Greenberg Traurig EB-5 attorney Kate Kalmykov has been traveling throughout Asia over the past several weeks meeting with agents, local media (access to recent interview here) and GT EB-5 clients. Kate’s meetings in Shenzhen, Guangzhou, Hangzhou, Fuzhou, Hong Kong, Hanoi, Ho Chi Minh City and Siem Reap Cambodia have revealed, among many other things, two trends in the increase for EB-5 demand: the urgency to submit applications before the predicted retrogression this summer; and the recent cancellation of Canada’s EB-5 Program.
Additionally, Kate has been preparing for upcoming EB-5 conferences: the U.S. Investment Immigration Forum 2014 Conference in Shenzhen on March 17th- 19th, and The Invest in America 2014 Summit and Exhibition on March 22nd – 23rd in Shanghai. Several others from the GT EB-5 team will join Kate for these events, including Steve Anapoell and Laura Reiff. For more information or to register for either conference, please click here to email Kate Kalmykov.
EB-5 Seminar in Fuzhou
Presentation to Clients of China Merchant Bank
Meeting with U.S. Investment Immigration Forum 2014 Conference Organizers
The State Department issued EB-5 visa availability projections in their March 2014 Visa Bulletin which did not contain any mentions of retrogression of the EB-5 visa category. The EB-5 visa category is listed as “Current” under section E “Visa Availability in the Coming Months” without any mention of a possible cut-off date being established. This is similar to the situation which occurred approximately 14 months, when the State Department issued a preliminary warning in December 2012 that it would establish a cut-off date for Chinese nationals in the EB-5 visa category, only to reverse itself two months later.
The Chief of Immigrant Control & Reporting of the State Department, Charlie W. Oppenheim, spoke to the American Immigration Lawyers Association (AILA) and described the demand for EB-5 visas as “manageable.” Mr. Oppenheim expects to provide another update on whether a possible cut-off is necessary in the June or July 2014 Visa Bulletins. It is important to note that Mr. Oppenheim noted that EB-5 visa demand increases during the summer months and in the past two fiscal years, almost one-third of EB-5 visas were used during the period from July to September. This indicates that individuals with approved I-526 Petitions should not wait until these “busy” months to apply for a visa, and instead should apply as soon as possible after receiving I-526 Petition approval. This would reduce the likelihood of any issues with retrogression affecting an individual’s EB-5 visa.
This news is consistent with our prior posts which warned that EB-5 investors should think hard before delaying the filing of an I-526 Petition or taking any other actions directly related to the possibility of EB-5 retrogression. Furthermore, USCIS predicted on its stakeholder call there will be a slowdown in I-526 Petition processing times in the coming months as the transition to the Immigrant Investor Program Office (IIPO) continues. This coupled with the March 2014 Visa Bulletin indicates a likelihood that EB-5 visa retrogression will not occur this fiscal year.
On March 6, 2014, Representative Jared Polis (D-CO), along with Representative Joe Garcia (D-FL), Representative Matt Salmon (R-AZ) and Representative Mark Amodei (R-NV), introduced The American Entrepreneurship and Investment Act of 2014. A copy of the bill and an official Section by Section overview have been made available.
The legislation would, among the other items listed below, make the Regional Center program permanent and improve the program by addressing key administrative and substantive concerns. Some of the specific proposals in the bill include:
- Improved definition of Targeted Employment Area (TEA) designations
- Codifies the current TEA designation authority, which leaves such designations up to the states, which are best equipped to determine local employment needs. This is consistent with USCIS’s May 30, 2013 “EB-5 Adjudications Policy (PM-602-0083);
- Lowers the minimum capital investment required from $1,000,000 to $500,000; and
- Expands the TEA designation for areas where a military installation was closed and where a State or the Federal government has designated an area as an economic development incentive program. Continue Reading
Greenberg Traurig Corporate & Securities Shareholder Bruce Rosetto recently co-authored an article in Practical Law Company entitled “Navigating the Recent Changes to Regulation D Rule 506”. The pieces focuses on the elimination of the ban on general solicitation in Rule 506 offerings, which presents exciting new opportunities for companies raising capital under the Regulation D safe harbor, particularly small and mid-sized companies. These changes are particularly beneficial to the EB-5 program, as they eliminate previous restrictions that prohibited EB-5 issuers from active solicitation, advertising and marketing.
To read the full article, please click here.
Bruce C. Rosetto is a Corporate & Securities Shareholder in the Boca Raton office of Greenberg Traurig, LLP. He represents private and public companies, private equity funds, investment banks and banks. His practice focuses on entrepreneurs and small to middle market public companies throughout the United States in a variety of industries, including life sciences, bio-tech, banking, environmental, manufacturers, technology, entertainment and many others.
Greenberg Traurig EB-5 Attorney Laura Reiff recently published an article in eb5 investors magazine. The piece is entitled “The Tug of War Between the Hill and the Agency” and focuses on the recently released Office of the Inspector General (OIG) report for the Department of Homeland Security and its potential impact on the EB-5 Regional Center Program.
The article was published in the Winter 2014 issue of the magazine. To read the full article, please click here.
