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.

The closing of businesses due to the pandemic caused by the rapid spread of the 2019 novel coronavirus, which causes COVID-19, has had a significant effect on employment levels in the United States. At this stage, it is impossible to know exactly what the long-term outcomes for employment will be, but it is reasonable to expect an increase in the national unemployment rate and fluctuations in regional unemployment rates. This, in turn, will affect targeted employment area (TEA) designation based on a high unemployment rate, but not rural TEA designation. Additionally, the effects will be delayed due to data lag, with the data for the current calendar year becoming relevant only in April 2021.

COVID-19 and EB-5 TEA Designation: The Basic Assumptions

Although numerous factors will influence the outcomes of the coronavirus pandemic for EB-5 investors, we can make several key assumptions. Infection rates and the effectiveness of response strategies will fluctuate across regions. Severely affected regions may experience unemployment rates that are on par with or higher than the national unemployment rate. Likewise, in less affected areas, the unemployment rate may be significantly lower than the national unemployment rate. The implications of this is that new regions may qualify as TEAs, and regions that currently qualify as TEAs may no longer qualify.

Moreover, the changes to unemployment rates and their implications for TEA designation will not become clear immediately. The two main types of data used to determine whether a project location qualifies as a TEA are American Community Survey (ACS) data and the data published under the Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics (LAUS) program. The earliest update to a relevant data set relating to the current calendar year is expected in April 2021.

Understanding Unemployment Data for TEA Designation: ACS vs. BLS Data

When calculating unemployment rates for TEA designation, we use either ACS five-year data only or the census-share method, which relies on a combination of ACS and BLS data. Data about 2020 unemployment statistics will not become available until April or December 2021, depending on the data set.

ACS data is based on a five-year period and updated each December, with the data set published in 2019 covering the 2014 to 2018 five-year period. The next set of five-year data, expected in December 2020, will cover 2015 to 2019. Thus, data related to current employment conditions will not appear until December 2021, when the 2016 to 2020 data will be published.

BLS data is published monthly, but using monthly data for TEA calculations would not make sense, as the designation would need to be updated each month when the data becomes outdated. Consequently, census-share calculations typically rely on annual BLS data, which is published in mid-April each year. Therefore, the 2020 data will be published in April 2021.

Because the ACS five-year calculation method relies on data covering a span of five years, it tends to be the more stable method, and the effects of the COVID-19 crisis may not be as pronounced. Additionally, the updated information will not be available until December 2021, so it will take longer for the current employment rate changes to affect the data.

In contrast, the census-share method relies on annual BLS data in addition to ACS data, and the relevant data will be released in April 2021. This means calculations based on BLS data will show the effects of the COVID-19 pandemic faster than ACS five-year calculations, and we will probably observe more significant fluctuations over time.

United States Citizenship and Immigration Services (USCIS) accepts either the ACS five-year method or the census-share method. That means a project area must qualify as a TEA based on either calculation method—the project area does not have to qualify under both. In other words, even if a project area does not qualify as a TEA when we use the ACS five-year method to calculate unemployment rates, it could qualify as a TEA when we use the census-share method.

Future TEA Status in the Face of Uncertainty

While it is difficult to predict future TEA status at the best of times, the current uncertainty complicates forecasts even further. Current TEAs with unemployment levels far above the threshold might continue to qualify for designation. Similarly, we can base assumptions on the effects of the COVID-19 outbreak as they become clear. For example, considering the extent of the outbreak in New York, it should be safe to assume current TEAs in New York will still qualify as such when the data for 2020 is released in 2021.

Calculations are usually made at the census-tract level for a small labor force. This makes it extremely difficult to predict how COVID-19 will affect specific TEAs, as it is impossible to know at this stage whether or not major changes will occur. Moreover, if unemployment rates rise steeply due to COVID-19, entire counties may qualify as TEAs, eliminating the need for census aggregation. Finally, the most significant impacts of the pandemic should be temporary, so unemployment rates that increase in the wake of COVID-19 might fall back below the threshold once the local economy recovers. Whatever happens, it is safe to assume that unemployment rates will fluctuate

While no one can predict the future, we can look at monthly county-level BLS data to develop an idea of a project site’s continued TEA status. Although using BLS data will be more accurate for the census-share method, it is useful for the ACS five-year data method. ACS data will not be available until December 2021, but analyzing the BLS data can show how conditions in the project area are changing over time. This could provide valuable clues about what we can expect from the updated ACS data.

