EB-5 Immigrant Investor Program

The U.S. Congress extended the EB-5 Regional Center Program through December 8, 2017, without reform, as part of a stopgap continuing resolution to fund the federal government (H.R.601), which the President signed into law on September 8.

The language in H.R.601 Section 106 states that the program is “extended to December 8,” which does not necessarily mean “guaranteed to remain unchanged until December 8.” Congress is reportedly actively working on a major EB-5 reform bill and they could come up with legislation before December that affects multiple visa categories including EB-5.

The extension was expected after the summer recess due to other congressional priorities, like hurricane-relief, tax reform, missile defense against North Korea and other military spending, and prolonged budget negotiations. Under the package approved Friday, government funding will run out on Dec. 8. The biggest fiscal fights of the year will now be pushed to December, when lawmakers typically are under pressure to reach deals before leaving for the holidays.

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Alka Bahal is a Partner and the Co-Chair of the Corporate Immigration Practice of Fox Rothschild LLP. Alka is situated in Fox Rothschild’s Roseland, New Jersey office though she practices throughout the United States and at Consulates worldwide. You can reach Alka at (973) 994-7800, or abahal@foxrothschild.com.

Ali Brodie, Counsel, Fox Rothschild LLPFox counsel Ali Brodie, who heads Fox’s EB-5 Immigrant Investor Services practice, has written a piece for Law360 providing a comprehensive view of reform efforts centered on the EB-5 program. Extended to September 30, 2017, there are now bipartisan discussions to update and improve the program. Changes being discussed include reclassification of Targeted Employment Areas (TEAs), increases to minimum investment amounts, and stricter integrity and oversight measures. Lawmakers are also considering changes to the number of visas available annually, and more efficient processing to address the application backlog.

We invite you to read the full piece “Potential EB-5 Changes Ahead,” originally published by Law360 on May 16, 2017.

Today, Congress submitted a proposed omnibus spending bill to extend funding to the government through September 30, 2017.  The EB-5 Regional Center Program is included in the bill which proposes a clean extension without any of the much-debated reforms.  If approved, the EB-5 Regional Center Program will be extended through September 30, 2017, offering lawmakers and stakeholders additional time to reach a long-term legislative solution.

Today, Congress extended the EB-5 Program for 1 week through May 5, 2017.  The Program was extended as part of a continuing resolution (CR) funding the federal government through May 5, 2017, thus preventing a government shutdown.  The EB-5 Program would have otherwise sunset today.  The President has until midnight tonight to sign the CR.

This is welcome news for EB-5 industry stakeholders as the program is alive for another week and allows more time for negotiations with lawmakers, with the ultimate goal of reaching a deal that would reform the program with a long-term reauthorization.

Ali Brodie writes:

Today, January 13, the Department of Homeland Security (DHS) will expand upon the notice of proposed rulemaking released on January 11, 2017 by publishing a Notice of Proposed Rulemaking in the Federal Register, titled ‘EB-5 Immigrant Investor Program Modernization,’ addressing a variety of policy issues including Targeted Employment Area (TEA) designation and minimum investment amounts.  Notably, minimum investment amounts may increase from $500,000 to $1.35 million for TEA investments, and from $1 million to $1.8 million for non-TEA investments.

Changes to TEA designation include eliminating the method of designation by which states designate areas of high unemployment, and limiting how census tracts can be aggregated to qualify for high unemployment designation.  These regulatory changes will impact both EB-5 Regional Center projects and EB-5 Direct projects.   The deadline for stakeholders to submit comments on the proposals is April 11, 2017.  EB-5 investors or those interested in pursuing an EB-5 investment opportunity should consider acting quickly.


Ali Brodie is counsel in the Denver and Los Angeles offices of Fox Rothschild LLP.

cropped-cropped-favicon.pngFox Rothschild LLP has formalized its EB-5 Immigrant Investor Services practice, led by Scott Bettridge in Miami and Roy J. Carrasquillo in New York. The national practice boasts a multidisciplinary group of attorneys drawn from its Corporate, Immigration, Government Relations, International, Real Estate, Securities and Tax practices. The firm’s EB-5 team provides an integrated approach for clients with EB-5 matters, particularly in the areas of complex and structured financing, tax credits, bonds, immigration matters, corporate mergers, acquisitions and formation, and alternative financing. The EB-5 practice group members will continue to serve developers, individual EB-5 investors, states and municipalities, EB-5 service providers and established regional centers throughout the United States.

