EB-5 Visa Waiting Line and Visa Allocation

People who use EB-5 face some tough facts:

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

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

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

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

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

I imagine Charlie Oppenheim at the Department of State, sitting at his desk on October 1, 2017 with 30,000 EB-5 visa applications before him and tens of thousands more to come as USCIS approves pending I-526. How does he apply the above rules to decide who gets a visa in FY2018, and in what order? I hope he addresses this question during his keynote speech at the IIUSA EB-5 Advocacy Conference on April 23. 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 6,941^st+ 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 6,941^st + 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 696^th+ applicant that year (9,940*0.07) from a single country, in which case she’s held back for any applicants from not-oversubscribed countries to go ahead (China has been oversubscribed and triggered the per-country cap since 2015, and Vietnam will as of May 2018)
• #6 does not mean that 7% of visas get set aside annually for each country in the world. It does not mean that any one country gets only 7% of visas annually. #6 just means that any one country’s allocation gets capped at 7% so long as other countries are also competing to use up available visas. When other countries aren’t competing, then any visas still on the table get allocated to the waiting line in FIFO order without regard to per-country limits. So in 2017, China in fact got 75% of visas: 7% plus the 68% of visas that remained after numbers had been allocated to qualified applicants from other countries. (Or maybe only the remainders, if the Chinese Student Protection Act in fact took the first cut.)
• When more than one country exceeds the 7% cap, then both/all the oversubscribed countries get held back with cut-off dates designed to let applications from not-oversubscribed countries proceed first. Once qualified rest-of-the-world applications have been accommodated, then simple FIFO order reigns again: oldest priority dates get the first visas until all visas for the year are taken. (In practice that puts China at the head of the line for leftover visas, since it’s been held back for years and thus has the oldest applications on file. 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. Triggering the 7% cap is scary because it puts a country in the same line as China for leftover visas, and near the back of that line based on priority dates and the FIFO process. The saving grace for small countries like Vietnam is that they at least get 7% a year when they need it 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 visas available to Vietnam then. What I can’t expect is to get a visa left over from the rest of the world, 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/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, they could end up well beyond the 7% cap,  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:

• Vietnam EB-5 Retrogression Now a Reality: 5 Things to Know posted 4/11/2018 by Bernard Wolfsdorf and Joseph Barnett
•  Operation of the Numerical Control Process Department of State
• Numerical Limits on Permanent Employment-Based Immigration: Analysis of the Per-country Ceilings (July 2016) Congressional Research Service

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!

I-526 processing time (Part I)

Update: See also my followup post How long does I-526 take? (Part II)

Every month USCIS publishes Processing Time Information for the Immigrant Investor Program Office. The update just published indicates that as of October 31, 2017, IPO was processing I-526 filed on  November 21, 2015, I-829 filed on September 2, 2015, and I-924 filed on October 18, 2015. This is bad news, considering that previous reports indicated that IPO had progressed passed those dates months ago.  USCIS only publishes one month at a time, but I log the reports to track trends. Here’s a clip from my IPO Times Log showing the current report compared with recent reports.

I think the bouncing dates reflect two facts: (1) that the IPO processing report dates are never very exact, because IPO has a complex multi-step multi-track process that prevents keeping petitions in strict FIFO order; (2) that the Q4 2015 filing surge has been difficult to process (due to quantity and quality problems). I’ll guess that IPO issued a lot of RFEs earlier in the year on October/November 2015 petitions, moved on to December 2015 petitions while waiting for responses, and has now updated the processing report to reflect the fact that they’re again occupied with earlier petitions that received RFE responses. Or maybe the report update just means “oops, we recalculated our mysterious processing times report formula and concluded that we aren’t actually as far along as we said before.” This has happened several times before, according my report log.

In her published remarks for the 11/7/2017 EB-5 stakeholder meeting, IPO Deputy Chief Julia Harrison discussed the wait time for I-526 petitions filed in 2015.

Q: What is USCIS’s best estimate of the wait times for form I-526 petitions filed in 2015?

Response: The posted processing time is the best indication of a petitioner’s position in the queue. The actual adjudication time for any individual petition can vary based on: its position in the queue, the quality (and hence the adjudication time required) for prior petitions in the queue, and the quality and clarity (i.e. credibility of the evidence presented) in the individual’s petition. If RFEs or NOIDs are required they can significantly add to the time required to adjudicate a petition.

