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US green card availability to increase beginning October 1

visa-perm

Effective October 1, 2016, green cards will become more readily available for most people immigrating to the United States on employment-based (EB) immigrant visa categories.

The US State Department announced in the October 2016 edition of its Visa Bulletin that the agency is processing requests under the EB1 category for all countries of birth, effective October 1. This category includes aliens of extraordinary ability, outstanding professors and researchers, and multinational managers and executives, regardless of place of birth. During the summer, the agency reported a lengthy backlog for EB1 immigrants born in mainland China and India.

The EB2 category—for professionals with an advanced degree and aliens of exceptional ability—is also immediately available, except for individuals born in mainland China and India, for whom the category is backlogged to February 15, 2012, and January 15, 2007, respectively.

The EB3 category—for professionals and skilled workers—has limited available for all places of birth. That said, the backlog for most places is to June 1, 2016, and it is not likely to slow the process of immigration, since the Department of Labor generally takes more than four months to grant the alien employment certification application, often referred to as PERM, longer and that is a prerequisite for EB3 immigration.

The EB5 category—for investors—is currently available for all places of birth except mainland China, which continues to be where the majority of EB5 immigrants are born. EB5 is unavailable for China-born investors in projects in Regional Centers, while EB5 is available to China-born investors in non-Regional Center projects who have I-526 immigrant petition receipt dates on or before February 22, 2014.

There is an annual limited supply of immigrant visas in all EB categories that is replenished effective October 1, the first day of the new fiscal year. In categories where the annual demand tends to be greater than the limited supply, the Visa Bulletins issued for October through April often show the most movement. There is often more movement in the dates for individuals born in mainland China and India during these months. The EB1 and EB5 dates that have improved so much since the September 2016 Visa Bulletin are likely to retrogress once again later in the fiscal year, but the State Department did not release a prediction as to when or by how much.

The full text of the October 2016 Visa Bulletin can be found here.

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US green card availability to increase beginning October 1

US government immigration fee increase proposed

Rising Prices ahead

On May 4, 2016, the US Citizenship and Immigration Service (USCIS) published notice of a proposal to increase certain government filing fees and create a new fee. The average increase is 21 percent, but the highest increases are for the visas used by American businesses to bring skilled workers to the United States, immigrant investors creating jobs for Americans and immigrants acknowledged to have extraordinary ability.

A 42 percent increase is proposed for the Form I-129 used for the most common work visas, including H-1B professional, O-1 extraordinary ability, and L-1 intracompany transfer visas, as well as E-1 treaty trader, E-2 treaty investor and E-3/FTA H-1B1/TN treaty professional visas processed in the United States rather than at an American consular post or Preflight Inspection Unit abroad. A 42 percent increase is also proposed for the Form I-140 used for EB1, EB2 and EB3 employment-based immigrant visas.

If 42 percent seems outrageous, the increase proposed for the Form I-526 required for an EB5 immigrant investor creating at least 10 jobs for American workers is 145 percent.

Family-based immigration fares better, with only a 27 percent increase proposed for the Form I-130 used by United States citizens and lawful permanent residents to sponsor certain close relatives to immigrate. The Form I-485 required for immigrants who process through the USCIS instead of an American consular post abroad is proposed to increase only 16 percent.

The USCIS explains that the fee increases are required to recover costs for their services and to maintain adequate service. Current service is far from adequate. Although Congress mandated USCIS processing timelines in the American Competitiveness of the 21st Century Act of 2000 (AC21), almost 16 years later the agency continues to consistently fail to meet the standards set by law.

AC21 set 30-day processing times for most employer-sponsored nonimmigrant visas and 180-day processing times for most employer-sponsored immigration. Processing times tend to be at least twice as long or worse. Instead of 30 days, five months is the processing time currently reported for Form I-129 H-1B visa extensions, for example, and the USCIS California Service Center reported that as of February 29, 2016, the agency was currently processing Form I-485 immigrant applications received before May 17, 2014!

The agency has not increased fees in many years. Proposed fee increases usually become final fee increases without significant, if any, change—most likely later this summer.

There is a 60-day comment period. Guidance on how to submit comments is in the notice. The full text of the USCIS notice can be found online at the Federal Register.

