COVID-19 has made its way to nearly every country in the world, with confirmed cases building quickly in New York, California, and other states across the United States. Schools are closing and businesses are shutting down—some permanently—resulting in major layoffs. Politico has falsely reported that to stimulate the economy in these chaotic times, President Trump is considering raising the number of available EB-5 visas to 75,000 and reducing the required investment amount to $450,000.

The EB-5 Immigrant Investor Program was born in 1990 as a way to entice foreign nationals to invest in the U.S. economy and job market in exchange for permanent residence—the right to live and work permanently in the United States.

Roughly 10,000 visas are available each fiscal year for EB-5 investors and their spouses and unmarried children below the age of 21. Some EB-5 projects are classified as being located within a targeted unemployment area (TEA), which is defined as an urban area with high unemployment or a rural area. Until 2019, EB-5 investors were required to invest $500,000 in a TEA project or $1 million in a non-TEA project. When the EB-5 Modernization Rule came into effect in November 2019, the amounts were increased to $900,000 and $1.8 million, respectively.

Politico reported that, in a movement headed by Senator Lindsey Graham (R-SC), a new reduction to an unprecedented low may be introduced to combat the economic turmoil caused by COVID-19. Graham has spoken out about the matter, declaring that the report is false and that he is not using the coronavirus recovery bills to promote the EB-5 program.

The EB-5 program has previously helped stimulate the U.S. economy after periods of chaos, such as after the 2008 recession. Project developers turned to the EB-5 program when loans from banks became difficult to obtain, and the program grew to new heights—since 2008, EB-5 investors have contributed an estimated $37.2 billion to fostering the U.S. economy. Between FY2010 and FY2015, the EB-5 program drove down unemployment by creating around 276,000 new full-time jobs and boosted national infrastructure by generating approximately $5 billion in tax revenues.

Most EB-5 investors invest in TEA projects, which are located in areas in greater need of economic stimulation. To be eligible for the EB-5 visa, investors need to prove that their capital has funded the creation of at least 10 new full-time jobs for U.S. citizens and residents, and their capital must remain at risk until they receive their unconditional permanent resident status after at least two years. Though changes to the EB-5 program in light of COVID-19 are not being considered at present, the program remains a powerful way to create new jobs, which may be desperately needed after the resolution of the coronavirus pandemic.

In 2019, the EB-5 Modernization Rule brought some major changes to the EB-5 visa investment program. The changes have left EB-5 investors, project developers, and regional center managers alike confused and full of questions. Some of these questions were finally cleared up during the United States Citizenship and Immigration Services (USCIS) public engagement held on March 13, 2020. Here are the answers to some of the most common questions about the EB-5 Modernization Rule.

Priority Date Retention

Who is eligible to retain their priority date?

Depending on an EB-5 investor’s circumstances, he or she may be eligible to retain the priority date of a previously approved I-526 petition when filing a new I-526 petition on or after November 21, 2019. This benefit is only valid for EB-5 investors applying from abroad and does not apply if the investor’s previous I-526 petition was revoked for fraud or willful misrepresentation.

How can EB-5 investors request to retain an earlier priority date?

To make sure their new I-526 petition is filed with their existing priority date, when EB-5 investors file their new I-526 petitions, they should include a letter in which they formally request priority date retention. In addition, investors should fill out and include Form I-824 in their applications.

Increased Minimum Investment Amount

What have the minimum EB-5 investment amounts increased to?

Targeted employment areas: $900,000

Non-targeted employment areas: $1.8 million

When did the new minimum investment amounts come into effect?

The new minimum investment amounts apply to any EB-5 investors who filed their I-526 petition on or after November 21, 2019. For EB-5 investors who filed before November 21, even if their petition was pending on November 21, and even if they have not yet transferred the full investment amount, the old minimum investment amounts remain valid.

If an EB-5 investor files a new I-526 petition but retains his or her previous priority date, which minimum investment amount is he or she subject to?