Also, if the investment project is first presented to USCIS on an I-526, the adjudication may have additional due diligence needs pertaining to the investment project which may require an RFE and any additional processing time will vary depending on the facts and complexity of each case.

Ms. Harrison’s answer focuses on case-specific factors that contribute to individual processing times. For general predictions about I-526, I think it’s helpful to step away from individual detail and think about processing as a capacity question. Petition data indicates that there were an average of 19,700 I-526 petitions pending at IPO in Q4 2015, and IPO has processed an average of 2,700 petitions per quarter since then.  Dividing inventory by flow rate gives an estimate for the time to push all inventory through the system. 19,700 petitions / 2,700 petitions per quarter = 7.3 quarters. If it takes 7.3 quarters or 22 months to adjudicate all petitions that were at IPO in Q4 2015, then we’d expect petitions filed that quarter to have a processing time around 22 months on average. That’s consistent with the IPO times reports (19 to 23 months for Q4 2015 petitions so far).  You can download my I-526 Times spreadsheet (Happy Christmas dear blog readers from Suzanne) for a model that compiles relevant data and allows entering a priority date to get a rough processing time prediction. According to the model, I-526 petitions filed in 2016 and 2017 can expect to wait about 20 months for processing, on average, assuming basically first-come-first-served processing. (But note that anecdotal evidence suggests huge variation in actual times from a few weeks to many years, so IPO’s process apparently isn’t as orderly as it tries to be. I didn’t make a prediction model for I-829 because the recent volume trends have been too erratic for a simple waiting line formula, and didn’t make a model for I-924 because USCIS doesn’t publish data for I-924 pending or processed petitions. And if someone assembles a better version of the I-526 model, please share.)

In addition to the spreadsheet model, I also keep updating my IPO Times Quotes document with communications from USCIS regarding processing times. Consult this if you want to see what IPO has said recently about how they organize petition processing, and factors that affect petition processing times. If you have personal experience to share, please enter it in this Google form. You can view form responses so far in this spreadsheet: https://docs.google.com/spreadsheets/d/1xjbYYrb6taz1j6G8JSbshNTLVJ5u0zhirBdSg6K4zTY/edit#gid=1725165840

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!

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

[Update: see also my 4/8/2018 post EB-5 Visa Waiting Line and Visa Allocation]
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

• White Paper: Solutions to the EB-5 Visa Waiting Line by the AILA EB-5 Committee
• Numerical Limits on Permanent Employment-Based Immigration: Analysis of the Per-country Ceilings by the Congressional Research Service

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!

EB-5 Timing Issues: Not a Fast Track

October 2017 Update: I now have a new post specific to the process and wait between I-526 and the conditional green card.

May 2017 Update: I’m demoting my original post from January 2016 to an attachment, as people keep consulting the post but all the numbers I used to try calculating timing have changed significantly since then. It’s hard to answer the question “how long will the EB-5 process take.” It depends on where the investor was born, when the investor filed I-526 relative to filing surges, how many petitions and applications get denied or abandoned, how processing times change, how demand changes, and whether Congress agrees to make changes to visa numbers or allocations or the filing process. The bad news, in short, is that the sheer number of people already in line for an EB-5 visa, plus the annual visa quota and per-country limitation, currently means that new China-born investors could be waiting a decade just to get a visa number for conditional permanent residence. Just a few years ago, companies could think in terms of a 5-year exit strategy to comfortably cover EB-5 investors through I-829 approval, but that could look more like 15-year exit strategies in today’s bad-case scenario. But the bad case won’t be reality for everyone — or maybe no one, if legislative proposals are enacted. Or the bad case could get even worse (as it did since I first wrote this post in October 2016, when the visa backlog looked about six years long), if surges in I-526 petition filing continue without other changes. Here is a spreadsheet with my ongoing attempt to calculate the backlog effect. Note that this simplistic approach does not model the influence of filing surges that create different time horizons for investors from different periods. And of course, it doesn’t reflect the fact that new legislation could change the picture entirely. For background on visa timing — the main wild card in the EB-5 process — see Robert Divine’s article The Realities and Implications of Chinese EB-5 Investors’ Wait for Visa Numbers (January 4, 2016).

