More than 30 years have passed since the EB-5 Immigrant Investor Program was introduced in 1990, and a lot can change over three decades. The program spent its first two decades with little attention, issuing only a small portion of its annual 10,000 EB-5 investment visas. But after the 2008 financial crisis, popularity skyrocketed as projects turned to the EB-5 program to secure financing otherwise impossible to attain. Then, the situation reversed, and the EB-5 program faced more demand than it could handle, with lengthy backlogs forming for EB5 investment participants from high-demand countries like China and Vietnam.

Even as the EB-5 program careened through the 2010s in drastically different circumstances than its first two decades, the program regulations remained the same. EB-5 reform is needed—it’s been necessary for several years, and it’s still necessary in July 2021. But when Congress failed to pass comprehensive EB-5 legislation reform, the Department of Home Security (DHS) took matters into their own hands by releasing the Modernization Rule in November 2019. The new regulations transformed the EB-5 program in three main ways, generally to the displeasure of EB-5 investment participants and other stakeholders.

Priority Date Retention

Priority date retention is the only Modernization Rule change received positively by EB5 investment stakeholders. This change allows EB-5 investors to retain the priority date of their original I-526 petition when filing subsequent I-526 petitions, which may be necessary if, for example, the investor’s affiliated EB-5 regional center is terminated through no fault of their investor. Against the backdrop of ever-increasing backlogs, low productivity at United States Citizenship and Immigration Services (USCIS), and rampant regional center terminations, priority date retention can be invaluable indeed. According to DHS, this change generally received positive feedback.

Minimum Investment Amount Hike

Praise for the priority date retention change paled in comparison to the outrage directed at DHS’s 80% hike to the minimum EB5 investment amount. When the Modernization Rule regulations went into effect on November 19, 2019, the minimum investment amount for regular EB-5 projects leaped from $1 million to $1.8 million overnight. For targeted employment area (TEA) projects, the rate increased by the same percentage, climbing from $500,000 to $900,000. Suddenly, countless prospective investors were priced out of the market, and EB5 investments were nowhere near as attractive as they once had been.

DHS argued the hike was necessary to stay in line with inflation. When factoring in inflation, the $900,000 and $1.8 million amounts are roughly equivalent to the value of $500,000 and $1 million in 1990. The Modernization Rule also implemented measures to continually increase the minimum investment amounts in line with inflation in increments of five years, with the next scheduled increase in 2024.

Naturally, EB-5 investment stakeholders were upset about this new development—some prospective investors had to give up their dreams of U.S. permanent residency, some projects lost access to high-quality EB-5 funding, and some regional centers faced difficulties attracting investors under the higher investment amounts. However, since the regulation had been announced a few months in advance, the industry saw a surge in EB5 investments as applicants rushed to beat the November 19, 2019, deadline.

Tightened TEA Designations

The third and final major change the Modernization Rule introduced to the EB-5 program was restrictions on TEA designations. Traditionally, TEAs have been designated by the respective state, which resulted in uneven designation and different criteria nation-wide. These state-by-state discrepancies, coupled with instances of gerrymandering to designate affluent urban areas as TEAS, were cited as a key reason behind DHS’s decision to tighten DHS regulations and centralize the designation determination at USCIS.

As many as 43% new commercial enterprises (NCEs) with TEA designation were affected by the changes, according to DHS statistics, and not only because USCIS is stricter with designations than some states had been. The new regulation also made it more difficult to group census tracts together to create a TEA, as had been common practice previously. Under the Modernization Rule, an investor can only include census tracts directly adjacent to the one where the NCE is physically located, dramatically cutting down on the ability to create new tracts.

Opposition and Repeal

A few disgruntled EB-5 regional centers challenged the Modernization Rule in court, arguing it had been illegitimately enacted and asking the courts to repeal the regulations. Many EB5 investment stakeholders could empathize with the regional centers grievances but saw the lawsuit as an unnecessary distraction when faced with the dire issue of looming expiry for the EB-5 Regional Center Program. But to the industry’s surprise, the courts indeed overturned the Modernization Rule, reverting the EB-5 program back to its pre-November 2019 state.

For around a week, EB-5 investors rushed to submit their I-526 petitions at the lower $500,000 or $1 million amounts. With the shock ruling having been delivered so shortly before the regional center program expired, there was little time to take advantage of the presumably temporary lower EB-5 investment amounts. On June 30, 2021, the regional center program did indeed expire, and as of July 13, 2021, USCIS is no longer accepting I-526 petitions affiliated with regional centers, although direct investors may still file with the lower minimum investment amounts. The Modernization Rule will likely be reinstated, but the future of the EB-5 program is uncertain in these chaotic times.

The U.S. government’s administrative decisions regarding the EB-5 Immigrant Investor Program have occasionally resulted in sudden or unexpected changes to the program’s regulations. For example, the EB-5 industry was rocked by the news that the regional center program had expired on June 30, 2021. Under the program, foreign nationals were able to make EB-5 investments through economic units known as regional centers. EB-5 investment projects affiliated with regional centers enjoyed less strict job creation requirements—they were allowed to count direct, indirect, and induced employment. Therefore, foreign nationals who made a regional center EB-5 investment could create the 10 required jobs more easily than if they were only counting direct employment. Further, these investors only had to show United States Citizenship and Immigration Services (USCIS) that their EB-5 investment funds had been spent according to the regional center project’s business plan. Regional center projects consequently became the most popular way to make EB-5 investments.