The new rules apply to any EB-5 investor filing on or after November 21, 2019, without exception. Investors filing new I-526 petitions must adhere to the new rules and requirements, including the new minimum investment amounts, regardless of whether they retain their priority date.

Targeted Employment Area (TEA)

Do the TEA changes affect EB-5 investors who filed before November 21, 2019?

No.

How can EB-5 investors determine whether an EB-5 project is in a high-unemployment TEA?

The American Community Survey (ACS) and the Department of Labor–Bureau of Labor Statistics (BLS) are accepted by USCIS as credible data sources. EB-5 investors must simply be consistent with whichever source they use.

How can EB-5 investors prove under the new rules that their EB-5 project is located in a TEA?

According to USCIS, EB-5 investors can submit the following evidence to prove the TEA designation of their chosen EB-5 project:

• The location where the new commercial entity (NCE) conducts the majority of its business activities
• A map that shows the census tract(s) in which the NCE conducts the majority of its business as well as directly adjacent tracts, if applicable
• The calculation used to determine the weighted average employment rate for the given location
• Credible unemployment statistics data for the given area
• Evidence backing up the credibility of other data provided

Can TEA designation from approved I-526 petitions filed before November 21, 2019, be carried over to new petitions from the same investor filed on or after November 21?

No. Any I-526 petitions filed on or after November 21, 2019, are subject to the new TEA rules, without exception.

Removal of Conditions on Permanent Resident Status

Are spouses and children required to submit their own separate I-829 petitions?

Yes, every person associated with an EB-5 investment must file a separate I-829 petition. The only exception is if the EB-5 investor has passed away, in which case the spouse and children submit a single petition together. EB-5 investor children who married or turned 21 during their two years of conditional permanent residency, as well as EB-5 investor spouses who got a divorce during this period, are still eligible for a U.S. green card on the investor’s principal I-829 petition.

One of the requirements of the EB-5 program is that an investor’s capital has been obtained through “legal sources.” What exactly does United States Citizenship and Immigration Services (USCIS) mean by “legal sources”? It’s important to know because EB-5 investors must document the lawful source of their funds on their I-526 petition.

What Documents Should EB-5 Investors Submit to Prove Source of Funds?

According to the USCIS website, a variety of documents are suitable as evidence of the lawful source of EB-5 funds. I-526 petitioners must submit the following documentation, where applicable:

• Tax returns filed within the last five years for a corporation, partnership, or other entity
• Personal tax returns filed within the last five years for income, a property, a franchise, or anything else
• Registration records for a foreign business
• Other documentation indicating the source of funds, such as documentation certifying the sale of an asset, inheritance papers, or documentation certifying the donation or gifting of the capital to the investor.
• Certified copies of judgments of evidence of pending actions involving monetary judgments against the petitioner within the past 15 years, whether in the United States or abroad

In addition to proving the lawful source of funds, EB-5 investors are required to show the path of their capital to the new commercial enterprise (NCE). Examples of suitable documentation include wire transfer records and bank statements.

Documenting the lawful source of their EB-5 capital can be a time-consuming process for investors, depending on the sources of capital they choose. They may need to gather large amounts of documentation spanning several years.

Every EB-5 investor’s situation is different, and USCIS may require investors to submit more evidence than listed above, depending on their circumstances. Investors must discuss the matter with immigration counsel to ensure they don’t miss any essential documentation.

Examples of Suitable Source of Funds Documentation

Common examples of documents EB-5 investors may submit to prove the source of their EB-5 investments include the following:

• To prove salary earnings, income tax returns, W-2s, contracts of employment, bank statements, and more
• To prove the sale of a business, a business registration certificate; documentation of the sale of the business; documentation proving their ownership, directorship, or officership of the entity; an appraisal of the business from a certified accountant, and more
• To prove investment earnings, documentation of investment accounts over the past three or more years, stock certificates, bank statements, and more
• To prove the sale of property, the purchase and sale agreements, a certificate of ownership, a deed tax certificate, bank statements, a loan contract, and more
• To prove a loan, bank statements, documentation showing the loan, asset appraisals, documentation showing the sources of the lender’s capital, and more

While these are the most common sources of EB-5 capital, EB-5 funds may also be sourced from inheritance, gifts, divorce income, lawsuit judgments, and more. If an investor receives EB-5 funds as a gift from parents, relatives, or friends, the donor must prove the lawful source of their funds for the gift.

