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EB-5 Insights

Where Government Policies and Business Realities Converge

Posted in EB-5 Program, USCIS

As we previously reported, USCIS has recently changed its policy of allowing loans to be a source of an investor’s lawful capital. Many stakeholders have reported that I-526 Petitions are being denied when the investor does not wholly own the real property used to collateralize the loan. USCIS has stated that proceeds from a loan may qualify as capital of the investor provided that: (1) the investor is personally and primarily liable for the loan and (2) the value of the collateralized asset actually owned by the investor meets or exceeds the value of the loan.

Despite many legal arguments to the contrary, the AAO claims Matter of Soffici holds that all cash proceeds derived from a loan must be evaluated as indebtedness. This is an extraordinary leap from the facts of the precedent decision, since the cash proceeds of the loan claimed by the petitioner were actually the proceeds of a loan obtained by the NCE, not by the investor. Stakeholders have voiced a number of concerns about this flawed legal reasoning and recently it has been reported that there is now pending litigation to decide this issue in the federal courts.

Taking a new legal route, we have been successful in making legal and factual arguments about property law in China. There are various factual scenarios and property law concepts in China applicable to these indebtedness cases, including the value of the property, the type of property ownership under Chinese law, divisible property law concepts, mortgage laws in China, and debt/credit/contribution principles.   Thus, even if USCIS continues to adjudicate cases under its new policy guidance, mortgage cases still can be approved if they are structured correctly and USCIS is issuing approvals once again.   This is very welcome news for many EB-5 applicants that had filed their applications and were concerned about the viability of their petitions given this retroactive change in policy.

Posted in Firm News

In the midst of the digital age, where law firms are increasingly discovering the importance of blogging in their thought leadership and branding efforts, LexBlog issued The Definitive Report on Blogging in the Am Law 200. Greenberg Traurig publishes 16 blogs, the majority of which cover legal developments important to firm clients.

LexblogThe 2015 LexBlog Am Law 200 Blog Benchmark Report ranked Greenberg Traurig’s Inside Business Immigration (www.gtlaw-insidebusinessimmigration.com) as the most visited immigration practice blog and the firm’s EB-5 Insights blog (www.eb5insights.com) was ranked No. 3. overall. Additionally, Greenberg Traurig’s Inside Business Immigration ranked No. 22 among the 962 unique blogs studied. Editors Ian Macdonald, Inside Business Immigration, and Kate Kalmykov, EB-5 Insights, are key factors in driving traffic to the blog sites and continue to bring valuable insights on immigration matters to the subscribers.

The LexBlog research team studied each Am Law 200 firm’s individual web presence and the 962 unique blogs. The blogs were catalogued into topic categories and carefully cross-referenced with their traffic rankings on Alexa.com. According to the report, LexBlog is the leader in helping lawyers and law firms build a powerful online presence through blogging and social media.

To read full press release click here.

Posted in EB-5 Job Creation, EB-5 Program

On July 29, Representative Zoe Lofgren, Ranking Member of the House Judiciary Committee, Subcommittee on Immigration and Border Security, and Representative Luis Gutiérrez introduced H.R.3370, the Entrepreneurial Business Creating Jobs Act of 2015 to permanently reauthorize and reform the EB-5 Regional Center Program. Representative Lofgren’s sectional summary can be found here.

The legislation provides visas for foreign entrepreneurs who obtain venture capital or seed financing and wish to start businesses in the United States. And it provides visas for foreign entrepreneurs who are in the United States in non-immigrant status operating an existing business and can show that the business is growing.

The legislation also permanently reauthorizes the Conrad State 30 J-1 Visa Waiver Program, and authorizes for five years the E-Verify Program and the Special Immigrant Nonminister Religious Worker Program. Below are the major components of the legislation:

Provisions for “Venture Capital-Backed Start-Up Entrepreneurs”

  • Visas are made available to foreign entrepreneurs on a conditional basis who are sponsored by, as defined by the legislation, a “qualified venture capital fund,” one or more “angel investors,” a “qualified business,” or who obtain funding through a “qualified seed accelerator.”
  • In order to have conditions removed, the entrepreneur must show that within a two-year period, the business created full-time jobs for five or more U.S. workers; raised an additional $2 million in capital investment; earned $1 million in revenue; or created full-time jobs for three U.S. workers with salaries of $100,000.