However, this changed after the Senate failed to pass the EB-5 Reform and Integrity Act, a bill that would have reauthorized the regional center program through 2026. Senator Lindsey Graham blocked the request for a unanimous consent vote on the bill. The Senate went on summer recess, and the regional center program thus expired on June 30, 2021.

Despite this temporary setback, foreign nationals planning an EB-5 investment can rest assured that the EB-5 program is still up and running. Given the program’s many economic benefits, the U.S. government will likely continue to support EB-5 investments. Interested foreign nationals can still invest in EB-5 projects directly and apply for permanent resident status.

What Are Direct EB-5 Investments?

Direct EB-5 investments are made not through a regional center but directly in the EB-5 project in question. They differ from regional center investments in many other ways. For example, a foreign national who makes a direct EB5 investment is usually much more involved in the day-to-day operations of the business. Direct EB-5 investors gain significant control over their investment but have to spend significant time and resources overseeing the business. As a result, direct investors typically want to make sure that their EB-5 investment yields significant returns, and they are usually responsible for making sure that the project complies with all applicable laws. In contrast, many regional center investors are only interested in gaining permanent resident status through their EB-5 investment and are not heavily involved in business operations.

Perhaps the most important difference between direct and regional center investments is the way job creation is calculated. As mentioned previously, regional center projects can count direct, indirect, and induced jobs. On the other hand, non-regional center EB-5 projects can count only direct employment. Direct employment involves hiring employees on the EB-5 project’s payroll—these must be full-time jobs and last at least two years to be counted toward the requirement of 10 total jobs. For the most part, such jobs are either ongoing operational positions associated with the EB-5 project or construction jobs. In addition to these guidelines, USCIS sets out many other criteria for directly created jobs.

Moreover, foreign nationals who are looking for direct investment opportunities should note that non-regional center EB-5 projects are structured very differently from regional center projects. A major difference is that the new commercial enterprise (NCE) and the job-creating entity (JCE) must essentially be the same. The NCE is the business that receives the EB-5 investment, and the JCE is the project development entity in charge of creating the required jobs. Due to this requirement, the sources of funds, investment terms, and role investors play can be radically different for direct and regional center projects.

All of the above information indicates that making a direct EB5 investment requires careful planning and significant effort to ensure that the project complies with USCIS guidelines. It can be difficult for EB-5 investors to keep track of the plethora of regulations governing direct investments, so they would do well to hire experienced EB-5 consultants and a knowledgeable immigration attorney. The expertise these professionals provide will prove to be indispensable. Many EB-5 investors who did not work with EB-5 professionals or take the time to learn about USCIS regulations were unable to receive their coveted permanent resident status.

Historical Trends in Direct EB-5 Investments

The following graphic shows several intriguing trends in the history of direct EB-5 investments:

Even though regional center investments have usually been more common in recent years, direct investments have enjoyed several periods of popularity—until the 2008 economic crisis, it was more common for EB-5 investors to receive their visas through direct investments. 2015 was another positive year for direct investments because the regional center program’s looming expiration date motivated foreign residents to choose non-regional center projects, which have no expiration date.

Direct EB-5 investments will likely surge in popularity given the temporary suspension of the regional center program, and EB-5 investors will be able to take advantage of the reduced minimum investment amounts of $500,000 for targeted employment area (TEA) projects and $1,000,000 for non-TEA projects. As these investment amounts may be raised, foreign nationals interested in making an EB5 investment should act quickly. Book a free consultation with EB5AN to learn more about available projects.

When marketed to prospective foreign investors, the EB-5 Immigrant Investor Program is generally framed in terms of its benefits to foreign investors: for a one-time, largely passive EB-5 investment, a foreign national from any country can relocate to the United States and gain permanent residency for themselves and their immediate family members. But an EB5 investment doesn’t just benefit the investor—it’s also good for the U.S. economy and U.S. workers.

U.S. companies structure their projects for EB-5 investment funding, a cheaper alternative to most sources of funding. This extra funding gives them security as they develop their condominiums, hotels, restaurants, and other enterprises. New U.S. jobs are created for the construction workers to build these projects and for employees to staff them. In the case of a new hotel or restaurant, the business may have a positive economic impact on the wider community, driving more traffic to nearby businesses. In this way, the EB-5 program is a fantastic economic stimulant for in-need local U.S. economies, all at zero cost to the U.S. taxpayer.

Economic Impact of the EB-5 Program

Congress’s intention with the EB-5 program was, of course, the economic growth described above. In fact, one of the key requirements of the EB-5 investment program is that every investor must show that their investment has created at least 10 new jobs for U.S. workers. But data on the precise economic impact of this valuable program is scarce. A government study conducted in 2012 and 2013 found $5.8 billion in EB5 investment capital raised by more than 11,000 individual investors, creating an estimated 174,039 jobs for U.S. workers. A later study conducted by EB-5 stakeholder groups showed the flow of roughly $11 billion through the EB-5 program in FY2019, resulting in approximately 355,200 new jobs. Two-thirds of EB-5 investment capital has been poured into construction—real estate projects are particularly popular within the space. Hotels, restaurants, and health care facilities are other fairly common EB-5 industries.