Tips for Documenting the Source of Funds

Although collecting the required source of funds documentation can be time-consuming and cumbersome, EB-5 investors can take several steps to facilitate the process:

• Consult an immigration attorney to determine which sources of funds are most appropriate to use and figure out what documentation to gather.
• Store potential investment funds in a separate account to make tracking easier.
• Start well in advance so they have time to have all their documents translated, if necessary.

As the world continues its fight against the novel coronavirus, infections are rising, unemployment is increasing, and more and more industries and businesses are suffering. Other than those that operate solely online, most industries are not immune, and those that most heavily rely on the EB-5 Immigrant Investor Program are among the hardest hit. Here are several resources you can use to keep yourself up to date on the impact of the pandemic on key EB-5 industries.

COVID-19’s Impact on the Commercial and Multifamily Real Estate Industries

Yardi Matrix conducted webinars on COVID-19’s impact on multifamily real estate and commercial real estate on April 1 and April 2, respectively. The webinars provide focused, practical information, and the recordings are available for download to paid members.

CBRE has also held flash calls to discuss the virus’s impact on the real estate industry, with recordings and notes available for free download on its website. On March 18, the entity held a flash call on COVID-19’s impact on commercial real estate, and on March 27, it held two flash calls: one on the impacts on multifamily real estate and one on what occupiers should be focused on during the crisis. Listening to both the Yardi Matrix and CBRE webinars can offer EB-5 investors opinions from a multitude of industry experts.

COVID-19’s Impact on the Hotel Industry

STR is publishing webinars about COVID-19’s impact on the hotel industry. The webinars cover hotel industries worldwide, with weekly updates examining the impact on the United States and Canada published every Thursday. The site thus allows EB-5 investors to keep abreast of the changes in both the United States and their home region.

Marcus & Millichap has released a report titled Coronavirus Hospitality Special Report: 2020 Outlook. The report looks at how COVID-19 is impacting the hospitality sector and the relief bills being passed to save struggling hotels.

On March 20, 2020, HVS posted an article called The Importance of Financial Relief for the Hotel Industry. The article examines the sources of revenues for different types of hotels and makes clear the dire situation the hospitality sector finds itself in.

Specific Resources for Your EB-5 Project

If you’re a project developer or EB-5 investor concerned about the pandemic’s impact on a particular EB-5 project, it’s recommended to consult not only industry analyses but also analyses from the state, county, and municipality of the project. State-level responses have differed across the country, and some states, such as Utah, have offered their own financial relief where the federal aid does not suffice. Besides, the health of an industry and the predicted success of a project depends partially on its region, so it’s always a good idea to have a solid grasp on both the industry and local-area outlook when conducting due diligence and getting involved with an EB-5 project.

The EB-5 processing statistics of the past several years make one observation painfully clear: I-526 petition processing volumes were remarkably low in FY2019. The Immigrant Investor Program Office (IPO) is a complicated entity, and there is a lot going on behind the scenes that may not be clear on the surface. FY2019’s low processing rates were not without reason.

Contrary to FY2019, FY2018 recorded abnormally high I-526 petition processing volumes. The sharp drop may seem sudden and unexpected, but one important factor differentiates the two fiscal years: the IPO chief. In FY2018, Julia Harrison was the acting chief, and in FY2019, Sarah Kendall took over.