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Posted in EB-5 Program

The National Association of Counties (NACo) hosted its 80th Annual Meeting where it discussed various proposed policy resolutions and platform changes. One such resolution was one supporting the EB-5 resolution to make the EB-5 program permanent. The steering committee unanimously voted in support of the EB-5 resolution, and the Board of Directors formally adopted the resolution at their meeting July 13, 2015.

The EB-5 policy resolution supports federal legislation to permanently authorize the EB-5 Regional Center Program. It specifically states that NACo “promotes EB-5 as an important tool for economic development, public private partnerships, job creation and infrastructure development.” The EB-5 policy resolution also supports EB-5 education at NACo events to educate counties on how they can utilize the EB-5 program for its benefits.

The EB-5 policy resolution also confirms the positive fiscal, urban, and rural impact of the EB-5 program, citing from a 2013 peer-review study that the EB-5 program showed a “$2.58 billion contribution to GDP, supported over 30,000 American jobs, and generated $381 million in federal and $200 million in state/local tax revenue.” The study also found that the industries benefitting most from the EB-5 program are diverse in nature, including construction, food service, wholesale trade, real estate, financial services, legal services, architecture/engineering, and healthcare.

Posted in EB-5 Program, Immigrant Visa, USCIS

The White House has just released a new report titled “Modernizing & Streamlining our Legal Immigration System for the 21st Century,” which builds on the President’s executive actions of Nov. 21, 2014. This report provides for plans to improve the immigration system to modernize and streamline the processes for certain visa categories and to address security issues. The report also calls for plans to strengthen the United States’ humanitarian system by providing benefits for certain individuals.

The report specifically addresses the EB-5 program in important ways. The White House acknowledges that the United States Citizenship and Immigration Services (USCIS) has undergone significant changes in an effort to enhance the program’s processes and to improve its integrity, including the creation of a new team with expertise in economic analysis and specific EB-5 components, as well as the issuance of updated policy guidance to provide better clarity as to program requirements.

The White House recognizes that there is a need for additional enhancements and improvements to address the integrity and impact of the EB-5 program. Specifically, the White House recommends additional measures including enhancements to avoid fraud, abuse, and criminal activity; measures to ensure that the program is reaching its full potential in terms of job creation and economic growth; and recommendations to streamline the program to make it efficient and stable for participants in the program, including petitioners and Regional Centers. Continue Reading

Posted in EB-5 Program, Regional Center

On Sept. 28, 2012, just two days shy of its expiration, the EB-5 Regional Center Program was extended for three years when President Obama signed S.3245 into law.  The bill was sponsored by Senator Patrick Leahy, and cosponsored by Senators Grassley, Kohl, Hatch, Rubio, Schumer, Lee, Conrad, and Collins.  It had no short title, listed as a bill “[t]o extend by 3 years the authorization of the EB-5 Regional Center Program, the E-Verify Program, the Special Immigrant Nonminister Religious Worker Program, and the Conrad State 30 J-1 Visa Waiver Program.”   

Senate bill 3245’s unanimous approval in the Senate and overwhelming passage in the House on a vote of 412-3 did not reflect the challenges and compromises that were made along the way.  For example, when the bill was first introduced in the Senate on May 24, 2012, it provided permanent reauthorization for the four expiring programs.  Section 5 of the bill, which provides that “nothing in this Act may be construed to authorize the planning, testing, piloting, or development of a national identification card,” was an addition by a senator, who leveraged the ability all senators have to single-handedly block a unanimous consent agreement. 

In the years following the enactment of S.3245, the EB-5 Regional Center Program has experienced tremendous growth.  According to a recent report commissioned by the EB-5 Investment Coalition, and authored by U.S. Policy Metrics/Hamilton Place Strategies, which Laura Reiff wrote about here, the EB-5 Program generated $5.2 billion in private investment between 2005 and 2013, with $1.6 billion invested in 2013 alone.  It is only since 2008 during the height of the financial crisis that the program began approaching its full potential as a driver of economic growth. The U.S. Department of State’s collection of annual visa issuance data is illustrative of the program’s trends.  By all accounts the upward trajectory will continue as EB-5 has increasingly become a credible and mainstream source of capital for developers and other entrepreneurs.  In light of the EB-5 Program’s growth between 2012 and 2015, the senators and representatives who voted in favor of S.3254 over-delivered on the promise of jobs and capital investment.    

The EB-5 Regional Center Program’s economic track record since 2012 is impressive.  But recent increased scrutiny on the program from lawmakers, the Government Accountability Office, and the Department of Homeland Security Inspector General—in part symptoms of its own rapid growth and success—have made the reauthorization process more complex.  This, combined with a variety of competing policy ideas about improving the program, counsels all stakeholders to expect an equally, if not more unpredictable and bumpy road to the next reauthorization.   