Where the economic impact of EB5 investment strays from Congress’s original aim is in the location of investment. Most EB-5 investment capital has gone to affluent urban districts, with a liberal interpretation of targeted employment areas (TEAs) allowing these regions to qualify for the lower TEA investment amount. In November 2019, the Modernization Rule restricted the previously broad definition of a TEA, reducing the number of projects that qualified for this special status and raising the overall EB5 investment amount by 80% to account for inflation over the program’s first 30 years. In June 2021, the Modernization Rule was challenged and overturned in court, causing the TEA rules to revert back to their broader, pre-Modernization Rule state. As of July 8, 2021, the future of TEA regulations is uncertain.

Who’s Investing in the EB-5 Program?

The EB-5 program is popular for investors around the world—but that wasn’t always the case. For its first decade of existence, the EB-5 program was severely underused, with hardly any foreign nationals making an EB-5 investment. As more people caught wind of the program and it began to be marketed in China, it started to pick up—FY2005 saw 346 EB-5 visas issued, up from only 64 in FY2003. By FY2009, that figure had increased to more than 3000. The key turning point for the EB-5 program was 2008, when the financial crisis prompted project developers to turn to EB-5 for financing they couldn’t get elsewhere.

China has long dominated the EB-5 program, accounting for as many as 85% of all issued EB-5 visas in FY2014. In FY2019, this figure dropped to 47%, but China remains the largest EB-5 country by a large margin. Other key EB-5 countries include India, Vietnam, South Korea, Taiwan, and Brazil, but none have come close to China’s volumes. That’s not necessarily a bad thing—China’s thirst for EB5 investment has created a lengthy backlog for investors from the country. The backlog first surfaced in 2014, and still, in July 2021, thousands of Chinese investors face major delays because of their nationality. Vietnam has also faced a backlog since 2018, but it’s expected to clear up by September 2021.

The backlogs are a result of the country-cap system of United States Citizenship and Immigration Services (USCIS). No one country is permitted to receive more than 7% of EB-5 visas per fiscal year, although they may claim leftover visas if there are no eligible investors from non-backlogged countries. Since this system doesn’t consider the differences in population size and EB-5 demand among countries, certain nations are more susceptible to developing a backlog in the EB5 investment program than others. The fact that spouses and children of EB-5 investors are granted visas from the EB-5 visa pool rather than extra, derivative visas also clogs up the system, since each EB-5 investor, on average, has two dependents also claiming visas.

The EB-5 Immigrant Investor Program is widely viewed as an asset to the U.S. economy. Since 1990, the EB-5 program has allowed foreign nationals to apply for permanent resident status after investing the required amount of capital in a qualifying U.S. business. Since every EB5 investment must create the required number of jobs, the program helps reduce unemployment and provides U.S. businesses with invaluable support. Additionally, successful and high-net-worth foreign nationals are able to relocate to the United States through the EB-5 program and further benefit the country with their expertise.

Despite the EB-5 program’s positive impact, it has occasionally experienced turbulent periods due to the government’s administrative decisions. For instance, on June 22, 2021, a U.S. district court ruled that the EB-5 Modernization Final Rule must be deauthorized. The Final Rule, which had come into effect on November 21, 2019, raised the minimum required EB-5 investment amounts to $900,000 for targeted employment area (TEA) projects and $1,800,000 for non-TEA projects. After the June 22 decision, however, these amounts were restored to $500,000 for TEA projects and $1,000,000 for non-TEA projects. These lower minimum amounts were certainly good news for foreign nationals considering an EB-5 investment—many more potential investors would now be motivated to participate in the EB-5 program. However, United States Citizenship and Immigration Services (USCIS), which governs the EB-5 program, did not immediately react to the court’s decision. USCIS’s silence on the matter may have caused some uncertainty among investors wanting to take advantage of the newly lowered EB5 investment amounts. How would USCIS react to the Final Rule’s deauthorization?

USCIS finally broke its silence on July 7, 2021, and released a statement on its website regarding the court decision. The statement says the following:

“On June 22, 2021, the U.S. District Court for the Northern District of California, in Behring Regional Center LLC v. Wolf, 20-cv-09263-JSC, vacated the EB-5 Immigrant Investor Program Modernization Final Rule (PDF). While USCIS considers this decision, we will apply the EB-5 regulations that were in effect before the rule was finalized on Nov. 21, 2019, including:

• No priority date retention based on an approved Form I-526;
• The required standard minimum investment amount of $1 million and the minimum investment amount for investment in a Targeted Employment Area (TEA) of $500,000;
• Permitting state designations of high unemployment TEAs; and
• Prior USCIS procedures for the removal of conditions on permanent residence.

In other words, we are applying the regulations in effect before Nov. 21, 2019, on this website and in the USCIS Policy Manual, Volume 6, Part G, Investors. In addition, we again will accept the April 15, 2019, version of Form I-526, Immigrant Petition by Alien Entrepreneur, because the Nov. 21, 2019, version of the form reflects updates from the now-vacated rule.”

