those targets were met. USCIS has had since April 2017 to consider public comments on the regulation and come up with a final rule, but the task is complicated. The public generally didn’t like the draft rule, and DHS has had staff turn-over in nearly every position responsible for the EB-5 regulation.

USCIS did make four updates in 2018 to the EB-5 section of the USCIS Policy Manual. The updates (1) reaffirmed that USCIS provides documentation of CPR status to those with pending I-829, (2) rescinded previous guidance on tenant occupancy methodology, (3) updated guidance on regional center geographic area requirements, and (4) clarified policy on debt arrangements.  USCIS did not issue or promise any new guidance on the most pressing policy grey area: redeployment.

EB-5 Visa Usage and Petition Volume

Some of us have been talking about EB-5 visa numbers and trying to crunch numbers for wait time estimates since 2015, but 2018 was the year when everyone joined the conversation. In 2018, Department of State lengthened its estimate for the EB-5 visa wait for China-born investors, gave a cut-off date to Vietnam for the first time, and predicted oversubscription for India. EB-5 visa availability and wait time estimates went from being a fringe topic for killjoys with confusing spreadsheets to being a primary and widely-discussed factor in marketing strategy, investment decisions, and litigation.

The best attempt in 2018 to alleviate the visa number problem came from a lawsuit pointing out Congress’s expressed original intent to grant 10,000 visas to EB-5 investors, and the error of applying that limit to investors plus family members. So far the judge denied a preliminary injunction in the case, but the plaintiffs are continuing to pursue the matter.  Meanwhile, proposed legislation suggested changes to visa number allocations, but not changes that benefited EB-5. Fortunately those proposals did not become law.

Demand for EB-5 continued fairly strong in 2018, with about 4,000 I-526 filed from January to October. Of these, about 1,000 were filed in a surge in September 2018, in advance of possible changes/sunset date, and over 850 were filed by people born in India. Overall, I-526 receipts were well below totals from previous years, and should continue to fall as people adjust to the hard limit imposed by the 10,000 annual EB-5 visa quota for investors plus family members.

Trends at IPO

In 2018, IPO got a new chief and (I think?) several new division chiefs, issued four policy manual updates, held no stakeholder engagements until three appearances in November, significantly improved I-526 processing volume and times, dropped the ball on I-829, further confused processing times reports, issued many RFEs on issues related to the “at risk” requirement, and terminated 138 regional centers (mostly for inactivity or not filing Form I-924A).

EB-5 on the Ground

In 2018 I wrote EB-5 business plans for new projects in hospitality, multi-family, retail, assisted living, manufacturing, distribution, and storage, as well as E-2 work. I enjoyed hearing good news from past clients with approved petitions, and tried to help clients struggling with timing issues, redeployment challenges, policy changes, and political uncertainty. This blog had 49 new posts in 2018, and received 407,967 views from 121,349 visitors. Of these visitors, 56 made a contribution to support the blog. I appreciate the people who work hard to make EB-5 work, and especially the clients who have let me be a part of the process. We shall see what 2019 brings.

Regional Center List Updates

Additions to the USCIS Regional Center List, 09/11/18 to 12/31/18

  • Ameri-Link Midwest Regional Center (Illinois, Indiana)
  • Ameri-Link Ohio Regional Center, LLC (Ohio)
  • American Equity Fund Texas, LLC (Texas)
  • BC Central Florida Regional Center LLC (Florida)
  • Brilliant EB-5 Regional Center, LLC (Nevada)
  • FCA South Carolina Regional Center, LLC (South Carolina): www.fcaeb5.com
  • Los Angeles International Regional Center, LLC (California)
  • Mayaguez Regional Center, LLC (Puerto Rico)
  • National EB-5 Wealth Center, LLC (Texas): www.eb5wealthcenter.com
  • Southern California EB-5 Fund, LLC (California)
  • York Resources RC Funding, LLC (Connecticut, New Jersey, New York)

Renamed:

  • Smith Western Regional Center (former name Western Pacific Regional Center) (California, Oregon, Washington)
  • Native American Regional Center, LLC FKA Native American EB-5 Corporation (Illinois, Indiana)

Removed from the approved list, but not listed as terminated:

  • US Access Florida Regional Center, LLC (Florida)

New Terminations:

  • Civitas Miami Regional Center, LLC (Florida) Terminated 9/6/2018
  • Live in America – Colorado Regional Center LLC (Colorado) Terminated 9/7/2018
  • Civitas Great Plains Regional Center (Kansas, Missouri, Oklahoma) Terminated 9/12/2018
  • Encore Colorado RC, LLC (Colorado) Terminated 9/24/2018
  • Northern Mississippi Regional Center, LLC (Arkansas, Mississippi, Tennessee) Terminated 9/7/2018
  • Civitas Alabama Regional Center (Alabama) Terminated 9/6/2018
  • Civitas Michigan Regional Center (Michigan) Terminated 9/6/2018
  • USHoldings Regional Center (Georgia, South Carolina) Terminated 9/24/2018
  • Civitas Laredo Regional Center, LLC (Texas) Terminated 9/6/2018
  • Civitas Atlanta Regional Center (Georgia) Terminated 9/6/2018
  • Civitas Rio Grande Regional Center (Texas) Terminated 9/10/2018
  • US Freedom Capital-Texas, LLC (Texas) Terminated 9/18/2018
  • E Development Corporation dba EDC (Island of Guam) Terminated 10/15/2018
  • Civitas Washington D.C. Regional Center (District of Columbia, Maryland, Virginia) Terminated 9/5/2018
  • Civitas Illinois Regional Center (Illinois) Terminated 9/5/2018
  • Central Arizona Regional Center (Arizona) Terminated 12/19/2018
  • American Dream Fund San Francisco Regional Center, LLC (California) Terminated 10/3/2018
  • Civitas Louisiana Regional Center (Louisiana) Terminated 9/11/2018
  • Golden State Economic Development Fund, LLC (California) Terminated 12/6/2018
  • Carolina EB-5 RTP Regional Center, LLC (North Carolina) Terminated 12/20/2018
  • San Diego Regional Investment Center, LLC (California) Terminated 11/16/2018
  • EB5 Affiliate Network Washington, D.C. Regional Center, LLC (District of Columbia, Maryland, Virginia, West Virginia) Terminated 9/13/2018
  • Mag Ventures 1, LLC (Ohio) Terminated 9/11/2018

Updates (reauthorization or shutdown, indebtedness, visa numbers, litigation)

–12/22 UPDATE–

The page for the Immigrant Investor Regional Center Program at USCIS.gov has been updated with the following information.

The EB-5 Immigrant Investor Regional Center Program expired at the end of the day on Dec. 21, 2018, due to a lapse in congressional authorization to continue the program. All regional center applications and individual petitions are affected. USCIS will not accept new Forms I-924, Application for Regional Center Designation Under the Immigrant Investor Program, as of Dec. 21, 2018. Any pending Forms I-924 as of Dec. 21, 2018, will be put on hold until further notice.

Regional centers should continue to submit Form I-924A, Annual Certification of Regional Center, for fiscal year 2018.

We will continue to receive regional center-affiliated Forms I-526, Immigrant Petition by Alien Entrepreneur, and Forms I-485, Application to Register Permanent Residence or Adjust Status, after the close of business on Dec. 22, 2018. As of Dec. 22, 2018, we will put unadjudicated regional center-affiliated Forms I-526 and I-485 (whether filed before or after the expiration date) on hold for an undetermined length of time.

All Forms I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status, filed before or after the expiration date, will not be affected by the expiration of the program.

USCIS will provide further guidance to the public if legislation is enacted to reauthorize, extend, or amend the regional center program.

The Department of State website has this notice:

Operations During a Lapse in Appropriations

At this time, scheduled passport and visa services in the United States and at our U.S. Embassies and Consulates overseas will continue during the lapse in appropriations as the situation permits.  We will not update this website until full operations resume, with the exception of urgent safety and security information.  The National Visa Center, National Passport Information Center, and Kentucky Consular Center will still accept telephone calls and inquiries from the public.  Please note we will be closed for scheduled federal holidays on December 24 and 25 and will reopen on December 26.

