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Peng & Weber EB-5 Newsletter
This page presents articles from the EB-5 Newsletter by Peng & Weber attorneys.
Jan. 13, 2017
After nearly 25 years without any changes in EB-5 regulations, United States Citizenship and Immigration Services (USCIS) released on January 13, 2017 a Notice of Proposed Rulemaking (NPRM) calling for drastically increasing the minimum investment requirements for EB-5 investors. Since 1990, the minimum investment requirements were $500,000 for Targeted Employment Areas (TEAs) and $1 million for other areas, but the NPRM calls for increasing these amounts to $1,350,000 and $1.8 million, respectively. The NPRM also makes a few other changes, such as eliminating states from participating in the TEA process and making it easier for some petitioners to retain priority dates if they need to refile their I-526 petitions.
Apr. 22, 2016
Speaking at an Invest in the USA conference in Washington, D.C., on April 22, 2016, Mr. Charles Oppenheim, Chief of the Visa Control and Reporting Division of the U.S. Department of State, announced some mildly encouraging China EB-5 visa cutoff date projections for the coming year. According to Mr. Oppenheim, the Department of State’s June 2016 Visa Bulletin will be published around May 8, 2016, and will show an EB-5 China final action date of February 15, 2014. This represents a forward movement of just two weeks from the current EB-5 China cutoff date under the April 2016 Visa Bulletin (February 1, 2014), and just one week from the EB-5 China cutoff date to take effect May 1, 2016, under the recently published May 2016 Visa Bulletin (February 8, 2014).
Feb. 17, 2016
The U.S. House Committee on the Judiciary last week held a hearing titled “Is the Investor Visa Program an Underperforming Asset?,” which signaled its ongoing efforts to achieve a passable EB-5 bill that would reauthorize the Regional Center Program (currently set to expire on September 30, 2016) contingent on comprehensive EB-5 program reforms. The February 11, 2016, hearing gave Committee members a fresh opportunity to publicly air their persisting concerns about the EB-5 program, in particular the “gerrymandering” of targeted employment areas (TEAs) by states under existing EB-5 regulations and policy. The Committee heard testimony from Nicholas Colucci, Chief of the Immigrant Investor Program (IPO); Rebecca Gambler, Director of Homeland Security and Justice Issues at the U.S. Government Accountability Office (GAO); Jeanne Calderon, Clinical Associate Professor of Business Law at NYU Stern School of Business; and a CEO of a U.S. company focusing on direct (non-regional center) EB-5 investments.
Feb. 5, 2016
During USCIS’s first EB-5 Immigrant Investor Program teleconference of 2016 held on February 3, 2016, the Immigrant Investor Program Office (IPO) emphasized its increasing efforts to strengthen program integrity amid its continued growth. IPO Chief Nicholas Colucci—who had just testified the day before in a Senate Judiciary Committee hearing that stressed the problem of fraud in connection with the EB-5 Regional Center Program—highlighted three initiatives IPO is carrying out in response to fraud concerns. First, IPO is working with USCIS’s Fraud Detection and National Security Directorate (FDNS) to include EB-5 as part of USCIS’s Administrative Site Visit and Verification Program (ASVVP), which currently covers only religious worker petitions, H-1B petitions and L-1 petitions. Under the ASVVP, FDNS officers conduct unannounced site visits on randomly selected petitions to collect information as part of a compliance review. Second, IPO plans to increase the number of interviews conducted at the Form I-829 petition stage. Lori MacKenzie, Chief of IPO’s new Policy and Performance Division, noted that IPO anticipates giving I-829 petitioners the option to have representatives from the regional center present at their interviews. Third, IPO is in the process of developing a regional center audit program to further promote compliance with program requirements.
Nov. 5, 2015
By Cletus M. Weber, Elizabeth Peng & Tina B. Lee
*We wrote this article in early November 2015. Legislative action or inaction could supersede this article at any time if it has not already done so by the time you read this article.