Greenberg Traurig EB-5 attorneys in the firm’s the U.S. and Shanghai offices have been working to prepare for upcoming EB-5 conferences in China. The 2014 U.S. Investment Immigration Forum Conference will be held March 17th – 19th at the Marco Polo in Shenzhen, and The Invest in America 2014 Summit and Exhibition will be held March 22nd and 23rd in Shanghai. Full details for both conference are below.
- U.S. Investment Immigration Forum 2014 Conference
- March 17th– 19th at Marco Polo in Shenzhen, China
- This event will be attended by EB-5 industry leaders from around the globe, including more than 30 confirmed migration agents, as well as regional center representatives, U.S. immigration economists and tax experts, immigration services associations, and more.
- If you have not yet registered, please be sure to do so today as space is limited. The registration form may be found via this link.
- Sponsorships and exhibit tables are available in addition to registration fees, for more information visit this website.
- The Invest in America 2014 Summit and Exhibition
- March 22nd-23rd at Jing An Shangri-la Hotel in Shanghai, China
- The event welcomes U.S. investment projects, Regional Centers, real estate brokerage firms, franchises, PE and VC companies, financial services, attorneys, CPAs, international trade agencies, government officials, and colleges to participate in exhibition and presentations.
- Register today via this link
For more information, please contact Kate Kalmykov at firstname.lastname@example.org
On February 26, 2014, USCIS held a stakeholder conference call for individuals interested in the EB-5 Program with Dan Renaud, Robert Cox and Nicolas Colucci. This was the first stakeholder conference call for the new EB-5 Program Director, Nicolas Colucci. Mr. Colucci highlighted a few suggestions for I-526 Petitions, which included ensuring each I-526 Petition is filed with an up-to-date TEA letter, providing line-by-line translations and clearly indicating on an I-526 Petition the applicant’s name, regional center identification number and new commercial enterprise name. Mr. Colucci stated that I-485 and I-829 Petitions will still be adjudicated at the California Service Center and I-526 and I-924 Petitions will be adjudicated at the Investor Program Office (IIPO) in Washington, D.C. Mr. Colucci is overseeing the transition of the EB-5 Program to the IIPO and warned there may be temporary slowdowns in processing times as new employees are on-boarded at the IIPO. The IIPO is looking to have a total of approximately 100 staff by end of the fiscal year, or September 30, 2014. However, Mr. Colucci anticipates reducing processing times after training new employees; and through this new training hopes to increase consistency across the board in adjudications.
A few of the highlights from the question and answer session included:
- ELIS System. USCIS is still implementing this system to ease filing of I-526 Petitions.
- Customer Service. Mr. Colucci stressed USCIS is looking to decrease processing times.
- Regional Center Geographic Scope. USCIS stated that expansions of the geographic scope of a regional center should be to areas which are contiguous to the current approved regional center area. However, USCIS did not define “contiguous” and it is still ambiguous whether this is contiguous counties or contiguous metropolitan areas.
- Collections of TEAs. Multiple TEAs are allowed so long as i) the job creating enterprise(s) are principally doing business in that TEA and ii) the job creating enterprise(s) are located within the regional center’s geographic scope.
- Sale of Regional Centers. USCIS stated that a sale of an existing regional center entity is “not prohibited.” However, USCIS must be notified within 30 days of such sale, which would most likely be done through a filing of Form I-924A. Further, USCIS may request an amendment to the regional center designation.
- Job Creation Credit for Guest Expenditures in Hotel Developments. USCIS stated these are permissible so long as the underlying market and economic statistics supports inclusion. USCIS noted that this credit for guest expenditures will typically occur where a project is unique to a certain area and is therefore drawing new demand to that area, rather than cannibalizing existing demand. Examples of this include a budget hotel where none exists, a 5 star hotel where none exists, a long-term stay hotel where none exists or a hotel which was built to serve a new entertainment/sports venue.
- I-829 Petition Evidence. USCIS stated the type of evidence necessary for an I-829 Petition will be driven by how the economic calculations were done at the I-526 Petition stage. For instance, if at the I-526 Petition stage job creation was calculated using revenues of a project, evidence of those revenues would need to be proven at the I-829 Petition stage.
- Bridge Financing. USCIS reiterated that bridge financing is permissible so long as the financing to be replaced by EB-5 funds was contemplated as short-term bridge financing. It is of note that the initial bridge financing does not have to be procured with the plan to have EB-5 funds replace such initial bridge financing, merely that the initial bridge financing was procured in contemplated of long-term financing replacing such initial bridge financing.
- TEAs Filed with I-924 Applications. TEAs do not need to be filed with an I-924 Application, so long as the I-924 Application contains underlying evidence supporting that a TEA determination may eventually be issued.
Overall, the conference call was very productive and USCIS was very responsive to some of the questions and concerns held by EB-5 stakeholders. It was interesting to note that the newly nominated USCIS Chief Leon Rodriguez was not present. Furthermore, a representative of the Financial Industry Regulatory Authority (FINRA) was on the call and requested clarification regarding the definition of “at risk.” FINRA is the largest independent securities regulator in the U.S. and their chief role is to protect investors by maintaining fairness in U.S. capital markets. The participation of a FINRA representative as a stakeholder is a positive sign for the future of the EB-5 Program.