A draft of a Continuing Resolution (“CR”) was filed yesterday by Senate Majority Leader Mitch McConnell which would fund all current US government operations through December 9, 2016. Because last year’s Omnibus appropriations bill included the EB-5 Regional Center Program, the EB-5 Regional Center Program would be extended automatically by the passing of the CR during that period. A cloture vote on the CR is expected early next week and it is expected that the draft CR will be passed by both chambers of Congress. We will continue to monitor any new developments regarding the CR and the EB-5 Regional Center Program.

 

In a continuation of its effort to encourage eligible immigrants to become U.S. citizens, the Obama administration is proposing adjustments to the immigration benefit fee schedule that would raise the cost of some benefits but reduce naturalization fees for certain low-income immigrants.

The Department of Homeland Security (DHS) released its proposed changes to the U.S. Citizenship and Immigration Services (USCIS) Fee Schedule on May 4, 2016, affecting its fees for services.  The proposed rule has been published in the Federal Register (81 FR 26904, 5/4/16) and is open for comment. Comments are due by July 5, 2016. The proposed changes are likely to go into effect this fall.

According to USCIS, it conducted a comprehensive fee review, after refining its cost accounting process, and determined that current fees do not recover the full costs of the services it provides.  Accordingly, it has stated that adjustment to the fee schedule is necessary to fully recover its costs for services and to maintain adequate service levels.  DHS proposes to increase USCIS fees by a weighted average of 21 percent and add one new fee.  In addition, DHS proposes to clarify that persons filing a benefit request may be required to appear for biometrics services or an interview and pay the biometrics services fee, and make a number of other changes.  USCIS last adjusted its fee schedule in 2010.

This chart summarizes the proposed changes.  The range of fee changes varies, for example, increasing by $45 for an application for naturalization and by $195 for an application for a fiancé visa. The rules also include a new fee of $3,035 to recover the full cost of processing the Employment Based Immigrant Visa, Fifth Preference (EB-5) Annual Certification of Regional Center, Form I-924A.  In addition, the DHS proposal would clarify that people who apply for a benefit may be required to appear for biometrics services or an interview and to pay the biometrics services fee, among other changes

Largely exempt from the increases, however, are low income immigrants who wish to become U.S. citizens.  Under the proposed rule, “DHS would charge a reduced fee of $320 for naturalization applicants with family income greater than 150 percent and not more than 200 percent of the Federal Poverty Guidelines.”

“DHS is proposing this change to increase access to United States citizenship,” the proposed rule explains.  The allowance effectively cuts in half the current cost of naturalization — $680, including the $85 biometric fee for these individuals while seeking an additional $45 increase in the cost of naturalization applications for those immigrants who can afford it.

Rep. Luis V. Gutiérrez (D-IL), who has been promoting naturalization and voter registration across the country as a means for immigrants to “Stand Up to Hate,” cheered the rule.  “Right now, a lot of immigrants face a difficult choice: pay $700 or so for the chance to take all the tests and apply for citizenship, or pay $450 to renew a green-card for five years,” Gutiérrez said in a statement.

“Now, the math is much better,” he continued. “You can apply for citizenship and a fee waiver and become an American citizen – with all the rights, duties and honor of citizenship – for a more attainable price or maybe even for free.  The new calculation is going to mean that millions of those who are already eligible can finally take the step and apply for citizenship.”

Applicants can apply for a fee waiver if their income is below or 150 percent of the poverty line, they are receiving a means-tested benefit, or they are experiencing “financial hardship.”

In recent years the Obama administration has put an emphasis on encouraging the estimated 8.8 million eligible legal permanent residents in the U.S. to naturalize and become citizens. Immigration activists, like Gutiérrez, have also embarked on campaigns to help immigrants naturalize and register to vote in a bid to influence the upcoming 2016 election.

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Alka Bahal is a Partner and the Co-Chair of the Corporate Immigration Practice of Fox Rothschild LLP. Alka is situated in Fox Rothschild’s Roseland, New Jersey office though she practices throughout the United States and at Consulates worldwide. You can reach Alka at (973) 994-7800, or abahal@foxrothschild.com.

In our continuing series of reports, Charles (“Charlie”) Oppenheim, Chief of the Visa Control and Reporting Division, U.S. Department of State, shares his most recent analysis of current trends and future projections for the various immigrant preference categories with AILA (the American Immigration Lawyers’ Association).