Oct. 16, 2015
Hours before the EB-5 regional center program's scheduled expiration on September 30, 2015, President During the temporary extension period for the EB-5 regional center program that is set to expire on December 11, 2015, Congress is expected to progress toward new EB-5 legislation that will include significantly greater government oversight of the regional center program. Several EB-5 bills have been introduced in Congress, and all of them contain similar provisions aimed at improving program integrity and oversight. USCIS and the SEC have also increasingly stepped up actions to identify and remove bad actors from the EB-5 arena.
Oct. 1, 2015
Hours before the EB-5 regional center program's scheduled expiration on September 30, 2015, President Obama signed a stopgap federal spending bill that included a temporary extension of the EB-5 regional center program in its current form until December 11, 2015. The bill, a continuing resolution passed by Congress earlier that day, will keep the federal government--and the EB-5 regional center program--operating through December 11, 2015, while Congress continues to negotiate the fiscal year 2016 budget and the future of numerous federal programs. The continuing resolution also includes temporary extensions of the E-verify, Conrad 30, and non-minister special religious worker programs administered by USCIS.
Aug. 19, 2015
On August 10, 2015, USCIS released a draft of a long-awaited policy memorandum prompted by the China EB-5 visa backlog. Titled “Guidance on the Job Creation Requirement and Sustainment of the Investment for EB-5 Adjudication of Form I-526 and Form I-829” (Draft PM-602-0121), the draft policy memorandum “draft memo”) clarifies how USCIS will take into account delays caused by China visa retrogression when adjudicating I-526 and I-829 petitions. USCIS has posted the draft memo on its website for public comment through September 8, 2015.
1. On job creation.
2. On sustainment of the EB-5 investment during the conditional permanent residence period.
Aug. 28, 2015
China EB-5 Visa Cutoff Update
Mr. Charles Oppenheim, Chief of the Immigrant Visa Control & Reporting Division of the U.S. Department of State, announced the following China EB-5 visa update at the AILA EB-5 Investors & Regional Centers Conference on August 28, 2015:
*The October 2015 visa bulletin (which is expected to be published on September 8, 2015) will show a China EB-5 visa cutoff date of October 8, 2013, assuming that the Regional Center Program is reauthorized. In other words, if the Regional Center Program is extended beyond its current sunset date of September 30, 2015, China EB-5 visas can be expected to remain available with the cutoff date advancing just over 2 weeks.
(Note: Per Mr. Oppenheim, if the Regional Center Program is not reauthorized before the October 2015 visa bulletin is published, the October 2015 visa bulletin will show China EB-5 visas as unavailable with respect to regional center-based visa categories ("I5" and "R5"), until/unless reauthorization occurs.)
*The China EB-5 cutoff date will continue to advance throughout FY2016, although not necessarily each month. By the end of FY 2016 (September 30, 2016), the China EB-5 cutoff is projected to be a May 2014 date or, in the worst case scenario, an April 2014 date.
Although the best-case scenario would be no visa backlog at all, it appears the good news is that the China EB-5 visa cutoff can be expected to move forward rather than backward (retrogress) in FY2016.
Aug. 19, 2015
As Congress continues to roll rapidly toward the impending September 30, 2015, expiration of the EB-5 Regional Center program, various legislators are still trying to put together something workable that will extend the program (or in some cases make it permanent), along with additional changes the legislators believe will improve the integrity, security, and effectiveness of the program in creating jobs for U.S. workers. In addition, the large group of legislators who insist that no significant changes be made to any immigration program unless included within an overall comprehensive immigration reform (CIR) package, which would address the ten million or so undocumented foreign nationals currently residing in the USA, do not seem to have moved from their position of CIR or nothing. On top of this, Congress is still trying to address many other major issues, such as the federal budget, before the September 30 end of the federal fiscal year.
Within this overall context, it is helpful to see what has already come along and what is expected or rumored to be coming along in the remainder of this fiscal year. It is also helpful to consider the likely outcome caused by the tight deadline. The latest intelligence is that various members of Congress will ultimately introduce at least four different bills addressing EB-5. Two have already arrived.