If you would like us to monitor a specific project location for you, please e-mail the EB5AN team at info@eb5an.com or schedule a call. We have developed an excellent understanding of the factors affecting TEA determination through the development of our free national EB-5 TEA map and our EB-5 TEA qualification report service.

Although the United States surpassed Saudi Arabia and Russia in 2018 to become the world’s largest producer of crude oil, Saudi Arabia has amassed great wealth over the last half century with its own plentiful oil reserves. This has enabled it to maintain a large presence on the world stage, and it is home to an abundance of moneyed residents. Nonetheless, the recent crackdowns by the Saudi government against dissenters and perceived corruption have led to increased interest in Saudi EB-5 investing.

Wealth and Economy

As a result of its large oil reserves, Saudi Arabia is known for containing some of the world’s richest people, especially among the royal family and its associates. It currently is home to more millionaires than any other Middle Eastern country, totaling 176,000 in 2017. Saudi Crown Prince Mohammed bin Salman (MBS) has also launched an ambitious plan called Vision 2030 to diversify the Saudi economy, reduce its dependence on oil, and expand public service sectors throughout the country.

Political Landscape

MBS has been seen by many as a reformer for the Saudi people, purging corruption within the government and royal family and ushering new changes into the kingdom. The most publicized reform has been the repeal of a long-held ban on female drivers. However, it is still common for Saudi activists to be detained and tortured for expressing dissent, and the Crown Prince has been heavily criticized for his country’s role in the humanitarian crisis in Yemen. MBS has also been embroiled in the scandal surrounding the 2018 murder of Washington Post columnist Jamal Kashoggi in the Saudi consulate in Turkey. Political instability in Saudi Arabia has prompted many potential EB-5 investors to seek safer ground in a more liberal environment.

While Saudi Arabia welcomes expatriates into its workforce, their presence in the country must be tied to a sponsor and a specific work contract. The government offers no visas for retirees or opportunities for naturalization, making it quite difficult for non-Saudis to stay in the country after retirement. This policy was enacted to prevent non-Saudi citizens from taking advantage of the country’s retirement and health benefits. As such, EB-5 visas might be an appealing option for wealthy non-Saudis after they retire.

Crime and Safety

Crime rates among the Saudi population are low, but this is likely due to the extreme punishments given to criminals or those who dare to speak out against the government. Penalties include lashings, torture, amputations, excessive prison sentences, and public beheadings. Another issue of concern in Saudi Arabia is the ballistic missiles being launched across the border by Houthi rebels in Yemen since 2015. This is in response to Saudi Arabia’s continued military presence in Yemen. There is also an increased risk of terrorist attacks in the country, though the Saudi government has strengthened its security forces in response. Still, many wealthy Saudis prefer to move their families to a more stable location.

Environmental Conditions

As the home of the largest desert on Earth, Saudi Arabia’s frequent sandstorms compound the air pollution already emitted by factories and vehicles in its cities. The Saudi capital of Riyadh is now one of the most polluted cities in the world, with current pollution levels shortening the average Saudi’s life by 1.5 years. Agricultural practices and city expansion risk threatening the country’s rich biodiversity as well. Other large risks are oil spills, desertification, and shrinking underground reservoirs of water. The Saudi government is making some effort to transform the country into a more environmentally friendly economy, but sustainability is not yet a popular concept among the Saudi public.

Educational Quality

Elementary through high school education is free for all Saudis, with a slightly lesser enrollment rate for girls than boys. Saudi Arabia is also creating more than 150 vocational training centers across the country so as to decrease its economic dependence on oil. Thousands of Saudi students are sent to American universities as well, with the total reaching almost 60,000 in 2018. The vast majority of these students are sponsored by the Saudi government, with the intention that they will use their newfound knowledge to benefit the kingdom upon their return.