–ORIGINAL POST–

Reauthorization or Shutdown

It remains to be seen whether our elected representatives decide they gain more from running the government past December 21, or from grandstanding over a shutdown. (I add any news as I hear it to the Washington Updates page.)

Just in case there’s no DHS funding bill or continuing resolution by December 21, here are the probable EB-5-related consequences of a shutdown:

  • The regional center program would lapse for the duration of the partial government shutdown, until a bill reauthorizes the RC program. During this lapse period, it’s likely that (1) any incoming regional center-associated I-526 and I-924 will be rejected, (2) no action will be taken on regional-center associated I-526 and I-924 already pending at USCIS, (3) adjudication will probably continue as usual for all I-829 petitions, (4) no regional-center based visas will be issued overseas, and no final action taken on adjustment of status cases involving regional center investment. Action can begin again as usual for all these petitions and visas as soon as a bill passes that renews regional center program authorization.
  • The EB-5 program itself is permanent program with no sunset date — only the regional center portion of EB-5 is subject to reauthorization. Petitions for investors without regional center sponsors (“direct EB-5”) are not affected by a lapse in RC program authorization.
  • USCIS is a fee-for-service agency not dependent on DHS funding, so IPO could remain open for business as usual and keep working on direct EB-5 and I-829 even during a shutdown.  But the Administration could choose to shut down USCIS operations to make a point. So far, there’s just a White House Executive Order that all federal departments and agencies will be closed Monday December 24. This may be an innocent Christmas Eve gift.
  • US Customs and Border Protection is deemed essential to national security and so will probably also keep operating during a shutdown. But travelers with any visa type should note that consular operations may be affected, and interviews may be may not be available.

I get my information from Government Shutdown (January 22, 2018) by Carolyn Lee, and Effects of a Potential Government Shutdown on Immigration Processing and Programs (December 12, 2018) by William Stock

Meanwhile, no evidence yet of action on the EB-5 Modernization regulation.

Source of Funds Victory

A US District Court has ruled in favor of EB-5 investors on a source of funds question.  The specific issue in Zhang et al. v. USCIS et al. was whether loan proceeds invested as cash constituted “cash,” as the plaintiffs claimed, or “indebtedness,” as USCIS claimed. The court ruled in favor of the two EB-5 investor plaintiffs, and also agreed to certify a class that comprises all I-526 petitioners who received or will receive I-526 denial solely on the ground that a loan used to obtain invested cash fails the collateralization test created by IPO in a 2015 IPO Remarks announcement. The court vacates USCIS denial of class members’ petitions, and remands the denials to USCIS for reconsideration. For more analysis, see 5 Things to Know About Ira Kurzban’s New “Use of Loan Proceeds for EB-5” Decision by the D.C. District Court (Wolfsdorf, Barnett)

Visa Numbers Case Setback

In less good news, State Dept. Can Still Count Relatives Toward EB-5 Visa Cap. The following excerpts from the Law360 article tell the story.

A D.C. federal judge refused to forestall the U.S. Department of State’s policy of counting foreign investors’ family members toward the EB-5 visa cap, dealing an early blow to a lawsuit levied by a group of Chinese investors who claim that the policy creates a lengthy visa backlog and conflicts with Congress’ intent.
U.S. District Judge Tanya S. Chutkan on Thursday denied the provisional class’ motion for a preliminary injunction against the government’s counting policy for the EB-5 visa program, which provides a path to permanent residency for foreign citizens who invest in U.S. enterprises, reasoning that language in the Immigration and Nationality Act does in fact support that policy.
…Ira J. Kurzban of Kurzban Kurzban Weinger Tetzeli & Pratt PA, who is representing the Chinese investors and the regional center, told Law360 that the plaintiffs will continue to pursue their claims in the district court, and “if necessary,” in the appeals courts.
“We recognize the issues in this case are difficult and the judge resolved them against our clients on a preliminary basis. We know that the court will take a fresh look at the matter when we seek summary judgment,” Kurzban told Law360 in an email. “We believe, that despite the longevity of the current method in counting visas, the process is simply wrong. [State’s] current counting policy is contrary to the law and the legislative history of the EB-5 program.”