Aug. 17, 2015
During USCIS’s quarterly EB-5 stakeholder engagement held on August 13, 2015, Immigrant Investor Program Office (“IPO”) staff announced a number of developments reflecting the EB-5 program’s continued momentum ahead of the regional center program’s September 30, 2015, sunset date:
• Enhanced Oversight of Regional Center Program
• EB-5 Protocols
• GAO Recommendations
• Staffing Increases
• Filing Statistics, October 1, 2014 to June 30, 2015
• Upcoming Policy Changes
• Regional Center Program Sunset
• Other Topics
Aug. 11, 2015
As noted in a previous Peng & Weber advisory, USCIS announced an abrupt policy change on April 22, 2015, regarding the use of loan proceeds as EB-5 capital. (We refer to this as the "April 22, 2015, Policy Change.") Under the April 22, 2015, Policy Change, if an investor in an EB-5 commercial enterprise invests cash that was obtained from a loan, the cash will not qualify as "capital" (i.e., will not count toward the required minimum EB-5 investment amount) unless 3 requirements are satisfied:
1. The petitioner is personally and primarily liable for the indebtedness;
2. The indebtedness is secured by assets the petitioner owns; and
3. The value of the collateral is sufficient to secure the amount of indebtedness that is being used to satisfy the petitioner's minimum investment amount.
To date, USCIS has provided little guidance on what loan structures will or will not result in qualifying loan proceeds. This advisory discusses a number of hypothetical examples intended to aid one's general understanding of how USCIS's April 22, 2015, Policy Change might apply in various situations. Each hypothetical example walks through the 3 questions that must be answered “yes” in order for the loan proceeds to count as capital under USCIS’s new policy:
1. Is the petitioner personally and primarily liable for the loan?
2. Is the loan secured by assets the petitioner owns?
3. Is the value of collateral sufficient to secure the loan?
July 23, 2015
As most EB-5 stakeholders are aware, proposed Senate bill S. 1501 seeks to extend the EB-5 regional center program for another 5 years beyond its current expiration date of September 30, 2015, and to make numerous changes to EB-5 eligibility criteria. (Please see below for Peng & Weber's FAQs About the U.S. Senate's Proposed EB-5 Bill for a detailed discussion.) Among key proposed changes, S. 1501 would increase the minimum EB-5 investment threshold from $1 million/$500,000 to $1.2 million/$800,000, and restrict "high unemployment area"-based Targeted Employment Area (TEA) designations. Both of these changes would take effect upon S. 1501's enactment, with one significant exception: regional center-affiliated projects that file or receive approval of their business plans before their bill's enactment would be grandfathered into the current minimum investment threshold and TEA rules. In light of S. 1501, this article discusses the potential grandfathering benefit of filing exemplar I-526 petitions with USCIS before September 30, 2015 (the date by which S. 1501 would have to be enacted).
July 10, 2015
Since hearing about the introduction of Senate bill S. 1501 in June 2015, many current and prospective investors, regional centers and project principals have been asking us how the bill will impact the existing EB-5 program. Sponsored by Senator Patrick Leahy of Vermont and Senator Chuck Grassley of Iowa (respectively the Ranking Member and Chairman of the Senate Committee on the Judiciary), S. 1501 is a bipartisan bill to reauthorize and significantly strengthen oversight of the EB-5 regional center program. The bill also changes several general EB-5 program requirements such as the minimum investment threshold. In this article, Peng & Weber provides answers to frequently asked questions about S.1501.
June 2, 2015
As part of the heightened scrutiny USCIS has been applying to lawful source of funds evidence in I-526 petitions, USCIS adjudicators are now questioning inconsistencies between information provided in a petitioner's I-526 petition and nonimmigrant visa applications (DS-160 forms) the petitioner has previously submitted. In light of USCIS's stringent examination of lawful source of funds evidence, Peng & Weber offers recommendations.