EB-5 Project Selection Preferences

As in Vietnam, Saudi EB-5 investors prefer large, flashy projects boasting established brand names. EB5AN frequently works with Saudi project developers and sponsors to assemble the required project documentation for EB-5 Form I-526. EB5AN also provides sponsorship through its 14 USCIS-approved regional centers for projects seeking Saudi EB-5 investors.

Capital Flow and Other Challenges with the EB-5 Process

The Saudi government imposes no limits on how much money can be moved out of the country, assuming the money is earned legally. Saudi EB-5 investors and foreigners working in Saudi Arabia must ensure that the money they try to transfer matches their earnings on paper. Otherwise the government has the authority to open an investigation into the funds.

Marketing Channels for Investors

Like in India, the Saudi EB-5 market consists of only a few experienced agents. Most Saudi EB-5 investors are sourced through small entities such as travel agencies, chartered accountants, wealth managers, and real estate brokers. In addition, regional centers and project sponsors target many Saudis directly through in-person seminars in Saudi Arabia itself. Saudis already in the U.S. on visas such as the H-1B or F-1 are also targeted.

The EB-5 visa program is open to foreign investors and their families all over the world with the means to invest in EB-5 projects, as long as they meet certain requirements. Those who are successful in their EB-5 investments receive U.S. green cards for themselves, their spouse, and their unmarried children under the age of 21.

EB-5 investors must fulfill several requirements to receive U.S. permanent resident status:

1. Investors are required to invest the stipulated required investment amount ($900,000 or $1.8 million, depending on targeted unemployment area, or TEA, designation) into an EB-5 project in the United States.
2. Investors’ EB-5 capital must create (or, alternatively, preserve) 10 full-time jobs for U.S. citizens or residents that last at least two years.
3. Investors’ EB-5 funds must remain at risk for the entire duration of the EB-5 process.
4. Investors must document the sources of their EB-5 funds (both the $900,000 or $1.8 million investment amount and the additional $50,000–$80,000 in administrative fees) to prove that they were obtained legally.
5. Investors must take on a concrete role in the new commercial enterprise (NCE). EB-5 investors investing directly must be heavily involved in the management of the project, while those investing through regional centers can simply assume a role as a policymaker.

How Do EB-5 Investors Make Their Investments?

The first step is to find a suitable EB-5 project with low financial and immigration risk. EB-5 investors should take their time to carefully assess a project’s documents and conduct due diligence to evaluate a project’s risk levels. Upon selecting an appropriate EB-5 project, investors should work with their immigration attorney to review the applicable laws and regulations before moving the required funds into the account designated in the project documents. In many cases, this will be an escrow account.

How Can EB-5 Investors Qualify for the Lower Investment Amount?

Investors working with EB-5 projects that meet the requirements for TEA designation are eligible to invest only $900,000 as opposed to the regular amount of $1.8 million. There are two types of TEA projects: projects in a high-unemployment urban area and projects in a rural area, which is defined as having a population of less than 20,000.

What Qualifies as an EB-5 Project?

An EB-5 project must be an NCE, which is defined as a lawful business that conducts for-profit activity. Many different types of businesses qualify, including corporations, limited partnerships, sole proprietorships, business trusts, and joint ventures. Furthermore, the NCE must have been established after November 29, 1990, when the EB-5 program was enacted.

What Does the Job Creation Requirement Entail?

One of the key requirements of the EB-5 program is the need for each investor’s capital to create at least 10 new full-time jobs in the United States. This requirement differs depending on the investment path the investor chooses.

Investors who invest directly in an EB-5 project must fund the creation of at least 10 full-time direct jobs. Direct jobs are defined as construction jobs or jobs on the NCE’s payroll.

Investors who invest in an EB-5 project via a regional center must fund the creation of at least 10 full-time direct, indirect, or induced jobs. Indirect jobs are jobs at external businesses that produce supplies or provide services to the NCE. Induced jobs are jobs created in the local community through the money spent by the workers of the NCE. The job creation must be estimated by a professional third-party economist using accepted economic or statistical calculation approaches.