FY2018’s High Processing Volume

The high volume of I-526 petitions processed under Harrison’s oversight in FY2018 is attributable to numerous factors. At the end of 2017, the IPO recruited cross-trained economists and adjudicators to form multidisciplinary teams to process I-526 petitions. Harrison focused on standardizing operations at the IPO to better manage the assignment of EB-5 applications, streamlining and expediting the adjudication process. A steady increase of employees at the IPO was a further factor that likely contributed to the growth in productivity in FY2018.

FY2019’s Low Processing Volume

Conversely, in FY2019, it’s clear that Kendall has taken a different approach to managing the IPO than her predecessor. Under Kendall’s leadership, the IPO has made structural adjustments to devote more attention to integrity, quality assurance, and control. The IPO stepped up its rigor and fraud investigation, working with law enforcement and the U.S. Securities and Exchange Commission (SEC) in some cases, which cost significant amounts of time. Additionally, in FY2019, the IPO worked extensively with USCIS and Department of State officials abroad to conduct overseas checks, including issues related to EB-5 investors’ source of funds.

In addition to matters related to security, the IPO also shifted its focus from I-526 petitions to other priorities. According to Kendall, training conducted in May 2019 resulted in reduced time for adjudication, and throughout the year, some staff were temporarily assigned to other priorities, leaving fewer agents available to make adjudications. The sunset of the regional center program was an additional contributing factor, even though the program was extended. Finally, Kendall allocated additional resources to I-829 processing in FY2019, inevitably taking resources away from I-526 processing. All in all, IPO staff were estimated to have spent an additional 8.65 hours on each I-526 petition compared to FY2016, an increase of 33%.

What Will Happen in FY2020?

No one can say how EB-5 processing volumes will fare in FY2020. Though the fiscal year is already half over, calendar year 2020 has presented both foreseen and unforeseen challenges that are likely to affect processing volumes at the IPO. The Trump administration’s hiring freeze for non-asylum officers at USCIS is one factor that could affect processing volumes and that the IPO has little control over. USCIS’s switch from a first-in-first-out processing method to a visa availability approach is also likely to impact processing times for EB-5 investors, depending on their country of origin. Chinese EB-5 investors may be subjected to longer waiting times, while investors from underrepresented countries may enjoy expedited processing times. The new processing approach took effect March 31, 2020.

The impact of the rampant and unpredictable spread of COVID-19 on USCIS’s processing of EB-5 petitions is also unknown. With the closure of the U.S. consulate in China, leftover visas are currently poised to be issued to Vietnamese EB-5 investors, and the situation could result in EB-5 visa retrogression for Chinese nationals. The closure of further consulates is unpredictable and not out of the question. Lockdowns in countries around the world could also impact EB-5 investors’ ability to assess potential EB-5 projects, gather necessary documentation, and consult with immigration attorneys, which could potentially result in diminished EB-5 demand for the duration of the pandemic.

The Department of State — Bureau of Consular Affairs has released the EB-5 Visa Bulletin for April 2020. April’s release has been highly anticipated, as April is the first month in which United States Citizenship and Immigration Services (USCIS) will implement its new visa availability processing approach for I-526 petitions.

The release of the Visa Bulletin comes on the heels of the March 13 stakeholder engagement, during which USCIS divulged important information about the new changes and how they will affect the EB-5 program and its investors.

Most notable is the fast advancement of the final action date for Indian EB-5 investors. The new final action date for Indian EB-5 investors is January 1, 2019, an advancement of more than two months. This is a continuation of the rapidly advancing final action date for Indian EB-5 investors, with demand decreasing so much that the Indian backlog is expected to disappear by summer 2020.

Vietnam is also progressing forward, though at a slower pace than India. The new final action date for Vietnamese EB-5 investors is February 8, 2017, up three weeks from the March bulletin. Since the Chinese consulate is currently closed, unused visas are expected to be allocated to Vietnamese investors.

The new final action date for China has remained the same as in the March Visa Bulletin: May 15, 2015. Two major factors have contributed to these circumstances. First, the visa availability processing approach for I-526 petitions, which goes into effect March 31, 2020, will primarily impact EB-5 investors from Mainland China. Second, the U.S. consulate in China is currently shut down due to COVID-19 concerns, meaning Chinese EB-5 investors residing in China currently cannot apply for their green cards.

