On November 7, 2017, the U.S. Citizenship and Immigration Services’ (“USCIS”) Immigrant Investor Program Office (“IPO”) hosted an EB-5 Stakeholders meeting in New York City. The EB-5 community uses these stakeholder meetings to obtain guidance from IPO on recent adjudication trends. Here are five major takeaways from the meeting:
1. “Sustainment” Requirement. Attorney Bernard Wolfsdorf asked a question impacting mainland-Chinese investors regarding USCIS’ draft June 2017 policy guidance on redeployment. He asked whether, due to the visa backlog for mainland-Chinese investors, USCIS’ policy guidance means that a mainland Chinese investor’s EB-5 capital must be “at risk” for much longer than the EB-5 capital of an investor from any other country (unless Vietnam and India also become backlogged). He further asked whether keeping the investment at risk until the filing of the I-829 might be inconsistent with Congress’ intent at INA § 216A(c)(1)(A) that an EB-5 investment must only be “at risk” for 2 years. USCIS responded that the 2-year period listed in the EB-5 law starts at the beginning of each investor’s respective conditional green card status. USCIS was not able to provide any update on modifying guidance in consideration of the EB-5 visa backlog.
2. Material Change Issues. Another issue related to the visa EB-5 backlog for mainland-Chinese is the effect of EB-5 project changes or problems and/or Regional Center terminations prior to “landing” and obtaining conditional green card status. In the past when these issues occurred, EB-5 investors could request a refund and re-file a Form I-526 for a new project. However, now with the visa backlog, re-filing a Form I-526 loses the important priority date for Chinese investors. IPO indicated the following situations may constitute a “material change” which would require those who haven’t landed (including those with approved Form I-526s) to re-file a Form I-526:
Mainland-Chinese investors stuck in the EB-5 visa waiting line who have invested in EB-5 projects experiencing difficulties appear to have significantly fewer options for relief.
3. Bridge Financing. Numerous questions were raised on the issue of using EB-5 capital to pay down “bridge financing” that was used by the JCE for job creation purposes. Developers have relied on USCIS’ guidance from May 2013 to structure projects in a way that allows job creation to occur for “shovel ready” projects prior to the receipt of EB-5 capital, and then to use EB-5 financing to lower their cost of capital, and give credit to EB-5 investors for jobs created from either the bridge or EB-5 financing. However, USCIS may be restricting the use of EB-5 capital for this purpose when “bridge financing” is not sufficiently temporary or short-term. There also appears to be some restrictions on the use of EB-5 capital to repay financing used by an EB-5 project that has completed construction. USCIS wants to see a connection or “nexus” between the EB-5 capital replacing the bridge loan and the jobs created by the bridge loan. This emerging issue needs to be watched closely, as both investors and Regional Centers want to ensure that EB-5 projects are structured properly for the use of EB-5 capital. Since EB-5 adjudications can take years, it is hard to turn around EB-5 projects to make them compliant without adequate notice.
4. Interview for Adjustment of Status Applicants. IPO confirmed that in-person interviews for EB-5 investors seeking conditional permanent residence in the U.S. through the filing of Form I-485 application for adjustment of status began in October 2017. These interviews are being conducted in accordance with USCIS’ new policy. It is important for EB-5 investors and Regional Centers to thoroughly prepare for these important interviews. EB-5 candidates applying for adjustment of status may not take advantage of section 245(k) of the Immigration and Nationality Act that provides some leeway for applicants that may have been out of status or worked without authorization for less than 180 days.
5. Job Creation Standard for I-829 Purposes. IPO indicated that an EB-5 investor may still be eligible for removal of conditions on permanent residence even if there are not 10 employees working for the JCE at the time of filing the Form I-829, or if the EB-5 company has declared bankruptcy, as noted in the draft August 2015 memo. Note, both the regulations and USCIS’ guidance use past tense when describing the job creation standard at the Form I-829 stage.