Evidently, USCIS has accepted the overturning of the EB-5 Final Rule. This statement confirms that USCIS will apply the lower investment amounts and the other pre-November 2019 regulations. Foreign nationals interested in making an EB-5 investment can now rest assured that USCIS is complying with the court ruling and that the reduced investment amounts have indeed come into effect.

However, potential EB-5 investors must act quickly to take advantage of this opportunity. USCIS or the Department of Homeland Security (DHS) may take administrative or legal action to overturn the court ruling and reinstate the higher EB-5 investment amounts. Schedule a free consultation with EB5AN to discover available EB-5 investment opportunities.

The EB-5 Immigrant Investor Program offers foreign nationals a chance to start a new life in the United States in exchange for a qualifying EB-5 investment in a new commercial enterprise (NCE). EB-5 investors hail from all around the world and come from various backgrounds and walks of life, so a one-size-fits-all solution doesn’t accommodate everyone’s needs. Fortunately, the EB-5 program offers a degree of flexibility to those considering making an EB5 investment. Namely, investors have the choice of investing directly in an NCE or investing indirectly via an EB-5 regional center.

Regardless of the path, everyone who pursues an EB-5 investment must fulfill the same requirements to be eligible for the coveted permanent resident status the program offers. One such requirement is involvement in the NCE in which one is investing. This requirement isn’t a major obstacle for most direct investors, who choose the route specifically to exercise more managerial control over their EB-5 investment capital. For those who invest through a regional center, however—and the majority of EB-5 investors do—the requirement can be daunting, as they may not have the time, desire, or experience to carry out substantial managerial work. Luckily, their managerial obligations are significantly lighter.

Managerial Duties in EB-5 Regional Center Investments

Though some investors may be interested in earning a return on their EB-5 investment, most EB-5 participants pursue the program solely for the green card benefit. For many, permanent resident status in the United States means a brighter, safer, more stable future for themselves and their family and is worth more than money. This leads to a significant proportion of EB-5 investors who either don’t want to, or cannot, participate in the day-to-day management of the NCE.

EB-5 regional centers are aware of EB-5 investors’ motivations, and most employ a structure specifically designed to circumnavigate this “active involvement” requirement. Most regional center projects are structured such that the investors sign on as limited partners, endowing them with certain rights, powers, and duties. While investors are then required to vote on pertinent business matters and policy decisions, this setup absolves them of the need to engage with daily managerial tasks.

More Freedom for Investors

Besides escaping the need for grueling daily management work, the limited partnership structure offers numerous benefits for EB-5 investors. With a minimal managerial obligation to the NCE, investors can pursue their own employment, education, or other endeavors in the United States, allowing them to structure their life how they envision it. In a similar vein, the setup allows investors to make an EB-5 investment in a suitable project anywhere in the United States while living in an entirely different state. For example, an EB-5 participant could invest in a Georgia EB-5 project but settle down in Massachusetts.

Before signing a contract with an EB-5 regional center, an investor should carefully read the terms and conditions and consult with a qualified EB-5 immigration attorney to ensure the agreement will satisfy the managerial involvement requirement of the EB-5 program. Failure to demonstrate sufficient involvement in the EB5 investment on the I-526 petition could result in denial, so this step is not to be overlooked.

The first half of 2021 has been a suspenseful six months for the EB-5 investment community, with stakeholders bating their breath as they watched the rapidly unfolding developments in the EB-5 space. The EB-5 Regional Center Program has been a hallmark of EB-5’s success throughout the 2010s, when EB-5 demand reached an all-time high and the United States welcomed thousands of EB-5 investors from all around the world. But as successful as the regional center program has been, Congress has yet to make the program permanent, even though the base EB-5 Immigrant Investor Program is. So, when Congress separated the program from the omnibus funding bill it has traditionally been coupled with, it aroused panic in the EB5 investment community. Could the program vie for reauthorization all on its own?

As it turns out, no, it couldn’t—at least not without reform. That has been the concern of EB-5 industry leaders since January, who have steadily warned that failing to enact wide-ranging EB-5 reform would likely result in the suspension of the program. A bipartisan duo—Senators Chuck Grassley and Patrick Leahy—introduced the EB-5 Reform and Integrity Act to the Senate in late 2020, and while the bill wasn’t perfect, it would have implemented the integrity changes necessary for the EB-5 Regional Center’s all-important reauthorization. While most EB-5 investment stakeholders embraced the bill, despite its flaws, some continued holding out for a better option that ultimately never came.

Why Did the EB-5 Regional Center Program Expire?

On June 24, Grassley and Leahy, joined by fellow Senator John Cornyn, requested unanimous consent from the Senate to pass the EB-5 Reform and Integrity Act. They praised the regional center program and the positive impacts it has had on the U.S. economy, including the thousands of jobs it has helped create. The addition of Cornyn was a surprise to many who had been following the developments, as he was an original co-sponsor of the Immigrant Investor Program Reform Act, a different EB-5 reform bill that stood in opposition to the EB-5 Reform and Integrity Act, and it gave many hope for a positive outcome.