All EB-5 investors from countries other than Mainland China, India, and Vietnam have current final action dates, which means they may apply for their EB-5 visas as soon as their I-526 petition is approved.

Only Mainland Chinese investors have filing dates that are not current. Like the final action date, the filing date for Chinese EB-5 investors has not changed since the March 2020 Visa Bulletin.

Likely due to the Freedom of Information Act, United States Citizenship and Immigration Services (USCIS) has released quarterly processing information for I-526 and I-829 petitions in FY2019 Q1. The data contained in the I-526 and I-829 processing data for FY2019 Q1 provide answers to certain EB-5 questions for which there is generally no concrete information, including whether approval rates vary by country, whether petition processing times vary by country, and which countries are filing the most I-526 petitions.

USCIS underwent an important change in FY2019 Q1: the introduction of a new IPO chief, Sarah Kendall. Kendall took over for Julia Harrison, after which processing volumes fell dramatically. Kendall’s leadership has led to a stricter EB-5 process, with denial volumes remaining steady but approval volumes sinking.

FY2019 Q1 finds itself right in between FY2018’s high processing volumes and the remainder of FY2019’s low processing volumes, so it may not entirely represent the EB-5 circumstances before and after. Nonetheless, the data provide interesting insights.

Processing Times

Throughout the quarter, USCIS estimated that I-526 petitions would take 20–26 months to process and I-829 petitions 27–39 months. According to USCIS, the first number in the range is the median time it takes to adjudicate the respective petitions, while the second number is the period in which 93% of petitions have been adjudicated.

The range given did not entirely reflect the actual processing times during FY2019 Q1. In terms of I-526 petitions, 64% were adjudicated before the lower number in the range, while 16% took longer than the higher number. In total, that means 80% of I-526 adjudications fell outside of the estimated processing range.

The estimated processing period was even less accurate for I-829 petitions. A whopping 79% were adjudicated in only 27.5 months or less, and 14% extended beyond the outer range of the estimated period. That means that at most 7% of I-829 petitions were adjudicated within the estimated processing period, as opposed to the 43% that would be expected.

In general, petitions were processed a bit faster than estimated. Approvals were processed faster than denials, with the average I-526 approval taking 17.5 months and the average I-829 approval taking 26 months.

Country Differences

The data on I-526 adjudications for FY2019 Q1 reveal some differences in processing time by country, but it does not suggest that USCIS was already using a visa availability approach during this quarter. I-526 petitions from Chinese EB-5 investors took, on average, two months longer to be adjudicated than petitions from investors of other nationalities.

On the opposite end of the scale, Indian EB-5 investors had their I-526 petitions processed particularly quickly, with an average processing time five months shorter than the global average. This was to be expected, however, as Indian EB-5 investors have filed a large number of expedite requests. Indians accounted for 83% of the I-526 petitions adjudicated within six months during FY2019 Q1.

Of the I-526 petitions filed in FY2019 Q1, the largest country demographic group was Indians, at 31%. Long-time champion China followed at 15%, with Vietnam in third place at 11% and South Korea in fourth with 6%. In FY2019 Q1, Indian EB-5 investors filed enough I-526 petitions to account for more than a year and a half’s worth of Indian EB-5 visas.

In terms of I-829 petitions filed, Chinese EB-5 investors dominated, accounting for 81% of all receipts and adjudications. Since I-829 figures generally reflect the I-526 numbers of previous years, these data are unsurprising.

