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 regional center EB-5, or Immigrant Investor, program enables businesses and real estate developers seeking capital apply to U.S. Citizenship and Immigration Services to become approved to accept investments from foreign investors. Each foreign investor, upon proving that his investment will create full-time jobs for ten U.S. workers, is able to apply for green cards for himself and his immediate family members.
The EB-5 program is a great example of a Congressionally-created win-win-win program. Communities, real estate developers and businesses win because EB-5 capital enables buildings to be built and businesses to expand that otherwise would not happen because of unavailability of capital from traditional sources. The U.S. labor market wins because hundreds of thousands of new jobs are created for U.S. workers. Eligible and worthy immigrants win by being able to immigrate to the U.S. and contribute to our economy.
Unfortunately, as currently administered by USCIS, the program is not realizing its full potential. The investment and job-creating purposes that Congress had in mind, and that the Administration fully supports, are being thwarted by ever longer USCIS processing delays and rules that change in the middle of the process with no notice, creating unpredictability and soaring denial rates. This is having a serious chilling effect on foreign investors who are otherwise ready, willing and able to put millions of dollars to work in communities around the country.
Currently, 60% to 65% of the regional center applications are denied. This statistic, in and of itself, is an indication that the program is clearly not functioning as it should. The relatively small percentage that are approved are often approved either too late to enable the project to go forward or long after the project has already commenced. Moreover, the frequency of requests for additional evidence (“RFE’s”)—sometimes several successive requests on the same case—shows that USCIS has been less than clear with stakeholders with respect to what it is looking for in an approvable case. This is just not the result that Congress intended when it created this promising program.
AILA’s EB-5 Committee has spent a great deal of time studying the problems that are endemic to the EB-5 program and prevent the program from achieving its Congressionally-mandated goals. The Committee suggests that the following “10 Point Program” could be implemented rather easily and could ultimately save the EB-5 program and maximize its job-creating potential:
- Provide a forum whereby USCIS representatives on a quarterly basis can advise regional center stakeholders of the issues it is seeing in applications that are producing the largest numbers of RFEs and denials. At the same forum, allow regional center stakeholders to provide lists of adjudicatory issues on which there is a lack of clarity.
- When new standards are going to be implemented that will affect large numbers of applications (whether it involves the methodology for the counting of jobs that will be created, or the structure of bridge financing, or any other aspect of an EB-5 transaction), provide notice to stakeholders in advance rather than issuing large numbers of RFEs on issues that were not issues at the time of filing.
- Implement USCIS Director Mayorkas’ idea of a Decision Board as promptly as possible. This Decision Board would be made up of economists and business analysts and would meet or conference with regional center applicants to discuss any issues that need to be resolved before a project can be approved.
- Hire a sufficient number of examiners to bring processing times to levels that make some sense in a time-sensitive, job-creating program such as EB-5.
- Instruct examiners that, except in rare instances, multiple RFEs should not be issued.
- Publish meaningful guidelines on what adjudicators want to see when adjudicating a regional center application. Most denials and RFEs are based on often-changing policies that are not contained in any regulation or even any government-issued memorandum.
- Make the regional center amendment process workable. Regional Centers are approved for specific geographical areas, specific industry codes and specific economic methodologies for counting job creation. Right now, if a regional center wants to amend its geography, economic methodology or industry code, the published processing time is 8 months – longer than filing a new regional center application. This is unworkable.
- USCIS has created a process – the exemplar I-526 – that enables a regional center to have a project approved for EB-5 investment prior to receiving investments. The problem is that, despite a $6,230 fee and an 8 month processing time, USCIS does not consider itself bound by any approval. USCIS must make this process meaningful as a way of saving time and adjudicatory resources. If it is not meaningful, stakeholders should not be expected to pay large filing fees and wait long periods of time; and the process should be eliminated.
- Provide substantive responses to inquiries sent to USCIS’s EB-5 mailbox.
- Last, but by no means least, increase the monitoring of approved regional centers. We all agree that if there are any non-compliant regional centers or project developers, they do harm to the program and should be eliminated.
Developers who invest hundreds of thousands of dollars putting together projects to present to USCIS deserve clarity and consistency. These prescriptions could be implemented immediately. The result would be not only a benefit to developers but also to the country, which would attract greater amounts of foreign direct investment and create more jobs for U.S. workers. We hope that USCIS will look favorably upon these constructive suggestions.