Litigation

The busiest people in EB-5 now may be ambulance chasers looking to exploit the disappointment of backlogged EB-5 investors from China. Chinese investors – don’t get burned twice! If you wish now that you’d known more before putting money in a project, take the lesson to know more before putting money into litigation. Examine (1) does my counsel know EB-5 well enough to make accurate claims that could possibly win my case, and (2) what’s the best I could get out of the case, if I win?  The hot button retrogression/redeployment issue has a particularly complex history and factors, so be smart. Otherwise money gets spent on claims like this “Defendants were fully aware when they solicited investments from plaintiffs in 2014 and 2015 that plaintiffs’ capital would need to be reinvested into a different project beyond the term of the partnership’s initial investment.” In fact, a project redeployment requirement was not suggested until August 10, 2015 (in a draft memo never finalized), was not instituted as policy until July 14, 2017, and has not been clarified to this day. Homework needs to be done. This blog, which has a record of EB-5 updates from 2010 to the present, provides one textbook.

SEC Action

The SEC announces Three Developers Settle Charges of Fraudulent EB-5 Offering (December 12, 2018). In this tidy case, the developers allegedly told investors that funds would be used exclusively for one real estate project, and then in fact used some funds for purchases at two other unrelated real estate projects. No personal yachts or condos involved here, but transferring funds from one valid project to another valid project is still wrong if not properly disclosed to investors. The developers agreed to settle the case by paying back all the investors’ money, with a penalty.

Regional Center Compliance

My post from September Preparing to file I-924A Annual Certification has resources for the I-924A, which is due from all regional centers by December 29.

A helpful RCBJ article: Regional Center Compliance Reviews, by Lincoln Stone, Susan Pilcher, Elsie Hui Arias (October 2018)

Preparing to file I-924A Annual Certification

It appears that a Continuing Resolution will extend regional center program authorization at least into December 2018. (I add detail and updates as available to my Washington Updates page.) Assuming business as usual, regional centers should think about preparing to file the Form I-924A annual report. Regional centers use Form I-924A to demonstrate continued eligibility for regional center designation. Regional centers that remain designated for participation in the program as of September 30 of a given year must submit Form I-924A with the required supporting documentation on or before December 29 of that same year.

FILING INSTRUCTIONS

Here are links to official information, instructions, and tips from USCIS:

CHOOSING TO TERMINATE

If a regional center does not file I-924A, or files I-924A that does not demonstrate eligibility for continued designation, then USCIS will respond with a Notice of Intent to Terminate, and eventually terminate the designation. The regulations at 8 CFR 204.6(m)(6)(vi) also offer a relatively tidy alternative for regional centers who do not wish to stay designated: “A regional center may elect to withdraw from the program and request a termination of the regional center designation. The regional center must notify USCIS of such election in the form of a letter or as otherwise requested by USCIS. USCIS will notify the regional center of its decision regarding the withdrawal request in writing.”

The active method (formal withdrawal request) and passive method (just don’t file I-924A) have the same outcome: termination of regional center designation. The active method has the advantage, for what it’s worth, of getting a relatively nice letter back from USCIS. (Representative letters for comparison:  termination based on withdrawal, and termination for failure to file I-924A.)  The word “fail” appears eight times in the no-I-924A termination letter, and not at all in the withdrawal termination letter. Only the withdrawal termination letter template points out that “the withdrawal and termination do not preclude the filing of a new regional center application” and  “the facts and circumstances of the prior designation, withdrawal, and termination may still be considered in the adjudication of future regional center applications.”