Additional Facts about I-526 and I-829 Processing

• I-526 denials are categorized into two types: “fraud” and “others.” In FY2019 Q1, only a single I-526 petition was denied based on fraud.
• The “country” column for I-526 petitions begs numerous questions. An astounding 20 I-526 petitions are recorded as having come from the Falkland Islands, which the Department of State recognizes as belonging to the United Kingdom. Furthermore, with a population of just around 2,000, it is extremely unlikely that 20 Falkland Islanders have filed I-526 petitions at any time during the EB-5 program’s history, let alone in a single quarter. An additional 13 petitions are classified as having come from an “unknown” country, 8 from the USSR, and, bafflingly, one from the United States.
• There is a discrepancy between the 1,808 I-526 petitions processed in the official quarterly report and the 1,743 processed in this detailed quarterly report.
• The data make clear that USCIS has not been operating under a strict first-in-first-out (FIFO) basis. Under a true FIFO system, the estimated processing range would not be so wide, and the data indeed reveal that Chinese investors are subjected to slightly longer waits than EB-5 investors from other countries. It is also clear that denial decisions take longer to make than approval decisions.

On Friday, March 13, 2020, United States Citizenship and Immigration Services (USCIS) held a public engagement to discuss the switch to a visa availability approach in I-526 processing. The public was invited to participate via teleconference and ask questions related to the new approach.

The speakers were Sarah Kendall, chief of the Immigrant Investor Program Office (IPO), and Charles Oppenheim, chief of the Visa Control and Reporting Division from the Department of State. In addition to discussing the switch from a first-in-first-out processing methodology to a visa availability one, the speakers touched on the EB-5 Modernization Regulation. The public engagement ended with a question-and-answer session open to the public, which particularly proved to be a wealth of valuable information.

The Visa Availability Approach

The apparent intent behind the adoption of the visa availability approach is to better align the processing for the EB-5 visa with that of other visa programs and to achieve a visa allocation more in line with congressional intent for the program. Kendall described the new approach as one that prioritizes I-526 petitions for which EB-5 visas are immediately available or soon to be available.

The new approach, which went into effect March 31, 2020, applies to all I-526 petitions unassigned as of March 31, 2020, including I-526 petitions currently pending. The approach applies to most I-526 petitions received after March 31, 2020. Investors who have already received a request for evidence (RFE) or notice of intent to deny (NOID) will not be affected.

The Most Heavily Impacted Investors

According to Kendall, under the visa availability approach, the IPO uses the Chart B Dates for Filing dates in the monthly Visa Bulletin released by the U.S. Department of State. If, based on the dates, the EB-5 investor would be ineligible to apply for a visa that month, the I-526 petition will not be assigned for adjudication.

This indicates only investors from Mainland China will be negatively impacted, as China is the only country for which the Date for Filing is not current. While this is bad news for Chinese EB-5 investors, it’s good news for Indian and Vietnamese investors, who would also be subjected to longer wait times if the IPO based its assignment decisions on Chart A. However, since the number of I-526 petitions filed by Indian and Vietnamese investors exceeds the annual country cap for visas, in time, Indian and Vietnamese EB-5 investors may also fall victim to the visa availability processing approach.

The visa availability approach dictates only which I-526 petitions will not be adjudicated—it does not determine which ones will be. Therefore, EB-5 investors from underrepresented countries should not except immediate processing even when the new processing approach kicks in. It is impossible to say which country’s EB-5 investors will most heavily benefit from the new approach.

Exceptions to the Visa Availability Approach

USCIS has expressed its intention to adhere strictly to the EB-5 visa availability process, save for two exceptions. The first exception is expedite requests, which USCIS intends to honor regardless of the petitioner’s country of origin. The second exception is EB-5 investors subject to longer wait times under the visa availability approach whose spouse is a national of an underrepresented country. Such investors may email the IPO to explain the situation and obtain visas based on the spouse’s nationality.

Number of Visas Available

When asked whether the visa availability approach would affect the number of EB-5 visas available, the speakers responded that both the EB-5 quota and per-country limit would remain unchanged. While the visa availability approach is designed to limit the number of leftover visas by maximizing the number of visas issued to EB-5 investors not from backlogged countries, Oppenheim indicated his belief that the number of leftover visas would not change for the next 12 to 18 months.

