Note: A version of this article by NES Financial’s Assistant General Counsel Jill Jones was published on Bloomberg and can be read here.
Any discussion regarding the EB-5 industry these days inevitably includes the words “retrogression,” “backlog,” and “long processing times.” And for good reason. Although USCIS’ published adjudication time for the conditional green card petition is now between 29 and 45.5 months, due to visa backlogs, the actual wait time to obtain an EB-5 visa is much longer. For Mainland born Chinese nationals who file an I-526 Petition today, it may take as long as 16 years to receive a green card. The backlog is not exclusive to China. Vietnam joined the list last year and most recently, India joined as well. It is predicted that South Korea, Taiwan and Brazil are next.
With the general lack of guidance, other than what we saw in the June 2017 Policy Memorandum, on redeployment from USCIS, many investors who are in the queue for visa availability are considering whether it is worth it to have their funds redeployed in order to continue pursuing an EB-5 visa. The specific reasons investors may opt to withdraw vary among individual investors but often hinge on whether their children may “age out” and no longer qualify as derivative beneficiaries at the time the EB-5 visas become available, or simply general frustration that wait times are too long with no signs of a clear outcome. Foreign nationals who have made the decision to uproot their families and relocate to the U.S. are averse to such uncertainty in the immigration process, particularly immigrant investors who, in addition to immigration risks, also expose their capital to market risks in order to comply with EB-5 Program requirements.
In addition to the hardships imposed on the EB-5 investors, the EB-5 backlog can also negatively impact regional centers and real estate project developers who have raised EB-5 capital over the years.
Tom Rosenfeld, President and CEO at CanAm Enterprises, a leading regional center operator that has been active in the EB-5 industry for more than 15 years, agrees: “The visa backlog is currently the main drawback of the EB-5 Program for all parties involved, from investors and regional centers to project developers. We need visa relief to make the EB-5 Program viable for the long-term. Prioritizing legislative changes that afford visa relief is an imperative for all EB-5 stakeholders.”
It seems that since May 2015, when retrogression first impacted Mainland born Chinese investors, we have been discussing how to get more visas allocated to the EB-5 Program. Similar to many industries, legislative relief lags behind the demands of the market. Several Senators have brought backlog issues to the attention of fellow congressional representatives, with Senator Rand Paul (R-KY) being among the most vocal proponents of the EB-5 Program and particularly, visa backlog relief. There are some possible changes on the horizon that could give hope to the thousands of backlogged EB-5 investors.
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