China Quota Retrogress in May

The Department of State May 2015 visa bulletin was released today.  It contains a cutoff date of May 1, 2013, for the EB-5 China quota (not other countries).

Attached is my memo explaining quota retrogression, which I have expanded to address a few questions I have been asked in the past few days and a Chinese translation.

I have been asked whether retrogression will impact EB-5 investments and I-829 applications for removal of conditional resident status.

For example, often EB-5 involves an investment in a New Commercial Enterprise (“NCE”) that loans the funds for 5 years to build a project such as a hotel.  Suppose, due to retrogression, immigration is delayed and this stretches out the time frame before conditional residents can file the I-829 (2 years after admission). The I-829s may not be decided before the loan is due to be repaid.  The EB-5 rules require the investment to be maintained until the I-829 is decided.  Will the investors’ I-829s will be impacted?

First, most EB-5 offerings provide that the loans cannot be repaid until the I-829s are decided.  If the loan is for 5 years, the terms provide for extension of the repayment time to protect the I-829s.

Second, many EB-5 experts believe USCIS will soon be forced to modify its policy to take into account the possible impact of retrogression and permit the repayment of the loan by the project to the NCE, but not to the investor.  The NCE may then bank the funds, provided the needed jobs were created, until the I-829s are granted and then return the investor capital.  In light of retrogression, I have posed this scenario to USCIS, but they have not yet stated their policy.  I believe the government’s policies will have to be modified in light of the new reality brought on by retrogression.