Unfortunately, one of the co-sponsors of the Immigrant Investor Program Reform Act—Lindsey Graham—was less willing to be flexible. Graham and another senator objected to the unanimous consent and thus halted the bill from being passed. Senator Chuck Schumer failed to bring forth temporary reauthorization to keep the program afloat until a decision on reform is reached, and that was that—once the clock struck midnight on July 1, 2021, the EB-5 Regional Center Program was officially suspended.

What Happens Now?

Don’t panic—the EB-5 Regional Center Program isn’t over. While the future is uncertain, this fiasco will probably at most cause a few months of delay instead of terminating this valuable program altogether. This isn’t the first time the regional center program has expired—it once expired temporarily in December 2018, remaining suspended for a month. While this temporary suspension resulted in extra delays for EB5 investment participants, many of whom were already stuck in backlogs, it didn’t have any long-term effects on the program, and processing resumed as normal following the reauthorization. In all likelihood, this time will be similar.

On June 30, 2021, United States Citizenship and Immigration Services (USCIS) updated its website to announce the changes coming to the EB-5 program over the period of suspension. The immigration agency will reject any Form I-924 petitions to set up a new regional center and Form I-526 petitions affiliated with a regional center EB5 investment, and processing on any currently pending such petitions has been halted. The announcement did state, however, that USCIS is still accepting I-829 petitions even for EB-5 investments affiliated with regional centers and that investors should continue to respond to requests for evidence (RFEs), notices of intent to deny (NOIDs), and other USCIS correspondence in a timely manner. On July 1, 2021, the agency updated its announcement to add that it would no longer accept I-485 petitions associated with regional center investments, either, even though overseas consulate processing is slated to continue.

As the EB-5 investment community careens into the future of the program, stakeholders should maintain a cool head and continue to push for meaningful reform. It’s not too late to pass the EB-5 Reform and Integrity Act and regain reauthorization for the critical EB-5 Regional Center Program. While the developments as of late are disturbing, they don’t spell the end of the world for the EB-5 program and the thousands of foreign nationals who have made EB-5 investments. Reauthorization is still likely in the future of the regional center program.

In light of the EB-5 regional center program’s expiration on June 30, 2021, many EB-5 investors and industry stakeholders are concerned about the EB-5 investment program’s future. However, despite the cause for concern, most industry representatives remain convinced that the regional center program will be reauthorized shortly. Many are pointing to direct investments as a viable option in the interim.

Will the EB-5 Investment Program Be Reauthorized?

Senators Grassley (R-IA) and Leahy (D-VT) have led the push for the reauthorization of the EB-5 regional center program. Their bill, called the EB-5 Reform and Integrity Act of 2021, would have authorized the program through 2023. However, when the senators pushed for a unanimous consent vote, Senator Lindsey Graham (R-SC) blocked the effort. With the Senate on its summer recess, the EB-5 regional center program expired on June 30, 2021.

Despite the program’s expiration, EB-5 industry stakeholders remain confident because the program is unlikely to end permanently. The regional center program has poured billions in foreign capital into the U.S. economy, and many senators’ constituents will not want the program to disappear.

The EB-5 regional center program could potentially be reauthorized as part of a spending bill in Fall 2021. The longer timeframe would give senators and lobbying groups more time to negotiate. Although it may be disappointing for EB-5 industry stakeholders to hear that the program will not be reauthorized immediately, they can be sure that these efforts would secure the long-term authorization of the EB-5 regional center program.

What Happens Once the Program Expires?

Those who have already made an EB-5 investment may find it unsettling to hear that the program is about to expire. However, the recent history of the program’s previous expiration periods shows that there is nothing to fear.

In December 2018, the federal government failed to pass the omnibus spending package to which the EB-5 regional center program was attached. This led to a federal government shutdown and the de facto expiration of the EB-5 regional center program.

Following the regional center program’s expiration, the Department of Homeland Security (DHS) released the following statement.

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

Even though DHS announced that it would put any incoming I-526 applications on hold, it was implied that these applications would be processed once the program was reauthorized. It seems that DHS will handle pending petitions after June 30, 2021 in a similar manner. Any pending petitions will presumably be put on hold until the program is reauthorized. Once the program is reauthorized, United States Citizenship and Immigration Services (USCIS) will likely resume processing applications.

What Does This Mean for Investors Who Invested at $500K?

On June 22, 2021, just a few days before the regional center program expired, the U.S. District Court for the Northern District of California ruled that former acting DHS Secretary Kevin McAleenan did not have the authority to institute the EB-5 Modernization Final Rule. The new regulations set forth by the Modernization Rule, including the raising of the minimum investment amount for TEA projects from $500,000 to $900,000, were also invalidated by the court ruling.

This court ruling meant that EB-5 regional center investors could make their investments under the pre-November 2019 guidelines during a short period. Under these guidelines, the minimum investment amount was $500,000 for TEA projects and $1,000,000 for non-TEA projects.

While DHS has released no specific information regarding how these investors will be treated until the program is reauthorized, most EB-5 industry representatives believe that these investors will be classified along with those who had invested at the $900,000 minimum amount for TEA projects.

