A recent meeting of the Invest in the U.S.A. (IIUSA) in San Diego, California served as a forum for those who work in the investor immigration space to share impressions, best practices, and ideas about which way was best to move forward with the EB-5 investor immigration program in the United States. The conference, which was held from May 21st to the 23rd, 2023, mostly attracted individuals who work with U.S. government-approved EB-5 regional centers that enable foreign investors to get a green card in the U.S. if they are prepared to invest $ 800,000 in a regional center project that creates at least ten jobs.
Current IIUSA Goals
Among the goals that the IIUSA organization is pursuing are: permanent reauthorization of the EB-5 program which was recently renewed only for five years on March 15th, 2022; consistency in adjudications of EB-5 applications; shorter periods of such adjudications; more clarity from the U.S. Citizenship and Immigration Services (USCIS) as the lead government agency administering the program; better communication with the agency; and a better understanding that the EB-5 investor program is more of a commerce department and job creation program than it is an investor immigration program.
From the investor’s point of view, what the program should be doing is essentially making use of the invested money to complete the project of the regional center, return the funds invested within a reasonable period of time and get the investor permanent resident status in the United States. It is estimated that the U.S. benefits by $ 4 for every $ 1 that foreign investors invest under the program and the program has been reasonably functioning now for over 30 years bringing billions of dollars and creating thousands of jobs in the United States.
Backlogs Are A Problem
The conference highlighted a number of problems that the program faces. Among the most serious has been the long processing times it is taking the USCIS to approve investor petitions. Indeed, statistics presented to the conference by researchers indicate that the median time for investor applications has been just over 4 years and that as of early in 2023, there were about 75,000 applications pending adjudication in the normal so-called unreserved category. Without a doubt, the problem of backlogs in petitions awaiting review has been most acutely felt by Chinese and Indian nationals since according to current processing rules, they are nationals of countries that have oversubscribed the program and are likely to wait ten years or more for their petitions to be adjudicated. Vietnam may be entering the same category as well. It is not like there aren’t possible solutions to the problem of these backlogs, for example, there are suggestions of clawing back visa numbers from previous years that were not used by USCIS or not including family members of investors in the count of the number of visas being used in any given year. However, the problem is that there is an infinity of problems to be dealt with in Washington all competing with the EB-5 program for the attention of legislators, and at the moment advocating for more immigration in the halls of Congress is toxic since any legislator who endorses such an approach could possibly lose in the next election. The nation is bitterly divided over immigration matters and getting pro-immigration measures adopted by Congress in this climate is a steep uphill climb.
Litigation As A Solution
While getting approvals for applications in a reasonable time or in other words ‘processing times’ is a high-ticket item in terms of concerns among EB-5 advocates, other problems are also important. Reauthorization of the EB5 regional center program is coming up in a few years and will require work to prepare for when that time comes. In the absence of a reasonable dialogue taking place between the USCIS and stakeholders to address issues being faced the immigrant community has had to resort to litigation to get approvals for applications that have been longstanding. Mandamus court actions used to compel U.S. government officials to take action on cases have had some success in recent times, but there is mounting evidence of government pushback on the basis that given the workload involved and the pace of work being done longer wait times are warranted and are reasonable. Indeed, apart from the exception of hardships that can be clearly demonstrated, such as for example a loss of a significant amount of money or the age out of a child who will no longer be eligible to gain permanent resident status, mandamus actions require a showing of unreasonableness and ought not to be used simply to expedite cases willy nilly.
Other problems have arisen as a result of a lack of clarity in the legislative process to the point where it has been necessary to litigate to decipher what Congress meant in passing the Reform and Integrity Act (RIA) on March 15th, 2022. Two hot topics are sustainment and redeployment. In the case of sustainment, a question has arisen as to what period of time the new legislation has required investor funds to remain in projects before the funds can be returned to investors. The starting point for the period of sustainment is not clear and various possible start dates lead to different outcomes in terms of the length of time investor funds will be held up in projects before they are repaid to investors. Some promoters have tried to exploit the lack of clarity to argue that funds can be repaid to investors within two years of investment regardless of when green cards are issued. A more conservative and probably best practice position is that the funds must remain invested for at least two years following the release of the investor’s money and its payment to the Job Creating Enterprise (JCE). This view holds that there needs to be a nexus between the investment and the job creation parts of the EB-5 program.
In the case of redeployment, that is to say, making use of investor funds in projects apart from what was presented in the business plan that led to the approval of the regional center project by the USCIS in the first place, the key question is whether ten full-time permanent jobs were created for each investor who invested in the project. Subject to a material change that needs to be reported to the USCIS, there are cases where the investor funds may be redeployed to other affiliated projects by the regional center without violation of the rules of the game. The best practice in this area is a clear delineation of what can and cannot be done in the regional center offering documentation.
This overview of some of the key challenges for the EB-5 regional center program seeks to present an insight that may be useful to legislators, legal practitioners, and developers as they work to improve the climate for the EB-5 regional center program that brings billions of dollars of investment into the United States and creates thousands of jobs for American workers.