On June 14, 2017, USCIS issued a notice that it had revised its Policy Manual as it relates to the job creation and “at risk” requirements for EB-5 investors. USCIS’ announcement can be found here. For the first time USCIS is expressly permitting what is known as “redeployment,” which is the use of EB-5 capital for an activity after such EB-5 capital has been used in accordance with the business plan on file with USCIS.
USCIS outlined that any redeployment must adhere to the following guidelines: (1) it must be within the scope of the new commercial enterprise’s business; (2) it must done within a commercially reasonable period of time; (3) must ensure the EB-5 capital remains “at risk,” which USCIS has vaguely defined as “…used in a manner related to engagement in commerce (in other words, the exchange of goods or services);” and (4) must be “…adequately described…” in the I-526 Petition.
These guidelines make it quite clear that in order to comply with the “at risk” requirement in a redeployment scenario, the EB-5 capital must be deployed into an actual commercial activity which involves the exchange of goods and services. This would appear to rule out the redeployment of EB-5 capital into financial products such as treasury bills, stocks, mutual funds, or money market investments. These requirements also appear to constrain redeployment to commercial activity which is “…within the scope of the new commercial enterprise in existence at the time…” of filing the I-526 Petition. Thus, for those EB-5 investors who have already filed, any redeployment will likely have to be something similar to the original use of the EB-5 capital.
During the adjudication of an I-526 Petition, USCIS will be evaluating proposed redeployment in accordance with the aforementioned guidelines. USCIS did clarify that, if an I-526 Petition did not contemplate redeployment, redeployment would not be a material change at the adjudication of an I-829 Petition regardless of whether or not the original job creating activity specified in the original I-526 Petition was undertaken and/or completed. However, such redeployment would still need to satisfy the “at risk” requirements discussed above (i.e. deployed into an actual commercial activity) and the original I-526 Petition must have been filed in good faith.
This new policy by USCIS is significant because it realistically mandates redeployment for a new commercial enterprise which has an EB-5 investor born in mainland China. For reference, EB-5 investors born in mainland China are subject to what is known as retrogression, whereby they must wait a certain period of time to obtain an immigrant visa after receiving approval of their I-526 Petition. The projected wait time is currently estimated at 5-6 years for individuals who are filing I-526 Petitions today. Accordingly, an EB-5 investor born in mainland China will not become a conditional permanent resident for approximately 6 years, at which point they will be a conditional permanent resident for 2 more years. Thus, the effect of USCIS new policy is that EB-5 capital must be invested in a commercial activity for approximately 8 years, with only commercially reasonable interruptions during those years.
You should contact an attorney at Greenberg Traurig for any specific questions.
As of May 26, 2017, USCIS is processing Form I-924 applications filed on or before Sept. 16, 2015. This reflects a greater than 20-month processing time for Form I-924. This is most likely the longest processing time in the history of the Regional Center EB-5 Program, and is certainly the longest processing time USCIS has publicly acknowledged (the California Service Center, which previously adjudicated Form I-924, did not publicly post processing times for Form I-924s).
The long processing times for Form I-924 have a detrimental effect on the ability of the Regional Center EB-5 Program to continue to be viable. For instance, many investors do not want to invest in a new commercial enterprise which has not been approved by USCIS through an exemplar Form I-924. However, in order to be eligible to receive approval of an exemplar Form I-924, the application must include more details than a hypothetical or actual project, and the project itself must be “shovel ready.” In order for a project to be “shovel ready,” the project typically has to be ready to proceed with substantial construction at the time of filing the exemplar Form I-924. One way to demonstrate this is to show that all financing (save for the EB-5 financing) is in place and all permits necessary for the project to move forward have been secured.
Therein lies the tension between USCIS’ processing times and the standards of approvability for an exemplar Form I-924. If it takes over 20 months for an exemplar Form I-924 to be approved, and the project was ready to be constructed at the time of filing, the project may be fully constructed by the time the exemplar Form I-924 is finally approved. This is a big issue for projects which require EB-5 financing to be completed. If receipt of that EB-5 financing is contingent upon the approval of the exemplar Form I-924 (or approval of a Form I-526, which takes longer to process than an exemplar Form I-924), the project likely will not be able to move forward until such approval is received. However, USCIS, during its adjudication of the exemplar Form I-924, will likely issue a request for evidence on why the initial timeline for the project has not been met. Thus, these projects are stuck in a catch-22 where USCIS wants to see timelines adhered to which are contingent on receipt of EB-5 financing. Additionally, in the past two years legislation has been proposed to mandate approval of an exemplar Form I-924 prior to soliciting capital from investors or filing a Form I-526. The current Form I-924 processing times make clear this is an unworkable standard.