PRACTICAL ADVICE

The instructions and tips from USCIS (linked in the first section above) are quite practical and detailed, so do read those carefully. The following section has a few additional lessons derived from my reading of the 207 regional center termination letters posted so far by USCIS. (I also maintain and share an ongoing log of all terminations and associated letters – another bit of generous work for which I am not much thanked.)

Avoidable reasons that regional centers have been terminated despite filing I-924A

  • The I-924A was filed using the wrong edition of the form, to the wrong address, or missing the proper fee
  • The I-924A got lost, and the RC could not show proof of mailing to prove that this loss wasn’t its fault
  • The I-924A was not properly filed until after December 29

I-924A issues for active Regional Centers

  • If the regional center has experienced any changes for which an amendment is required (such as changes in name, ownership, or structure), file the I-924 amendment before filing I-924A.
  • Strive for clear consistency between the info provided in I-924A and the info reflected in the record of past filings, including past I-924A, I-924, and investor petitions. (I’ve seen multiple decisions that indicate that USCIS is cross-referencing I-924A with other filings, suspiciously watchful for any apparent inconsistencies. Of course projects and numbers change over time, but USCIS tends to see changes as aberrations and discrepancies that need explanation.)
  • Double-check that the regional center entity is still active in good standing, and with an active business license. Remind USCIS with which Secretary of State and municipality the regional center is registered, so USCIS doesn’t check in the wrong place.
  • Double-check the Regional Center website for any problematic material (such as images of the USCIS logo, any language that smells like a visa guarantee, or any apparent inconsistencies with the regional center information – e.g. name, ownership, managers – officially reported to USCIS)
  • Google the regional center name and project names, see if any negative media stories appear, and consider preemptively explaining those stories as part of the I-924A

I-924A issues for Regional Centers with no EB-5 investment yet

  • A regional center on its third year since initial designation with no EB-5 investment is in line for termination for failure to promote economic growth, unless it makes a compelling counterargument. (That three-year metric is not published anywhere, but evident in termination letters. USCIS takes 2-3 years just to adjudicate the application for initial designation – enough time in limbo for the RC to lose its originally-contemplated projects and partners – and then gives the RC only 2-3 years to start again from scratch before termination. Quite unreasonable, but the current practice.)
  • A compelling counter-argument requires project evidence. In termination letters, USCIS does not admit to being impressed by evidence of marketing and promotional activities for the regional center, by due diligence on potential projects, or by general industry involvement. USCIS most wants to see evidence of projects imminently likely to use EB-5 investment. They seem to want to see project evidence related to timing (such as registrations, licenses, permits) and evidence related to firm commitment to do the project and include the regional center and EB-5 investment (such as signed term sheets, signed purchase agreements, loan commitments). The goal is to avoid USCIS deciding that “the evidence submitted relate only to potential projects and future aspiration goals” and “thus these projects are not relevant examples of the regional center’s ability to continue to promote economic growth” (to quote language repeated in multiple termination letters).  USCIS seems particularly fixated on the idea of “binding contractual obligation” and to particularly like finalized contracts and signed term sheets as evidence. (Again this advanced-project evidence demand is hardly reasonable – calling for status and commitments not consistent with the fact that USCIS will likely delay projects with years-long I-526 processing times. But the injustice has yet to be recognized.) There’s some evidence that having filed an amendment (especially one with I-526 exemplar request) can help support the activity argument, in lieu of being able to report filed investor petitions.
  • These regional center termination letters discuss specific examples of project evidence provided to USCIS with Form I-924A, and why USCIS did not think the evidence of activity made for a compelling economic growth argument.

FORM I-924A REVISIONS

If you’d like to advise USCIS about how to make the next edition of Form I-924A less faulty, you have until 11/13/2018 to do so through the Federal Register rulemaking comment process.

PLUG

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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, caller 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.