Even against a complicated legislative backdrop, however, the impending sunset of the EB-5 Regional Center Program presents lawmakers with a real opportunity to work together to strengthen the economy, reduce unemployment, and bolster the confidence of those who wish to invest in the United States.  And this opportunity is an entirely deficit-neutral way for elected officials to benefit the national interest in a very direct and immediate way.  As senators and representatives return to their states for the August recess, EB-5 stakeholders should take the opportunity to share the good work they have been doing with their elected officials.   

September 30, 2015 is edging closer as the legislative days in Congress are waning.  But there is time for Congress to act swiftly to sustain the EB-5 Regional Center Program as a vital engine for economic growth and avoid the disruption a lapse would cause.  If we have observed anything over the past few years in Congress, it is that senators and representatives are capable of coming together and making law where and when it counts. 

 

Posted in Firm News, General

Greenberg Traurig, LLP has announced that it will open in Germany on Oct. 1, 2015. The firm will serve the German market from Berlin with more than 50 lawyers and current staff from the Olswang office in Berlin. The new Berlin office will complement our existing platform in London, Warsaw, Amsterdam, Tel Aviv and, through alliance, Milan as well as our U.S., Seoul, Shanghai, Tokyo, Tel Aviv, and Mexico City offices. The Berlin-team is known internationally for its high-profile practices in corporate, M&A, immigration, finance, and restructuring, focusing on real estate, technology, telecommunications, media, and infrastructure industries. View the full press release here.

Posted in Awards & Recognitions

Greenberg Traurig’s Business Immigration & Compliance Practice has been shortlisted for The Legal 500 United States 2015 Awards in the areas of “Labor and Employment – Immigration.”  The team of more than 100 experienced legal professionals provides a wide range of services including immigration policy development, immigration compliance, U.S. work visas and permanent residence, global immigration, legal advocacy and legislative representation, and EB-5 immigration investment and job creation.  Greenberg Traurig immigration attorneys Laura Reiff, Kate Kalmykov, Ian Macdonald, Pamela Mak and Martha Schoonover have also been recommended in The Legal 500 United States 2015 guide to outstanding lawyers.  Reiff has also been included on the elite “Leading Lawyers” list in the Legal 500 United States 2015 guide.  In addition to the immigration group, The Legal 500 United States 2015 guide to outstanding lawyers nationwide has also recommended Greenberg Traurig as a “Top Tier” firm in the “Real Estate and Construction – Real Estate” category as well as 100 plus Greenberg Traurig attorneys and more than 25 firmwide areas of practice and industry focus. See the full Greenberg Traurig press release.

Posted in Immigrant Investor, USCIS

On June 4, 2015, USCIS’ Immigrant Investor Program Office (IPO) hosted a stakeholder engagement to discuss expenses that are, or are not, includable for job creation under the EB-5 program. This engagement is part of the IPO’s EB-5 interactive series, which covers in depth topics and provides an informative discussion for EB-5 stakeholders. As stated by USCIS, this call was important because regional centers and EB-5 investors must submit evidence of job creation that results from the new commercial enterprise. Specifically, EB-5 investor’s must provide evidence at the I-526 stage that their investment will directly or indirectly create a minimum of 10 full-time jobs. As most filings rely on multiplier tables in an economic report (also known as input-output modeling) to estimate the number of jobs created, it is important to remember that in order to obtain a valid result, the expenses used in the modeling must be eligible for job creation purposes. Below is a summary of what was covered in the engagement:

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Posted in Immigrant Investor

Chinese buyers bought more U.S. homes, for more money, than any other foreign buyers last year, according to a new report released by the National Association of Realtors. The report is based on a survey of realtors about existing home sales to foreigners over the period of April 2014 through March 2015; for purposes of the report, the terms “China” or “Chinese” comprehend mainland China, Hong Kong, and Taiwan.

Of the approximately 209 thousand home sales involving a foreign purchaser, individuals from China accounted for the largest share of transactions at 16 percent, up 9 percent since this data was last collected in 2007. Together, home buyers from China purchased a whopping $28.6 billion worth of U.S. residential property during the year period. Impressively, this injection into the U.S. real estate market by Chinese buyers represented nearly double what Canadian buyers—the next largest foreign purchasing group and our geographic neighbors to the North—invested at $11.2 billion. Indian nationals make up the third largest purchasing group, which funneled approximately $7.9 billion into the American economy.

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