The current solution to this issue is the procurement of bridge financing sufficient to allow the project to proceed on an interim basis until USCIS adjudicates the exemplar Form I-924. If bridge financing cannot be obtained, the project and its investors may suffer as a result of USCIS’ increasing processing times.
USCIS recently announced the release of a new edition of Form I-829, with the new edition dated April 21, 2017. Starting on July 24, 2017, USCIS will only accept the April 21, 2017, edition. Until then, investors can use the May 7, 2015 edition. Both editions of Form I-829 are available to download at no cost on the USCIS website. The revised Form I-829 more closely resembles the requests and structure of the revised Form I-526. For instance, the Form I-829 now requests the receipt number of the approved Form I-924 associated with the Form I-829. Additionally, the revised Form I-829 has space for listing multiple job-creating entities, similar to the revised Form I-526. The revisions to the Form I-829 appear consistent with USCIS’ desire to extract more information via forms for EB-5 petitioners.
The Form I-829 is important because it is the last step in the journey of an EB-5 investor. The Form I-829 should be accompanied by evidence that (i) the investor has invested, or was actively in the process of investing, the required amount of capital, (2) the investor sustained this investment throughout the period of conditional permanent resident, and (3) the new commercial enterprise created or can be expected to create, within a reasonable time, at least 10 full-time positions for qualifying employees. Upon approval of the Form I-829, investors receive unconditional permanent residency.
Kate Kalmykov participated in a press conference that discussed common issues facing nationals of China who apply for EB-5 visas. Specifically, she discussed how the current visa backlog may affect EB-5 visa applications moving forward and the legislative outlook for 2017.
Kate Kalmykov discusses common issues for Chinese foreign nationals while at the Invest in America 2017 Summit
For the third year in a row, Greenberg Traurig Attorneys Kate Kalmykov and Laura Reiff were honored to receive the “Summit Ambassador Award” awarded by Invest in America during the summit in Shanghai on May 6.
Kate Kalmykov accepts the Summit Ambassador Award at the Invest in America Summit in Shanghai.
Laura Reiff receives the Summit Ambassador Award for the third year. Accepting on her behalf is Jennifer Hermansky.
On May 6, 2017, Greenberg Traurig’s EB-5 team attended the 2017 Invest in America Summit events in Shanghai to kick off the largest U.S.-themed investment conference and exhibition in China. The Summit was held in four major Chinese cities: Shanghai, Shenzhen, Beijing, and Guangzhou.
Invest in America welcomed U.S. investment projects, regional centers, real estate brokerage firms, franchises, private equity and venture capital companies, financial services, attorneys, CPAs, international trade agencies, government officials, and colleges to participate in exhibitions and presentations. Started in 2011, the event hosted over 20,000 of China’s premiere business executives, private investors, and more than 400 emigration agents from all across China and around the world. The Summit provided information to investors and business executives who were eager to learn more about investment and business opportunities in the United States. For more information about the summit, please click here.
Once again, Kate Kalmykov spoke at the 2017 Invest in America Summit and Exhibition presenting in Shanghai on Hot Topics in Retrogression and in Beijing on Source of Funds/Path of Funds. Jennifer Hermansky provided insight on the Alternative Visa Options panels in Beijing and Guangzhou. Additionally, this year the Summit hosted breakout seminars in Hangzhou, Chengdu, Qingdao, Chongqing, Shenyang, and Harbin. Jennifer Hermansky was the keynote speaker in Harbin on Hot Topics in Legislation.