Processing Times

By its nature, the visa availability approach has the potential to reduce I-526 processing times, but whether it actually will is another story. Kendall specifically refused to discuss the current I-526 backlogs, stating that the IPO refrains from discussing figures with the public. She explained that the low processing numbers in FY2019 were due to increased anti-fraud measures and stressed the importance of such measures in the success of the EB-5 program. Kendall’s answer suggests that processing volume is not likely to increase significantly in FY2020 after FY2019’s remarkably low figures.

Indian EB-5 Backlogs

Also noteworthy was the announcement that unless the number of petitions increases, the backlog for Indian EB-5 investors is expected to disappear by the summer and not reappear in the foreseeable future. USCIS has been seeing a decrease in I-526 petitions filed by Indian EB-5 investors, which has allowed the final action date for Indians in the monthly Visa Bulletin to jump ahead significantly.

COVID-19

The switch to the visa availability approach is not the only factor influencing the EB-5 program. As COVID-19 spreads further and further across the globe, countries worldwide are beginning to close their borders and shut down public life, and consulates are not immune. The closure of the U.S. consulate in China has already resulted in a lack of movement of the final action and filing dates for Chinese EB-5 investors and has made them unavailable to receive leftover visas, which the IPO intends to assign to Vietnamese investors until the consulate in China reopens.

No other questions about the potential impacts of COVID-19 were raised at the public engagement, even though the closure of consulates in further countries and interruptions in service center operations in the United States are thinkable.

Additional Information

• The speakers refused to address questions related to travel ban countries and urged affected individuals to email their inquiries to USCIS.
• USCIS has released a FAQ page on the EB-5 Modernization Regulation.

The worrying trend of EB-5 regional center terminations continues to gain momentum. In the first quarter of the federal government fiscal year, from October 1, 2019, and January 31, 2020, United States Citizenship and Immigration Services (USCIS) added a further 39 regional centers to its List of EB-5 Terminated Regional Centers. This does not include the significant number of regional centers pending termination or the regional centers terminated since Q1 2020.

While the termination of a regional center has an obvious impact on the regional center’s owner and operator, it also has a detrimental effect on EB-5 investors. USCIS deems a regional center termination a material change. For investors who have not yet secured conditional green cards at the time of regional center termination, this means that USCIS will probably deny their EB-5 petitions. In addition to the wasted costs and time implications, EB-5 investors who made their initial investment before November 21, 2019, at the lower investment amounts, may need to reinvest at the higher investment amounts.

The increase in regional center terminations goes hand in hand with longer I-924 petition processing times and lower approval rates. Although this will contribute to a decrease in the number of regional centers in operation, the 2019 changes to the EB-5 program and the visa backlogs some countries face will further decrease EB-5 investment. Consequently, regional centers will simply have fewer projects to sponsor, making it more difficult to drive economic development while maintaining profitability. Moreover, the cost of operating a regional center are set to increase due to prospective legislative changes.

Even if the owners and operators of regional centers are willing to face these challenges, USCIS may still abruptly terminate their regional center designation for no longer serving the purpose of promoting economic growth. When USCIS considers a regional center’s promotion of economic growth, it does not consider the efforts the regional center makes to attract new projects. These efforts are not always successful, despite the time and money the regional center invests.

USCIS bases its regional center termination decision on failure to submit the required information to USCIS or failure to promote economic growth in the region of operation. When responding to a Notice of Intent to Terminate (NOIT) based on failure to promote economic growth, a regional center can demonstrate that it has made significant efforts to drive economic development and that the termination of the regional center would harm the local economy. If USCIS accepts the evidence provided, it will issue a Notice of Reaffirmation. If not, it will issue a Notice of Termination (NOT). The regional center can appeal the decision or file a motion to reconsider the decision using Form I-290B.