Below are highlights from the most recent “check-in with Charlie” (April 13, 2016), reflecting his analysis of current trends and future projections for the various immigrant preference categories.

This month, Charlie examines the final action date movements in the May 2016 Visa Bulletin and his analysis of current trends and future projections for the various immigrant preference categories.

Family-Based Projections. Because most family-based demand is generated at overseas posts, Charlie has greater visibility into those categories and is able to move the final action dates more consistently than the employment-based categories, which has a high percentage of USCIS-based (adjustment of status) filings. As a result, dramatic fluctuations in the family-based categories tend to be rare and typically occur only when there is a surge in family-based applicants responding to the agent of choice letter and becoming documentarily qualified.

As noted in the May Visa Bulletin, the final action dates for FB-4 China and India will remain at July 22, 2003, consistent with the final action date for FB-4 Worldwide. However, we can expect to see changes soon due to an increase in demand in both of these categories in recent months. The FB-4 India final action date will likely retrogress, possibly as early as June. It may also be necessary to hold or retrogress the FB-4 China final action date in late summer.

New Final Action Date for EB-4 and Certain Religious Workers (SR) Preference Categories. In May, a final action date of January 1, 2010 will be imposed for EB-4 and certain religious workers from El Salvador, Guatemala and Honduras. The imposition of a final action date for these countries in these categories is primarily attributable to a spike in demand for adjustment of status over the past two months for Special Immigrant Juvenile (SIJS) applicants. As noted in the Bulletin, any forward movement in these categories this fiscal year is unlikely.

Charlie advises that the per country limit for this category has already been reached for these countries for this fiscal year. Given EB-4 Worldwide demand, it is unlikely that there will be any additional “otherwise unused numbers” to allocate to these countries. Similarly, it is extremely likely that EB-4 India and Mexico will also become oversubscribed at some point during the summer months.

EB-5 China. Although demand in this category is increasing, I-526 petitions are being acted upon more quickly so the final action date may continue to advance slowly. Charlie has good visibility into demand in this category since most of these cases are at the NVC, although they are becoming documentarily qualified at their own pace.

EB-2 and EB-3 Philippines. EB-2 Philippines remains current and Charlie expects it to remain so for the foreseeable future. With regard to EB-3 Philippines, Charlie expects the final action date to continue to advance a few months at a time, consistent with movement over the past few months. He does not foresee it returning to the Worldwide final action date this fiscal year.

There is significant pent up demand in this category and given the greater level of visibility into it, Charlie is able to more the final action date consistently. Currently, the Texas Service Center has more than 1,600 EB-3 Philippines cases in the pending demand file and the Nebraska Service Center has more than 1,200. Demand at the U.S. Consulate in Manila is about half of that at USCIS. Charlie hopes that the EB-3 Philippines final action date will advance as far as mid-2010 by the end of this fiscal year.

EB-2 and EB-3 China. Recently, number usage for EB-3 China has exploded due to the EB-3 downgrade effect that Charlie has been expecting. Although anticipated, there was no advance warning as to when this demand would materialize, to what extent, or for how long. Demand for EB-3 China numbers exceeded 400 in March alone. EB-2 China spiked to 850 in March. April demand in both categories is expected to be at least on par with March demand, and may possibly exceed it. As a result, it would most likely be necessary to retrogress EB-2 and EB-3 China in June in an effort to hold number use within the annual limit.

EB-1 Demand and Impact to Other Categories. EB-1 demand from USCIS increased almost 100 percent from February (2,500+) to March (5,000+) which reflects more than 95 percent of the EB-1 Worldwide demand. This spike leaves fewer numbers to potentially spill down to other categories, which will impact EB-2 final action dates. Members should expect that the EB categories that typically rely on unused EB-1 numbers, such as EB-2 India, will be impacted. It remains to be seen whether a cut-off date will need to be established for any EB-1 countries this fiscal year.

India Employment-Based Final Action Dates. The final action date for EB-2 India will advance modestly, from November 8, 2008 in April to November 22, 2008 in May. Similarly, EB-3 India will creep forward from August 8, 2004 in April to September 1, 2004 in May. EB-3 demand, after the initial allocation of numbers, has been increasing by 100 month over month from January to February and February to March.