Kate Kalmykov welcomes guests to the 2017 Invest in America opening ceremony
Greenberg Traurig presents to the Invest in America audience
Kate Kalmykov presents in Beijing along with Cletus Weber
Kate Kalmykov provides insight into Source of Funds
Kate Kalmykov and Jennifer Hermansky greet guests at the Greenberg Traurig booth
Kate Kalmykov on the panel discussing Hot Topics on Retrogression
On Thursday, May 25, the U.S. Court of Appeals for the Fourth Circuit, in an en banc decision, affirmed a nationwide preliminary injunction on President Trump’s revised travel ban that was issued March 16, 2017, by a U.S. District Court judge in Maryland. President Trump’s new executive order (EO), “Protecting the Nation from Foreign Terrorist Entry into the United States,” which would have gone into effect March 16, 2017, temporarily bans U.S. entry for nationals from six Muslim-majority countries, including Iran, Libya, Somalia, Sudan, Syria, and Yemen.
In a 10-3 ruling, the Fourth Circuit upheld the lower court’s preliminary injunction barring the administration from suspending visa issuance and preventing entry for nationals from the six countries. The Appellate Court opined that the revised EO served more to effectuate the president’s agenda of religious discrimination against Muslims rather than its stated purpose to protect national security and prevent possible terrorist attacks. The opinion also stated that a “reasonable observer” could find that the primary goal of the revised EO “appears to be religious, rather than secular.” Furthermore, the Fourth Circuit held that while the president does have “broad power to deny entry” to immigrants, such power is not absolute.
On May 15, the Ninth Circuit heard oral arguments on the travel ban in a similar appeal from the U.S. District Court for the District of Hawaii. Its ruling is expected within the next several weeks. However, as long as the Fourth Circuit’s nationwide injunction remains in effect, President Trump’s revised travel ban for nationals of the six countries will remain blocked regardless of the Ninth Circuit’s ruling.
Greenberg Traurig will continue to monitor developments and provide updates in connection with President Trump’s revised EO.
The Omnibus bill that will continue to fund the federal government until Sept. 30, 2017, was passed in both the House of Representatives and the Senate on May 4, 2017, and was signed by the president on May 5, 2017. Of note, the bill continues a provision that will extend the EB-5 Regional Center Program as-is until Sept. 30, 2017. While the Omnibus bill does not contain provisions that will alter the program, including minimum investment amounts, TEA designations, or integrity measures, stakeholders should be reminded that the comment period for the proposed EB-5 regulations closed on April 11, and that the comments are currently in the review stage. Following DHS review, the regulations will be sent to OMB (Office of Management and Budget)/OIRA (Office of Information and Regulatory Affairs) for final review and approval. If and when the regulations are published as final in the Federal Register, implementation can be as soon as a minimum of 30 days from the publishing date. In addition, there have been many productive discussions with members of Congress regarding EB-5 reform via legislation, with drafts of legislative text circulated. Major EB-5 stakeholders have been working diligently to come to a compromise with members of Congress. Greenberg Traurig will continue to monitor the status of the EB-5 proposed regulations as well as any legislative activity between now and Sept. 30, 2017.
Congress is poised to extend the EB-5 Regional Center Program through Sept. 30, 2017, without any changes. The House Appropriations Committee submitted a proposal on Continuing Appropriations in the early morning of May 1, 2017. We expect the Omnibus Appropriation bill to proceed to House Rules Tuesday, May 2, with a vote on the House floor on Wednesday, May 3. The bill will then proceed to the Senate with time to meet the short-term patch deadline for approval by midnight Friday, May 5.
There has been an ongoing effort to include an industry-consensus EB-5 reform bill in this legislative package. While we continue to work toward a comprehensive, workable solution to EB-5 reform, it is possible that this effort will not be included at this point due to agreements above-and-beyond EB-5, and that we will merely see an extension of the program.
For more information, please see:
Bill text (p. 734): SEC. 542. Section 610(b) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) shall be applied by substituting ‘‘September 30, 2017’’ for ‘‘September 30, 2015’’.
Explanatory Text (p. 65): Section 542. A new provision is included extending the Regional Center program within the “EB-5” immigrant investor program authorization until Sept. 30, 2017.
Greenberg Traurig Shareholder Kate Kalmykov was recently quoted in The Jerusalem Post’s article, “Trumps Visa Policy May Harm Israeli Hi-Tech Innovators.” In the article, Kalmykov addresses Israeli hi-tech companies options for visas when looking to relocate employees to the United States. To read the full article, click here.