With 2020 finally wrapping up after throwing curve ball after curve ball to the entire world, it’s a good time to stand back and take stock of what has happened in the EB-5 industry in 2020. As of December 17, 2020, United States Citizenship and Immigration Services (USCIS) has not released detailed data on petition processing for the latter two quarters of FY2020. However, the statistics for the first half of the year are available, and they paint a distinctive picture for I-526, I-829, and I-924 petitions.
The good news is for EB-5 investment participants with I-829 petitions: I-829 processing volumes have increased, demonstrating the obvious intent of the Immigrant Investor Program Office (IPO) to prioritize I-829 petitions over I-526 petitions. I-526 petitioners find themselves in altogether different circumstances, with the IPO prolonging the slow processing volume it sustained in FY2019. To accompany the low processing figures, I-526 petitioners also experienced record-high estimated processing times, although actual processing times seem to be lower than USCIS’s estimates.
The situation is not so rosy for I-924 petitioners, either. Ever since the Modernization Rule went into effect on November 21, 2019, EB-5 regional centers have faced a tumultuous environment, with USCIS issuing terminations left, right, and center. The added challenge of the COVID-19 pandemic and the subsequent shutdowns made FY2020 a brutal year for regional center operators. With the virus still looming in the air even as 2020 comes to a close, FY2021 isn’t off to a great start, either.
The full picture of FY2020 for EB-5 regional center owners and I-924 cannot be known until USCIS releases the data for the second half of the year, but the figures for the first two quarters were already dismal. With rampant regional center terminations and astonishingly high estimated processing times, the EB-5 regional center landscape could be affected for years to come.
Mass Terminations Bring Regional Center Numbers Down to 2014 Levels
The Modernization Rule encompassed some modifications surrounding the designation of targeted employment areas (TEAs), which had the profound effect of disrupting EB5 investment activity at regional centers across the United States. Lack of investor activity is grounds for termination, and USCIS had no shortage of termination letters to distribute to EB-5 regional centers in 2019 and 2020.
Regional center terminations were increasing even before the Modernization Rule took effect, with regional center numbers falling since 2018. But the starkest decline was after November 2019, with USCIS terminating 140 regional centers and approving none between November 2019 and October 2020. The total number of EB-5 regional centers, which amounted to 646 in October 2020, was down 20% from FY2019 figures.
Most EB-5 regional centers terminated in FY2020 had been approved in FY2015 and FY2017. Given that USCIS tends to terminate regional centers with no investor activity for three to five years, it stands to reason that most were terminated due to lack of investor activity. It is clear, then, that foreign nationals interested in participating in the EB-5 program should carefully vet regional centers before entrusting one with their EB-5 investment capital
Extreme Fluctuations in Processing Times for I-924
The troubles for EB-5 regional centers stem from not only rampant terminations but also the overwhelming lack of new approvals. In March 2019, the estimated processing times for I-924 petitions were steady at 16.5–21.5 months, where they had rested for more than a year prior. But then, they suddenly started shooting up, until they reached a whopping 62–115.5 months in November 2019, when the Modernization Rule went into effect. For reference, that’s 5.1–9.6 years just to gain approval for a regional center.
While estimated processing times did fall back down from their peak at 115.5 months, they never returned to pre-April 2019 levels. With heavy fluctuations from November 2019 to October 2020 taking the estimated processing time range everywhere from 14.5 months to 115.5 months, predicting processing times for I-924 petitions has effectively become impossible. Most months bring strong fluctuations in either direction, so prospective regional center owners are left in USCIS limbo with no indication of when they can actually begin operations. But perhaps it doesn’t matter, because USCIS did not adjudicate I-924 petitions favorably in FY2020 anyway.