Latest EB-5 News

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July 15 2013

Latest Developments

In the past few weeks, I have been to the IIUSA and American Immigration Lawyers Association conferences. Also, the Senate passed its comprehensive immigration reform bill with EB-5 reforms I previously discussed. The House started work on its own immigration bill. News reports say the House will only vote on a bill approved by a majority of Republicans. While most congressional representatives – Republicans and Democrats – like the EB-5 program, there is considerable doubt about the House passing an immigration bill with the mostly positive Senate “Leahy Amendment.” I also spoke to a congresswoman this weekend who said the Republicans are against any immigration bill and the only way it will pass is if Speaker Boehner backs it, which may mean he loses his speakership.

Potential House Bill Disaster

While I believe most congressional representatives like the EB-5 program, the House immigration bill, called the “SKILLS Visa Act,” contains an EB-5 provision stripping the states of the authority to issue targeted employment area (“TEA”) certification letters. I strongly urge you to personally tell your congressional representatives to kill this provision. Here is why:

  • The states generally have done a good job with TEAs.
  • The states are very responsive.
  • The states understand investment and local job creation is beneficial.
  • The Feds are extremely rigid and difficult to deal with.
  • The new federal agency that would issue TEA letters would be the Bureau of Labor Statistics in the Department of Labor (DOL).

-   The DOL is hostile to businesses.

-   The DOL track record with immigration is abysmal. The DOL is already involved in immigration in two ways. First, for certain visas the DOL must certify that employers cannot fill the position with a U.S. worker. Second, the DOL sets minimum wage requirements for H-1B non-immigrant workers, which is authority that the states used to have. The DOL is unresponsive, refuses to take calls and also sets unrealistically high wages.

  • Even if your regional center project is clearly now in a TEA, this issue is important as you may expand to nearby areas where a TEA letter will be needed.
  • Changing the TEA rules will create uncertainty that will harm the EB-5 program. Regional centers will not know what areas the DOL will choose as TEAs. Investors will be spooked if a project is a TEA at inception but may lose TEA status before all the investors’ funds are in. Funds in escrow do not count until the I-526 is filed.
  • Canada is reopening its investor immigration program, creating competition with the U.S. program, providing even more reason for the U.S. program to be stable and predictable.
  • I believe the House bill may result in the end of TEAs consisting of combined census tracks and possibly the use of local political subdivisions as TEAs.

Please fight this unnecessary proposal!

SEC Enforcement

There are reports that the SEC is interested in the EB-5 program and the excessive fees paid to agents in China. The IRCTC (“Intercontinental Regional Center Trust of Chicago”) regional center SEC seizure was an eye opener for the SEC. The migration agents in China were paid exorbitant fees and did nothing to protect their investors in IRCTC.

While I am on the topic of IRCTC, I have heard that investors frequently ask regional centers about “the Chicago” regional center failure. One may point out that the U.S. government actually protected the investors’ money and ensured it was returned (the $500,000 – the $50,000 subscription fees may have been lost).

Alejandro Mayorkas Moves Upstairs

USCIS Director Alejandro Mayorkas will move to the position of Deputy Secretary of the Department of Homeland Security. Never before have we seen a USCIS director so engaged and interested in a particular type of visa as Mr. Mayorkas (who has said “call me Ali”) was with EB-5 visas. But under Ali’s tenure, processing times have skyrocketed, and USCIS imposed new, harsh policies, such as restricting the use of the “tenant occupancy” methodology and guest expenditures to forecast job creation. Moreover, USCIS denied the tenant occupancy policy was new and applied it retroactively! We will see whether his replacement continues to focus on the EB-5 program and whether the resulting effects will reduce the great backlog and slow times to decide cases.

Washington, D.C. Opens for Business

USCIS has opened and is staffing the new EB-5 unit in Washington, D.C. It will gear up as the California Service Center continues to “reduce” the 5,000 to 7,000 I-526 and other backlogged petitions.

Future Quota Backlogs?

If the USCIS processes 5,000 EB-5 petitions in the next 6-8 months, the 10,000 EB-5 annual visas will probably be exhausted in FY 2014 (October 1, 2013 to September 30, 2014), creating a waiting time for visa numbers.

I hope that a new immigration bill will contain a provision to exempt dependents from having a visa number, as Sen. Leahy’s amendment provides. Doing so would free up to thousands of visa numbers but, as I said above, the bill is in doubt.