What Does This Mean for Direct Investments?

Even though the vast majority of EB-5 investors choose to make their EB-5 investments through regional centers, there is another way to make EB-5 investments: EB-5 investors can participate in the EB-5 program by investing directly in their projects. Although direct investments have been fairly uncommon, several EB-5 industry representatives have suggested that they will become more widespread until the EB-5 regional center program is reauthorized.

Given that the EB-5 Immigrant Investor Program is designed to bestow U.S. permanent residency rights upon applicants in exchange for a successful EB-5 investment in a qualifying project, U.S. citizens are ineligible to participate. Foreign nationals residing in the United States on other visas may also overlook the program, since they’ve already attained residency rights. But temporary U.S. residents are just as welcome to participate in the popular residency-by-investment program as foreign nationals living overseas, and if they hope to make the United States their permanent home, an EB5 investment is a thoroughly wise investment.

The Benefits of Permanent Residency over Temporary Status

Though millions of foreign nationals dream of living in the United States, the dream is unattainable for most. Immigration is difficult, and even those who secure U.S. visas are only granted a temporary stay. The United States doles out thousands of H-1B employment visas and F-1 student visas each year, but both come with stringent restrictions on the activities the visa holder can undertake during their stay, and both are temporary, nonimmigrant visas, obliging the foreign national to return to their home country when their visa expires. Indeed, most immigrants to the United States can only stay temporarily, and depending on their visa, they may be barred from taking on employment, educational opportunities, or making multiple entries into the United States.

A permanent resident, conversely, enjoys most of the same rights and freedoms as U.S. citizens. A green card holder can live, work, and study anywhere in the 50 states without restriction. They can access the world-class health facilities that the United States boasts, they can more easily gain admission to world-renowned U.S. universities, and they may even be eligible for in-state tuition rates, which can generate thousands of dollars in savings. Upon retirement, they can cash in on their pension benefits both from overseas and from the United States, and they may qualify for Medicare and other Social Security benefits.

Making an EB-5 Investment from within the United States

If a foreign national is already residing in the United States on a different visa, be it an H-1B, an F-1, or anything else, they have the option of making an EB-5 investment and obtaining a green card. With a green card, the restrictions around employment and education fall away, and they can live indefinitely anywhere in the United States. Their immediate family members—spouse and unmarried children younger than 21—are eligible to receive green cards alongside them.

An example is an H-1B worker. H-1B visa holders may have an opportunity to obtain permanent residency, but it could take more than a decade, and they would be subject to harsh employment restrictions and visa regulations for the entire duration. With an EB5 investment, an H-1B visa holder could instead receive their green card in a few years, securing permanent U.S. residency rights to confidently settle down in the United States.

The process of making an EB-5 investment from inside the United States is essentially no different from the process for overseas investors, although domestic EB-5 investors can more easily travel to the site of their project for an in-person inspection. An investor, domestic or overseas, must select a qualifying EB-5 project and commit the minimum required EB5 investment amount to it—either $900,000, if the project is in a targeted employment area (TEA), or $1.8 million if it is not. The investor must then compile an I-526 petition, in which they must document the lawful sources of their EB-5 investment capital, as well as justify the TEA status of their project, if they are investing the lower amount of $900,000. Throughout the investment period, the investor must keep their investment capital at risk and, at the end of their two-year conditional permanent residency period, prove that their EB5 investment created at least 10 new full-time jobs for U.S. workers.

Whether an investor lives in the United States or another country, they have two choices for their EB-5 investment: direct or via an EB-5 regional center. The regional center route is the more popular option, as it allows investors to benefit from the extensive experience and expertise of the regional center operators and relaxes the job creation requirements by allowing indirect and induced jobs to count toward the 10 necessary jobs.

Adjusting Status to EB-5

After a domestic EB-5 investor’s I-526 petition is approved, they may file Form I-485 with United States Citizenship and Immigration Services (USCIS) to adjust their status from their nonimmigrant visa to an EB-5 green card. This is a much quicker and easier process than what overseas investors face—EB-5 applicants filing from abroad must submit a DS-260 to the U.S. embassy or consulate in their country and undertake a visa interview before receiving their EB-5 visa. Some domestic applicants adjusting their status may also have to undertake a visa interview, but it’s not required in all cases.

It can take some time for USCIS to process an I-485 petition to adjust immigration status, but domestic EB-5 investors have options to increase their freedom while they wait. By filing an I-131 petition, a domestic EB-5 investor can obtain authorization to travel internationally and return to the United States while their I-485 is pending. Similarly, an I-765 petition allows an investor to obtain employment authorization, enabling them to work freely in the United States as they await their permanent resident card. An I-765 petition may not be necessary for H-1B visa holders who plan to maintain their job, but it may be indispensable to an investor who graduates from a U.S. college on an F-1 visa.

All around the world, foreign nationals rely on the EB-5 Immigrant Investor Program to pursue a new, promising life in the United States for themselves and their immediate family members. U.S. permanent resident status for an EB-5 investor and their family offers invaluable benefits, such as facilitated enrollment at U.S. colleges, state-of-the-art health facilities, and the ability to live, work, and study freely anywhere in the United States, and all that is available through a one-time, largely passive EB-5 investment.