April 30, 2015
On April 27, 2015, Jeh Charles Johnson, the Secretary of the U.S. Department of Homeland Security (DHS), submitted an official letter to Senator Charles E. Grassley and Senator Patrick J. Leahy, Chairman and Ranking Member, respectively, of the U.S. Senate Committee on the Judiciary. DHS Secretary Johnson recommended that Congress extend the EB-5 regional center program, which is otherwise scheduled to expire on September 30, 2015. He also recommended that Congress substantially increase the minimum EB-5 investment amount. He made this request even though Congress had already authorized DHS many years ago to increase the minimum EB-5 investment requirement on its own (i.e., without further action of Congress.)
DHS Secretary Johnson also informed Congress that DHS had already implemented some internal communications protocols for dealing with outside inquiries about pending EB-5 cases, but still desired Congress to make the following additional changes:
• Authorize United States Citizenship and Immigration Services (USCIS) to terminate a regional center's designation when there is criminal activity or national security concerns;
• Require all regional center principals to be U.S. citizens or lawful permanent residents;
• Create an EB-5 Integrity Fund for regional center audits and site visits and require regional centers to pay an annual fee of $20,000 to cover the cost of operating the fund;
• Authorize USCIS to impose sanctions, fines, and temporary suspensions to regional centers;
• Limit Targeted Employment Areas to include a specified number contiguous census tracts;
• Increase the minimum EB-5 investment amount to reflect United States currency inflation; and
• Require regional centers to submit to USCIS investment proposals with business plans and organizational documents before USCIS will accept any EB-5 investor petitions related to the underlying project. (DHS is the parent agency of USCIS.)
Although DHS Secretary Johnson's recommendations are influential and will certainly be considered, Congress itself has the final say in the upcoming EB-5 regional center program's reauthorization discussion this fall.
April 23, 2015
On April 22, 2015, USCIS held an EB-5 stakeholder engagement to provide EB-5 program updates for the first half of FY 2015 and discuss current adjudications-related issues. Chinese EB-5 investors in particular should be aware of two important policy announcements made by Julia Harrison, Deputy Chief of the Immigrant Investor Program Office (IPO), concerning cases in which the EB-5 petitioner's investment capital derive from loan proceeds.
April 18, 2015
As has been anticipated for some time, the U.S. Department of State (DOS) announced this week that EB-5 visa numbers for mainland China-born applicants will retrogress beginning on May 1, 2015, with an initial cut-off date of May 1, 2013. In other words, starting on May 1, 2015, EB-5 visas will be available only to those China-born EB-5 investors whose I-526 petitions were filed before May 1, 2013. This initial backlog of exactly two years can be expected to grow over time (unless Congress takes the unlikely action of changing visa quotas), based on previous DOS predictions that the China EB-5 cut-off date would move rather slowly once established.
Chinese investors should not be surprised or alarmed by the EB-5 visa retrogression announcement, nor should they view it alone as a barrier to the ultimate success of their EB-5 case. However, because visa backlogs can delay immigration plans and potentially impact the eligibility of children to immigrate as derivative family members, Chinese EB-5 investors should know what visa retrogression means. This Peng & Weber update offers practical tools to help Chinese EB-5 investors better understand visa retrogression and how to respond to it.
April 18, 2015
On January 28, 2015, two U.S. Congressmen introduced a legislative proposal to make permanent the regional center portion of EB-5 law. The bill is still pending but we hope to see it pass before the current program expiration date of September 30, 2015.
United States Citizenship and Immigration Services (USCIS) is developing a proposed policy to allow EB-5 investors and others to attend biometrics appointments in China or elsewhere outside the United States.
The U.S. Department of State (DOS), which tracks visa usage around the world, recently reported that mainland China remains the largest source of investors in America's EB-5 investment program. According to DOS's recently released report (dated January 11, 2015), the ten countries and areas using the most EB-5 visas during fiscal year 2014 were China, South Korea, Taiwan, Vietnam, Iran, Russia, India, Mexico, Nigeria, and Japan.