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)

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. (4/25/18 update: here are notes from Mr. Oppenheim’s presentation. 10/30/18 update: See slide 5 in this presentation, and my recording of a panel on EB-5 visa numbers.) 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, which is what remained after numbers had been allocated to qualified applicants from other countries. (If not for the Chinese Student Protection Act, China could’ve received 700 visas plus the 75% leftover.)
  • 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:

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How long does I-526 take? (Part II)

Update: I have deleted this now-outdated post and replaced it with How long does I-526 take? (Part III)

I-526 processing time (Part I)

Update: I have deleted this now-outdated post and replaced it with How long does I-526 take? (Part III)

EB-5 Timing Issues and Visa Wait: Process and Data

[2019 Update: My post Forecasting Visa Availability: 5/6 Oppenheim projections and big picture (5/6/2019) provides perhaps a clearer big picture explanation of how the wait line works.  2018 Updates: see also my 4/8/2018 post EB-5 Visa Waiting Line and Visa Allocation and my 4/23/2018 post Visa Numbers (China, Vietnam, India, Brazil, S. Korea, Taiwan)]

How long does it take to get an EB-5 visa? Before we look at numbers, consider this picture illustrating variables in the EB-5 process from initial application to conditional permanent residence.

The investor files an I-526 and receives a priority date, goes through I-526 adjudication, and proceeds along with family members to I-485 status adjustment (if already in the US) or consular processing (if outside the US) in order to get EB-5 visas. The system has two major constraints: USCIS capacity to process petitions, and the annual quota on EB-5 visa numbers. These constraints have produced pile-ups of pending petitions and applications, illustrated by the green bins in the picture.

We have data for many parts of this picture, such as how many people are in each of the pending bins, the historical rate of receipts and approvals and denials, and the annual visa quota. The simplest way to estimate the visa wait line (the time from priority date to green card) is to add up the pending bins and divide that number by the annual quota. As there are currently 90,000+ people associated with the pending bins, and the annual EB-5 visa quota is about 10,000, the current total waiting line is 9+ years long. (Maybe longer, depending on assumptions about the other variables). As recently as mid-2014, the line was only about three years long (as we know from the Visa Bulletin, which indicates that China-born investors with June 2014 priority dates started getting visas in May 2017).

Calculating the actual visa wait time for any given person is complicated. Where is that person in line, relative to other pending petitioners and applicants? Is that person from China (which is oversubscribed and subject to a per-country limit) or from an undersubscribed country that’s free to take the first available visas? How have/will other process variables such as per-country receipts and approval rates change over time and affect calculations?

If I were someone born outside China considering EB-5 now, I’d feel good about the per-country limit that allows me to skip ahead of most China-born applicants in line (i.e. about 87% of the line). For me, the time IPO takes to process I-526 is the major factor in my total wait time.

If I were a China-born prospective investor, I’d look at everyone in line ahead of me, and also try to estimate how many queue-jumping non-Chinese may enter from behind in the time I have to wait. That calculation could add years to the potential wait time, well exceeding 10 years, if the number of non-Chinese investors increases dramatically in the future and IPO processing speeds up. Or future circumstances could quell new EB-5 demand, encourage existing applicants to drop out, or apply the per-country limit to other countries, improving the wait time for China-born investors who stay in the system.

All past investors should consider the significance of the visa quota constraint and the possibility that it will change. Indeed, it could change for the better. For example, if the State Department recognizes that Congress intended the 10,000 visa quota to apply to 10,000 investors, not investors plus family members, this would loosen the constraint and cut about six years from the current visa wait time. Unfortunately, quota reduction is also a live possibility. Industry lobbyists are reportedly considering legislation with visa set-asides that would reduce the generally-available annual EB-5 quota from 10,000 to 7,000. This could be disastrous for past EB-5 applicants, adding about four years to the wait time. Visa set-asides have emerged as a compromise between the Senator Grassley camp, which wants to incentivize rural/urban-distressed investment somehow, and certain regional centers, who resist an incentive based on a significant investment differential that would make their future prosperous urban projects uncompetitive.  Tying the TEA incentive to visa set-asides rather than reduced investment would allow regional centers to keep attractive terms and options for future investors. Their past investors would suffer, but that cost seems not much counted. (My impression of the current legislation discussion comes from this webinar and this article.) Of course, maybe protections for past investors will be added to the legislation, or maybe there won’t be any deal and we’ll get new regulations instead. The regulations could significantly reduce new EB-5 demand, which would hurt the industry but benefit people who stay in the current visa queue.