EB-5 investors can opt to either funnel their EB-5 investment capital directly into the new commercial enterprise (NCE) or work with an EB-5 regional center to pool their capital together with other investors and inject it into larger projects. Making an EB5 investment through a regional center offers a number of advantages that render it by far the preferred path of EB-5 investors. For example, not only can regional center investors leverage the deep EB-5 knowledge and expertise of the regional center operators, but they can also generally satisfy the managerial requirements simply by signing on as a limited partner, and they can include indirect and induced jobs toward the job creation requirement.

Since an EB-5 regional center is a commercial entity, it will require fees from EB-5 investors. The freedom and facilitated EB5 investment process that regional centers offer is well worth spending the extra funds, but this also makes it crucial to conduct careful due diligence before selecting a regional center. Making an EB-5 investment through a regional center is a major step—but with proper research, it could be one of the best investments a foreign national makes in their future.

Points to Consider When Choosing a Regional Center

EB-5 regional centers are commercial entities approved by United States Citizenship and Immigration Services (USCIS) to manage and facilitate EB5 investments. They gain approval for a particular geographical area, such as a state, and may sponsor projects within that area. Most regional areas primarily sponsor projects that qualify for targeted employment area (TEA) designation, as TEA status allows investors to invest half the minimum EB-5 investment amount (i.e., $900,000 instead of $1.8 million).

When looking for a regional center to invest through, a prospective EB-5 investor should look into the backgrounds and experience of its managers. Checking the track record of the regional center is also particularly important—how many projects has the regional center sponsored in the past? How many investors have received I-526 petition approval? How many have received I-829 petition approval? How many previous investors have had their investment capital returned at the end of the investment term?

There are certain questions an investor should also ask when considering a specific EB-5 project sponsored by a prospective regional center—has the regional center worked with this project developer before? Have they sponsored any similar projects before? Don’t forget to look into the project developer, too, examining their track record, experience, management, and more.

Reach out to the regional center and ask all the questions you want to their team. If the regional center is reputable, they’ll be happy to answer your questions and provide any documents you might request to determine their legitimacy.

Resources for Researching Regional Centers

An EB5 investment is a major journey, and it’s important that investors undertake all the necessary precautions prior to jumping into an EB-5 investment. Conducting all regional center–related due diligence at the regional center itself isn’t sufficient—investors should branch out and consult third-party resources as well.

USCIS

If an EB-5 regional center doesn’t have USCIS approval, it isn’t a regional center. Verify whether a prospective regional center is approved by USCIS by checking out USCIS’s comprehensive list of approved regional centers.

Better Business Bureau

The Better Business Bureau can also be a resource for prospective EB-5 investors looking for the right regional center. Simply search the name of a regional center to see its rating as well as comments and complaints from clients.

Local Departments of Buildings

While local Department of Buildings can’t provide insight into a regional center, they can help an investor determine whether a specific project is suitable for EB5 investment. The majority of regional centers work with commercial real estate projects, so an investor can simply locate the address of the development project (or ask the regional center team for it) and plug it into the Department of Building website for that region. These websites can offer information such as the owner of the property, the general contractor for the development project, and any permits or violations that have been issued.

We’ve put together a list of the Department of Buildings websites for some of the biggest U.S. cities:

• New York
• Los Angeles
• Chicago
• San Francisco
• Atlanta
• Miami

Participants in the EB-5 Immigrant Investor Program are often concerned about United States Citizenship and Immigration Services (USCIS) processing times—and for good reason. Their immigration plans, and those of their immediate family members, are effectively on hold until their permanent residency status is confirmed.

Unfortunately, the estimated processing time ranges provided on USCIS’ official government website can be misleading and difficult to understand. The time it takes to process applications can fluctuate depending on factors like the number of applicants and service center productivity. It’s normal to have to wait two to three years between making a qualifying EB-5 investment and receiving conditional permanent residency status.

A better way to assess how long you’ll have to wait for your petition to be accepted is by looking at the historical processing data. These provide you with median processing times for each visa form for each year.

This article explains what factors affect form processing times, how USCIS reports processing data, and how to reduce your form processing time.

 

What Impacts USCIS Productivity?

The productivity of USCIS and the Investor Program Office (IPO) tends to fluctuate based on leadership changes. There was a particularly notable decline in 2019 and 2020 under the leadership of Sarah Kendall.

The number of EB-5 petitions submitted by investors and the resources available to USCIS processing centers also impact the organization’s productivity.

Thankfully, EB-5 processing times are beginning to stabilize. This is down to two main factors:

• USCIS is back to full strength after the COVID-19 pandemic and is working through the subsequent backlog.
• The Reform and Integrity Act of 2022 introduced several measures to allow new applications to be processed quickly.

How Does USCIS Report Processing Times?

USCIS publishes two figures that indicate processing times:

• The time it took to process 80% of applications over the last six months. The latest figure for any visa type can be found on the official government Check Case Processing Times page. This figure isn’t particularly helpful, as most investors will have their petitions processed much faster. However, it ensures investors have realistic expectations of how long their applications may take to process.
• USCIS historical processing times. USCIS publishes historic data on the median processing time over the course of a year for each form type. The median represents the midpoint of processing times, with 50% of applications processed faster and 50% processed slower than the median. The figure for the current year is based on the data collected thus far.

