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.