And now, let’s get to the numbers. I’ve expanded and improved my backlog calculation spreadsheet, which now has multiple tabs that compile all the data I can find on each variable influencing the visa wait time for an EB-5 conditional green card. Keep the spreadsheet link, as I will update it whenever new inputs become available. (For those who don’t face backlog issues, see my posts on I-526 processing times Part I and Part II to help estimate the time between you and conditional permanent residence.)

Summary of EB-5 Visa Wait Time Variables

  1. I-526 petition variables
    • Number of petitions currently pending
    • Future petition filings
    • Number of petitions by country (how many China-born, how many born outside China)
    • Percent of petitions that will be denied or withdrawn
    • Number of family members to be associated with each petition
    • Time USCIS takes to adjudicate petitions
    • Investor’s priority date relative to others with pending petitions
    • The extent to which USCIS follows its first-in-first-out policy when adjudicating petitions
  2. Visa application variables
    • Number of I-485 adjustment of status applications for EB-5 pending at USCIS
    • Number of EB-5 visa applications pending at the National Visa Center
    • Number of pending applications by country (how many China-born, how many other)
    • Percent of applications that will be denied or withdrawn
  3. Political factors
    • Whether the rules and interpretation for the EB-5 visa quota remain unchanged
    • Whether new legislation introduces visa-set-asides that would reduce the annual visa quota generally available
    • Whether the regional center program remains authorized, and the impact of a sunset on investors in line for a visa
    • Whether new regulations or legislation include features that would change demand and/or affect past applications

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!

Direct EB-5 FAQ, White House Immigration Principles

Direct EB-5 FAQ
The regional center program dominates EB-5, but the alternate direct EB-5 track remains significant. 846 EB-5 visas went to direct EB-5 investors plus family in FY2016, and this number will likely climb as petitions from the past couple years finally reach the visa stage. Direct EB-5 can be an attractive option for foreign investors and U.S. business owners who wish to avoid the uncertainty surrounding the regional center program. About half the business plans I write these days are for direct EB-5.

There remain, however, lingering misunderstandings about how EB-5 works outside the regional center program. I’ve prepared a new page, Direct EB-5 FAQ, that addresses questions about the nature and practical uses of direct EB-5.

Test your direct EB-5 knowledge.

  1. True or False? The direct EB-5 program will sunset unless re-authorized by Congress.
  2. True or False? A direct EB-5 investor must invest at the $1 million level.
  3. True or False? Real estate developments are the most common direct EB-5 project type.
  4. True or False? A majority of direct EB-5 investors have come from China.
  5. True or False? The direct EB-5 investor must majority-own the enterprise receiving investment.
  6. True or False? The direct EB-5 investor must have day-to-day managerial responsibilities in the enterprise receiving investment.
  7. True or False? If a direct EB-5 investor buys a business, that business and its employees will qualify as new for EB-5 by virtue of the new ownership.
  8. True or False? A new commercial enterprise can use direct EB-5 capital to invest in a separate job-creating enterprise.
  9. True or False? A direct EB-5 investor can count full-time equivalent jobs created by the enterprise.

Each of these statements is false. If you were surprised, then check out the Direct EB-5 FAQ page for direct EB-5 information, policy references, and case citations.

White House Immigration Principles & Policies

Just in time for Columbus Day, President Trump has sent Congress a list of Immigration Principles & Policies that 15th-century Americans could wish they’d had. The White House principles focus on border security and interior enforcement, and repeat the idea that legal immigration should feature a skills-based points system while reducing admissions for relatives, asylum seekers, and refugees. We shall see how Congress reacts to this guidance from the White House. The White House principles look positive for immigrant investment, but the points system would be fatal (at least in the scenario proposed by Tom Cotton, which would eliminate EB-5 and would not allow immigrant investment to support US entrepreneurs, but only immigrant-controlled business).