Considering the detrimental effect of regional center terminations on the EB-5 industry and EB-5 investors, we expect many regional center owners to challenge regional center NOITS and NOTs. The EB5AN team has helped to successfully overcome many regional centers’ NOITS and a NOT. Contact EB5AN today to learn how we can help you.

Worldwide, people dream of a life in the United States. From Hollywood to McDonald’s, U.S. culture has permeated nearly every corner of the world, and the wealth and freedom in the United States are well known across the globe. The United States welcomes millions of visitors every year, but for many, their right to stay in the United States is only temporary.

For foreign investors with the necessary means, the EB-5 Immigrant Investment Program can make their dreams of a permanent life in the United States a reality. The program was established in 1990 to attract foreign investors to help foster local economies and create new jobs. In return for his or her EB-5 immigrant investment, the foreign investor—and his or her spouse and eligible children—receives a U.S. green card.

EB-5 Program Requirements

The new commercial enterprise (NCE) receiving the EB-5 immigrant investment must be a for-profit entity engaged in ongoing lawful business activity. The NCE can be structured as a corporation, limited liability company, partnership, joint venture, or any number of additional business structures, but it must have been established after 1990, when the EB-5 program was first enacted.

To obtain a U.S. green card, EB-5 investors must provide evidence that their capital has funded the creation of at least 10 new full-time jobs. The exact specifications can vary depending on the type of investment the investor has made. EB-5 investors must also demonstrate that they obtained their investment capital from lawful sources.

Targeted Employment Areas

How much must an EB-5 immigrant investment be? The minimum required investment amount depends on the targeted employment area (TEA) designation of the chosen EB-5 project. TEA projects are those located in an urban area with a higher-than-average unemployment rate or a rural area with fewer than 20,000 inhabitants. EB-5 investors who invest in a TEA project have to transfer at least $900,000, while investors working with EB-5 projects without TEA designation must invest at least $1.8 million.

Regional Center Investment

There are two different pathways a foreign investor can choose to make an EB-5 immigrant investment. The first is direct investment, wherein the investor works with the project developer directly, participating heavily in managerial activities in the NCE. In the case of direct investment, EB-5 investors must prove that their investment has created at least 10 direct jobs (i.e., construction jobs or jobs on the NCE’s payroll).

The second EB-5 investment path is regional center investment. The majority of EB-5 investors choose to work with regional centers because the regional centers carefully hand-pick high-quality EB-5 projects with low financial and immigration risk. Additionally, EB-5 regional center investors are not required to dedicate significant amounts of time to managing the NCE.

EB-5 immigration investment through a regional center offers one more important benefit: relaxed criteria for the job creation requirement. In addition to direct jobs, EB-5 investors working through regional centers may also count indirect and induced jobs toward the 10-job minimum. Indirect jobs are defined as those filled by external individuals and companies providing supplies and services to the NCE, while induced jobs are those created in the local community as the NCE’s employees spend their wages. To include such jobs on his or her EB-5 application, an investor must hire an economist to calculate the job creation using accepted methodologies.

I-526 and I-829 Petitions

An investor’s EB-5 application officially begins when he or she files an I-526 petition to United States Citizenship and Immigration Services following the transfer of the required EB-5 immigrant investment capital to the designated account (usually an escrow account). Upon approval of the I-526 petition—which typically takes around two years—the investor is eligible to apply for a U.S. visa, as long as there is one available.

EB-5 visas are limited to around 10,000 per fiscal year, and no one country is permitted more than 7%, regardless of demand or population. Therefore, investors from overrepresented countries, such as Mainland China, naturally experience a delay in their EB-5 process. Investors stuck in backlogs should keep an eye on the monthly Visa Bulletin, which reveals when they can apply for a visa.

EB-5 conditional permanent resident status is initially granted for two years, after which the immigrant investor must file an I-829 petition to remove the conditions. If the EB-5 immigrant investment meets all the requirements—the creation of 10 full-time jobs and continuous at-risk status—the investor and his or her family will be granted unconditional permanent residency to enjoy a new, free life in the United States full of valuable opportunities.