A number of factors make it difficult for Charlie to accurately predict movement in these categories. Increased EB-1 usage negatively impacts the supply of available visas for EB-2 India, and upgrades are currently driving EB-2 India demand. As a result of these two factors, there may be fewer numbers available to EB-2 India than previously expected.

When USCIS requests an EB-2 number in an upgrade case, it also asks that the previously requested EB-3 number be cancelled. Charlie has no visibility into EB-2 upgrade demand until USCIS completes adjudication of the I-485, requests an EB-2 number, and cancels the EB-3 number. This lack of visibility can potentially result in unexpected and dramatic changes in the EB-2 India final action date, as well as other employment-based preference categories.

You may access the May 2016 Visa Bulletin here and the April 2016 Visa Bulletin here.

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Alka Bahal is a Partner and the Co-Chair of the Corporate Immigration Practice of Fox Rothschild LLP. Alka is situated in Fox Rothschild’s Roseland, New Jersey office though she practices throughout the United States and at Consulates worldwide. You can reach Alka at (973) 994-7800, or abahal@foxrothschild.com.

Congress in 2015 tried to tackle new EB-5 reform legislation, but instead chose to extend the program without any changes until September 30, 2016. This was a result of an impasse on issues relating to increase in the capital threshold amount and the change in the metrics used to determine what is a (“TEA”) targeted employment area. The contentious debate on these issues provided both developers and regional centers one more year of status quo in the program.

What will happen this year is anyone’s guess. What we do know is that Congress is holding hearings on EB-5 reform. These hearings provide the opportunity for individuals in the EB-5 industry to voice their opinion as to the future of the program.

On Wednesday April 13th 2016, the Senate Judiciary Committee held its second hearing of 2016 on the EB-5 Program titled, The Distortion of EB-5 Targeted Employment Areas: Time to End the Abuse.  The Senate Judiciary Committee heard from several witnesses including the Executive Director of IIUSA, Peter Joseph.  IIUSA is the national non-profit trade association representing EB-5 developers, regional centers and other professionals that are in the EB-5 space. Peter Joseph in his testimony pointed to several critical issues that the Committee should consider in the long term reauthorization of the EB-5 legislation. Those issues include:

  • Increase visa capacity to enhance economic impact of EB-5 and address the backlog of

investors currently waiting for visas to be available.

  • Staff commercially viable processing system at USCIS that addresses existing backlogs

and prioritizes predictability and length of processing times for EB-5 related petitions and

applications.

  • Avoid retroactive application of new law and reform to protect the existing EB-5

investors and their families and the billions of dollars in financial commitments and

contractual obligations.

  • Ensure all EB-5 investors with petitions currently filed, or at a later stage in the EB-5

process, are guaranteed adjudication (not approval) and eligibility for immigration

benefits throughout the entire EB-5 process (I-526 petition, EB-5 visa issuance, and I-829 petition)

regardless of future reforms, lapses, or expiration of the program.

  • Continue to allow economic impact models including indirect/induced job creation to

count for EB-5 purposes (using the same econometric models that are generally accepted

as economic policymaking tools by government, academia, and business).

  • Improve program integrity, including through enhanced oversight and reporting

requirements of Regional Centers that are not unduly burdensome, such as site visits

funded by user fees.

  • Clarify geographic (including targeted employment areas (TEAs)), structural, and

industry project characteristics that enable consistent adjudication of EB-5 petitions and

applications.

The issues that Peter Joseph mentioned in his testimony on Capitol Hill clearly mirror the position that most in the EB-5 industry have taken on EB-5 reform. The program has been largely a success with a substantial amount of foreign capital being invested in job creating projects in the United States. Everyone in the EB-5 space would like to see an extension of the EB-5 legislation for at least a five (5) year period.

Since 2008, the Program’s annual contribution to foreign direct investment inbound into the U.S. grew over 1,200% to total almost $5 billion in fiscal year 2015 alone. This investment capital is creating tens of thousands of jobs for U.S. workers in diverse communities by funding projects in a wide variety of industry sectors across the country.

Will Congress take any action this year to reform the current EB-5 legislation? I believe not.

This is a Presidential election year. It is very likely that Congress will defer on making any substantive changes to the EB-5 program until 2017. Immigration reform legislation has never passed both houses of Congress in an election year.

The economic benefits of the EB-5 program are not in dispute. The major issue that Congress needs to address is improving the compliance portion of the legislation. This will provide transparency to the program. Something that is much needed.