On Oct 06 2009 by H. Ronald Klasko
Pre-Approval of Investment Projects Will Make EB-5 More Attractive to Investors
The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.
The current process by which individual investors in regional centers file for EB-5 classification makes no sense and leads to inconsistent adjudications for investors in the same project. Processing improvements currently under consideration will address those concerns and make the regional center program even more attractive for investors considering the EB-5 classification as an immigration option.
The investor often thinks that the regional center’s certification means the specific project in which he or she is investing has been pre-approved by USCIS. In fact, that is not the case. Rather, the qualification of the project in which the investor has invested is adjudicated at the time the individual investor files an I-526 petition. This means that, if a project has 100 investors, there will be 100 individual adjudications of the qualifications of the same project, and the adjudications may be inconsistent between different adjudicating officers.
If one of the adjudicating officers has questions regarding the project, the questions are addressed to the individual investor, since the regional center is not a party to the EB-5 petition. The individual investor generally does not know the answers to the questions in the RFE. Likewise, if there is a denial of a petition based on the qualification of the project, the regional center, which is the real party in interest, cannot appeal the denial based on the qualification of the regional center’s project, again because the regional center did not file the petition.
In the present scenario, everyone loses. The investor has to invest before knowing whether the project is approved. The regional center is subject to varying interpretations by varying officers and has no standing to address the issues. USCIS wastes precious resources by adjudicating the issue of the project’s qualification multiple times instead of one time.
Happily, change may be on the way, albeit not soon enough. USCIS has now stated that it is in the process of creating a government form whereby the regional center will be able to request pre-approval of a specific project before the investor invests. Presumably, such pre-approval would eliminate re-adjudication of the qualification of the project in connection with the individual EB-5 petitions of the individual investors.
Unfortunately, this important change is not going to happen overnight. USCIS estimates at least one year for the form to be approved and this new process to go through necessary channels. Advocates concerned about the success of the EB-5 program are and will be making efforts both at higher levels of USCIS and in Congress to create a streamlined and workable process in a much shorter time frame. In doing so, it is critical that any new process not simply add another level of delay and bureaucracy. Timing is critical for major development projects, and any new system must have very specific and short adjudication time-frames.