The two figures combined give some indication of how long investors may have to wait. Here’s the latest processing data, as of November 2023:

Form	Historic median processing time	80% of all petitions over the last 6 months processed within:
I-526: Immigrant Petition By Alien Entrepreneur	50 months	55 months
I-485: Application to Register Permanent Residence or to Adjust Status (employment-based visa)	8.6 months	Depends on local USCIS offices
I-829: Petition by Investor to Remove Conditions on Permanent Resident Statu	49.4	67 months
I-924: Application For Regional Center Designation Under the Immigrant Investor Program	22.1*	N/A

*The data for Form I-924 is from 2021. At the time of writing this article, no new data was available.

When reading processing data, it’s worth considering that:

• Around 50% of investors are likely to have their forms processed quicker than the median processing time
• Around 20% are likely to have to wait longer
• Extreme outliers can increase the “time it took to process 80% of applications” figure

The graph from 2019 below helps to illustrate this. It shows USCIS I-829 processing times for Q1 of that year. According to historical data, the median processing time for 2019 was 25.9 months. However, we can see that a large number of cases were completed in a shorter amount of time.

It also shows that one petition took up to 78 months to process. This is likely to have been a complex case. For example, there may have been questions over whether the applicant posed a national security risk.

I-526 and I-829 processing times are getting longer

Unfortunately, median processing times for Forms I-526 and I-829 have increased in recent years. I-485 normal processing times have remained roughly consistent.

The increase in waiting times for Forms I-526 and I-829 isn’t the result of USCIS not processing petitions quickly. In fact, earlier this year, USCIS reported an 83% increase in processing efficiency for I-526E and I-526. The cause of the problem is more likely that the number of new investors filing an application petition or request increased in the last year.

How Fast Is Form I-526E Processed?

USCIS has yet to release specific data on I-526E processing times. However, we’ve seen I-526E petitions for projects in rural TEAs gaining approval in less than three months. In our experience, most of these petitions take an average of six months.

This suggests that I-526E petitions will be processed quicker than standard I-526 forms. Note that there may still be a processing delay if problems with your application arise.

As mentioned above, investors in rural TEA projects may be able to get I-526E approval in less than 12 months, as they now qualify for priority petition processing under the RIA.

Also, while investors from China and India were previously forced to experience significant delays due to their country’s backlog of EB-5 applications, they can now avoid these delays by investing in a TEA project.

What Causes Slow Processing Times?

Slow processing times could be due to issues with your petition or at USCIS, including:

• High numbers of petitions being submitted, meaning USCIS takes longer to process new applications
• A visa backlog experienced by the investor’s home country
• The investor hasn’t filled in their form correctly
• The investor has broken an immigration regulation or the law
• USCIS discovered evidence that the investor represents a national security concern

How to Speed Up Your Form Processing Time

EB-5 investors have very little control over USCIS processing times. There are, however, things you can do to speed up the process:

File Form I-829 at the right time

Form I-829 should be filed within 90 days before your two-year conditional Green Card expires. If you leave it until after your conditional residency expires, your ability to gain a permanent residency card will be jeopardized. It will also be rejected if you file it more than 90 days before the expiry date.

Fill all documentation and evidence correctly

To get each petition approved, you need to fill it out in full and provide concrete evidence to support it. For example, Form I-829 requires evidence that your investment has created 10 full-time jobs. Gaps in documentation or poor evidence could lead to your form being rejected or slow down its processing time.

Work with a regional center

There are several ways that working with a regional center will help speed up processing time for EB-5 forms. Examples include:

• Exemplar projects: Regional centers can submit exemplar project proposals. Once an exemplar is approved by USCIS, the project section of I-526E forms for applicants investing in that project will automatically be accepted.
• Support with forms: Regional centers work closely with USCIS, therefore, they know what a good petition looks like. They can help investors fill out forms and provide the right evidence.
• Documenting job creation data: Regional centers document job creation data on behalf of their investors.

Expedite your petition

You can ask for some forms to be expedited. However, you need to have a specific, compelling reason. These include:

• Severe financial loss
• Humanitarian or emergency reasons
• A non-profit organization has requested it because it will benefit the United States’ cultural or social interests
• It’s in the interest of the United States government
• Errors made by USCIS

USCIS Processing Times: Conclusions

The EB-5 Immigrant Investor Program is an ideal way for foreign nationals to gain a Green Card by investing in a USCIS-approved project. But long processing times can be a worry—especially when it affects your family’s immigration plans.

Our advice is to assume that your application could be delayed when making your immigration plans. This way, you and your family will have a plan in place if complications arise. Once you gain permanent residency status, you can apply to become a U.S. citizen by submitting an application for naturalization.

For more information on EB-5 processing or to get help filing your petitions, get in touch with EB5AN. We’ve helped hundreds of EB-5 investors to gain permanent residency status in the U.S. Book a free consultation and discover how we can do the same for you.