In the meantime, in honor of voyagers who continue to build our great nation as they bridge continents and pursue their dreams in face of doubt and adversity, I will quote the first paragraph of President Trump’s Columbus Day proclamation.

Five hundred and twenty-five years ago, Christopher Columbus completed an ambitious and daring voyage across the Atlantic Ocean to the Americas.  The voyage was a remarkable and then-unparalleled feat that helped launch the age of exploration and discovery.  The permanent arrival of Europeans to the Americas was a transformative event that undeniably and fundamentally changed the course of human history and set the stage for the development of our great Nation.  Therefore, on Columbus Day, we honor the skilled navigator and man of faith, whose courageous feat brought together continents and has inspired countless others to pursue their dreams and convictions — even in the face of extreme doubt and tremendous adversity.

Articles & Resources (Ombudsman, Visa Numbers, Investor Protection, Redeployment, RC Audits), Washington Updates, RC List Changes

Helpful Articles and Resources

Washington Updates
What is happening with EB-5 in Washington? I wish I knew. Immigration policy generally looks like an orphan child.  The top three leadership posts at USCIS are all still filled by “acting” people (Lee Cissna was nominated but still not confirmed as Director), and now we’re missing a DHS Secretary as well, until Congress can find time to confirm a replacement for John Kelly. That can’t facilitate significant USCIS action like finalizing regulations or hiring. The White House website listed immigration as a top issue a few months ago, and gave an immigration policy statement, but not anymore. (8/2 Update: The White House is now talking about immigration with the RAISE Act.) I hear rumors that lobbyists are still actively talking to Congressional staffers about EB-5 legislation and regional center program reauthorization, but don’t know where that will lead. Congress has so many fish to fry. We wonder whether Congress can even figure out funding the government past September 30, and there’s talk of another short-term Continuing Resolution, which could mean another series of hop-and-skip extensions of the RC program, whose current authorization is tied to the 2017 funding bill. But it’s hard to predict. Insights or insider information, anyone? (8/3 Updates: Senator Cornyn, author of the draft EB-5 legislation released most recently, has announced Building America’s Trust Act, a new immigration bill that doesn’t appear to address EB-5. Representative Brian Fitzpatrick has introduced H.R.3471 with the promising title “To amend section 203(b)(5) of the Immigration and Nationality Act to implement new reforms, and to reauthorize the EB-5 Regional Center Program, in order to promote and reform foreign capital investment and job creation in communities in the United States, and for other purposes.” I’ll report more fully when the bill text becomes available.)

Regional Center List Changes

Additions to the USCIS Regional Center List, 07/17/2017 to 8/1/2017

New Terminations:

  • Anacostia Regional Center (District of Columbia) Terminated 7/18/2017
  • AAA Florida Senior Living Regional Center, LLC (Florida) Terminated 7/12/2017
  • Allied Artist High Desert EB5 Regional Center (New Mexico) Terminated 7/12/2017
  • Rosti Capital Regional Center (California) Terminated 7/17/2017

IPO Suggested Order of Documentation

IPO has added a very valuable resource to the EB-5 Resources page on the USCIS website:

Suggested Order of Documentation

Form I-526

Form I-829

Form I-924

The links direct to pages that provide a suggested list and order of contents for each EB-5 form. The regulations and Form Instructions already describe the evidentiary requirements for EB-5 petitions and applications, and these new pages don’t add new requirements. Rather, they provide the content in handy checklist form and suggest a way to standardize submissions by arranging required documents in a predictable order. We keep asking IPO what we can do to help improve the adjudication process and processing times, and this is a very helpful response. Immigration lawyers take note! If we can widely adopt the suggested order of documentation for each form, and most petitions take on a standard shape, with the same tabs in the same order, this will certainly support operational efficiencies at IPO and should help reduce processing times. Julia Harrison flagged this resource at today’s Employment Visa engagement in San Jose. I’ll write another post with more complete report of helpful input from the IPO representatives Julia Harrison and Jan Lyons, Kurt Vicha of FDNS, and Charlie Oppenheim from Department of State.