Stages in the EB-5 Process

Notes on EB-5 Stages

• Investment and Escrow: During Stage (A), the EB-5 investor’s full investment must be committed to the enterprise (in the enterprise account, escrowed, or otherwise contractually committed). If escrow is used, investor funds must be released to the enterprise at latest before (D) begins.
• Sustaining Investment: The investment must be sustained from (B) through (D) and must be actively deployed in job-creating activities at least during (D). USCIS is drafting new policy to address how exactly funds need to be deployed during (D), but has not finalized it yet. (In the meantime, the industry has tried to figure out reasonable redeployment policies.) The EB-5 investor may not recoup or draw down his investment before (E) and may be wisest to wait until (F) to exit.
• Material Change: The deal needs to be planned and structured carefully during (A), as the petitioner will have limited opportunity to fix any deficiencies after filing I-526. The EB-5-funded enterprise must closely follow the I-526 business plan at least during (B) and (C), when material changes are not permissible.  USCIS allows some flexibility to depart from the business plan during (D). (See also my post on what material change means.) Note that proposed regulations and proposed legislation both offer to relax the material change policy and protect priority dates in light of long waits.
• Job Creation: The investor can claim job creation that occurs from (B) to (D), and following his investment in (A). Under limited circumstances, he can also claim jobs created before the date of his investment or after the date that he filed I-829. In principle, he should be able to claim jobs that no longer exist when he files I-829 provided that the jobs were created and sustained for more than two years.
• Planning Horizon: USCIS policy requires the I-526 business plan to show that jobs can be created within 2.5 years of I-526 approval.  However, businesses and investors should keep in mind that investors might not actually be verifying job creation until a decade after I-526 approval, considering the visa backlog and retrogression effect for EB-5 investors, not to mention processing times. EB-5 investment must be sustained throughout the conditional residence period (D), so premature exits must be avoided and exit strategies should consider realistic timing. Five years used to be a standard target for investor exit, but can be dangerously early for the average investor today.

Potential changes that would affect the EB-5 process and wait times

• Increase the EB-5 visa quota: I list this because it’s the most obvious/simplest solution for the current dire picture, but I’m told that it is a political impossibility. Increasing the EB-5 visa quota would require increasing the total US visas and/or reorganizing how the total visa pie gets divided among different types. That would require comprehensive immigration reform — something that’s not on the table at all now and not expected any time soon.
• Increase EB-5 visa availability by counting investors only toward the EB-5 quota, not spouses and children. This is a live possibility, included in several versions of EB-5 reform legislation and suggested to DHS for revised regulation (see p. 22-29 of the EB5-IC comment). And indeed, there’s a good argument for this being the original intent of Congressional representatives who designed the EB-5 program. If about 10,000 investors can get visas per year, then about 30,000 people can get cleared from the backlog per year (average 3 visas per investor), and wait times would shorten dramatically. Currently, just over 3,000 investors get visas per year, with family members taking the remainder of EB-5 visas.
• Increase EB-5 visa availability by allowing EB-5 to recapture unused visas (see p. 22-29 of the EB5-IC comment)
• Lighten the burden on China-born EB-5 investors by removing the per-country cap for visas. This has been suggested by a couple recent bills. It wouldn’t speed up the visa queue overall, but would mean that China-born investors don’t get held back by retrogression, and other investors don’t get to jump ahead i.e. would share/mitigate the long wait.
• Use visa set-asides to incentivize Targeted Employment Area investment. This has been proposed in several EB-5 reform bills, and would shorten the visa wait time for new TEA investors while pushing other investors even further back in line. However, it’s likely that most set-aside visas would shortly return to the general pool (since the reform bills make TEA status difficult to achieve and the set-asides temporary) and thus the impact could be limited.
• Change the filing stages: Several legislative proposals suggest allowing investors to file I-829 after having sustained investment and job creation for at least 24 months, even if they are still waiting for a visa number. In this way, when they finally receive the green card, it can be permanent rather than conditional permanent residence (skipping Step D in the table above). Several EB-5 bills have also proposed to allow concurrent filing of I-526 and I-485.
• Mitigate the negative impact of long waits by adding more flexibility to the material change policy: Several legislative proposals and revised regulations provide more options and recourse for investors in case of material change, recognizing that such changes are inevitable over the course of years.
• Mitigate the negative impact of long waits by adding protection for children who would otherwise age out: Several legislative proposals offer to do this.
  
• Improve petition processing times: IPO continues to reaffirm its commitment to bring down processing times through staffing and efficiencies. I-829 petition times in particular should see improvement soon, as IPO has launched a new team devoted to I-829 adjudication.