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

• 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.