The I-829 petition is the last and most important step in an investor’s long journey towards permanent resident status. An EB-5 immigrant investor’s permanent resident status is conditional; the green card is valid only for two years. To obtain unconditional permanent resident status, an investor must file an I-829 petition within the 90-day period immediately prior to expiration of the two-year conditional residence period. If the I-829 is approved, the investor is able to remain in the United States permanently. If denied, the investor is placed in removal proceedings.
In order for the conditions on an investor’s status to be removed, it must be demonstrated that: (1) the new commercial enterprise was established; (2) the investor has invested the required capital in the new commercial enterprise; (3) the investment has been “sustained” and not been returned to the investor; and (4) that jobs have been created or will be created within a reasonable time. Although difficulties can arise in providing sufficient evidence of the first three requirements, the increasing complexity of EB-5 investments have created new issues in establishing that the investor created or can be expected to create within a reasonable time ten full-time jobs for qualifying employees. Two such examples exist when: (1) a tenant of a resulting project makes improvements to the building; and (2) the new commercial enterprise lends money to a borrower, but new commercial enterprise is not in privity of contract with all of the borrower’s job creating entities.
For regional centers and project companies, jobs created through construction are typically the easiest to prove. This is the case for two reasons. First, projects usually meet or exceed the construction budget and the jobs are therefore deemed created. Second, routine construction auditing can show that the construction’s hard and soft costs have been spent can be easily documented and proven. However, issues can arise in documenting the creation of construction jobs when a tenant moves into a building and makes tenant improvements. For these construction jobs to be counted, it must be established that the investor’s money was spent by the tenant in making these improvements. A solution to this issue is to have the developer enter into an agreement, usually through the lease, obligating the tenant to provide information on where and how much money has been spent.
A second area of concern is where the new commercial enterprise lends money to a borrower, but the borrower is not the only job creating entity. In this situation, the new commercial enterprise may find itself in a difficult position. It will need to get the necessary job creation information from all of the job creating entities, but they are only in a contractual agreement with the borrower. As a solution to this problem, the new commercial enterprise should attempt to strengthen the loan agreement with the borrower to require the borrower to enter into separate side agreements with the other job creating entities. These separate side agreements between the borrower and the other job creating entities would require the job creating entities to produce the necessary information regarding the job creation from the loan.
Greenberg Traurig Co-Chairman Cesar Alvarez was honored in Miami, Florida for having recently received the 13th Annual Keepers of the American Dream Award with fellow Miami award recipient chef and restaurateur Jose Andres. The award is given by the National Immigration Forum, an organization that promotes responsible federal immigration policies, addressing today’s economic and national security needs while honoring the ideals of our Founding Fathers, who created America as a land of opportunity. Alvarez and Andres received the award in October at the annual gala alongside follow award recipients Mary Kay Henry and Ralph and Cheryl Broetje. To learn more about the National Immigration Forum, please visit their website.
The EB-5 program contributed $3.39 billion to the U.S. GDP and supported over 42,000 U.S. jobs during 2012. This is according to the “Economic Impacts of the EB-5 Program 2012: An Economic Development Program for the 21st Century” report released by the Association to Invest in the USA (IIUSA). These results are more than double than those seen in the 2011 report.
The following results are among those highlighted by IIUSA in the 2012 report:
- “Total economic impact, combining the benefits of EB-5 investments, household spending of immigrant investors and other EB-5 related spending, was $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs.
- Investment represents the largest component of EB-5 spending, with approximately $1.8 billion invested by EB-5 Regional Center investors. These investments contributed $2.5 billion to U.S. GDP and supported 33,134 American jobs.
- Over 85 percent of EB-5 investment capital – $1.55 billion – was invested in the construction sector. Other sectors seeing EB-5 investments include chemical manufacturing, mining, manufacturing, and power generation.
- Pennsylvania, New York, California and Illinois top the list of states with the largest level of investment, and these saw the largest investment impacts. For example, more than 8,000 jobs were supported in California.
- Household spending by immigrant investors and their families contributed approximately $383 million to US GDP and supported more than 4,700 jobs in 2012. The economic impact of household spending represents a permanent impact on the U.S. economy, as these families maintain spending patterns year after year.
- Spending on EB-5 related immigration services contributed approximately $477 million to U.S. GDP and supported nearly 5,000 jobs in 2012. These expenditures include spending on flights, moving services, cars, investment and legal services and government fees.”
The report uses well-established economic modeling methods to track data on I-526, I-829, and I-924A applications, as well as approval/denial statistics for EB-5 Regional Centers to determine GDP and job growth impacts. IIUSA uses data measured by state and by impacted industry sector. This includes federal, state, and local tax revenue from EB-5 investments and household spending by investors.
IIUSA is the national trade association representing EB-5 Regional Centers. To view the “Economic Impacts of the EB-5 Program 2012: An Economic Development Program for the 21st Century” report, visit the IIUSA website.