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US government immigration fee increase proposed

EB-5 China backlog

Now later

The United States State Department announced in the May 2015 Visa Bulletin that conditional resident status based on the EB-5 immigrant investor visa is currently available only to individuals born in China whose I-526 immigrant petitions were received on or before May 1, 2013.  EB-5 remains immediately available to immigrants born in all other countries.  Further, this backlog does not impact pending I-526 and I-829 petitions, regardless of country of birth.

The fiscal year begins on October 1.  According to the State Department’s Visa Control and Reporting Division Chief, 2,525 EB-5 visas remain available this fiscal year to people born in all countries other than China.  China has already used 6,819  or 88.56% of the EB-5 allotment for this fiscal year.  Vietnam is the second largest user this year, with a mere 244 EB-5 visas, followed by Taiwan, India and South Korea.  The State Department anticipates that the other countries will not use up all of the remaining EB-5 visas and estimates about 1,000 more EB-5 visas will be released to immigrants from China before the current fiscal year ends on September 30, 2015.

EB-5 immigrants from all countries can continue to file and obtain approval of I-526 immigrant petitions.  In fact, filing the I-526 as early as possible is more important than ever, since it is the I-526 receipt, also known as the priority date, that is ultimately used for quota purposes.  Approximately 10,000 new EB-5 visas will become available on October 1, 2015, when the new fiscal year begins.

For more information, check out the May 2015 Visa Bulletin.

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EB-5 China backlog

Much ado about nothing

Work work work

On March 24, 2015, the Department of Homeland Security’s (DHS) Office of the Inspector General (OIG) issued a report critical of former Citizenship and Immigration Services (USCIS) Director and current DHS Assistant Secretary Alejandro Mayorkas’ handling of the EB5 immigrant investor visa program entitled “Investigation into Employee Complaints about Management of U.S. Citizenship and Immigration Services’ EB-5 Program. ”

One would be forgiven for thinking that a great problem with the EB5 program was revealed that needed immediate attention, from some politician press releases and reports from certain news services that seem to have only read these releases and not the 97 page report.

Not true.  Here is what the report concludes:

Mr. Mayorkas’ actions in these matters created a perception within the EB-5 program that certain individuals had special access and would receive special consideration. It also lowered the morale of those involved.

No finding of special access or special consideration, only “created a perception” of this to some USCIS staff who reported that “lowered the morale of those involved.”  I can already predict how John Oliver of Last Week Tonight will lampoon the government for these revelations.

To put this into context, former Director Mayorkas led the USCIS in 2013 when the DHS OIG issued an earlier report recommending that the agency and Congress make a number of changes to the way the EB5 program was handled.  That report is available at the DHS OIG web site.

Mr. Mayorkas led the implementation of those changes, which resulted in the creation of the Immigrant Investor Program Office (IPO) and major changes to the USCIS employees responsible for administering the program, including hiring new staff trained in securities law, fraud detection, and economics, and relocation of the office from California to Washington, which resulted in additional staff changes.  Further, he brought in Nicholas Colucci, then Associate Director at FinCEN – the Financial Crimes Enforcement Network, which is the anti-money laundering regulator for US financial institutions – to serve as IPO Chief instead of promoting from within.

That feathers were ruffled for a small group of 15 miffed USCIS employees comes as no surprise. As the President of the American Immigration Lawyers said in response to the report:

But when have you ever heard of a large organization in which everyone wholeheartedly embraced changes to the way things have “always been done”? Mr. Mayorkas was responsible for leading an agency with some 15,000 employees in 200 offices across the world. The EB-5 program was just one of dozens of programs led by Mayorkas, with many of them troubled by some of the problems that have plagued EB-5. All too often its decisions failed to meet the “fundamental threshold for rational decisionmaking,” in the words of one federal judge overruling a decision denying a visa petition.

The EB5 program creates jobs for American workers, most often in areas targeted for rates of unemployment 150 percent or more above the national average.  For every 10 fulltime-equivalent jobs for American citizens and lawful residents created, an EB5 immigrant makes a minimum $500,000 investment and sometimes more than twice that amount.

USCIS processing of EB-5 cases is slow, very slow.  Slower than any other immigrant visa petition handled by the agency.  While the USCIS processes most petitions within four to five months and even offers a 15-day premium processing service for many, EB-5 petitions on the average languish for three times as long or longer before an officer is assigned and begins work.  And that is just the first step of the multiyear process to obtain permanent resident status, with an immigrant’s invested funds committed to and at risk in the American investment during the entire period, often five years.  It is this slow agency processing that jeopardizes the EB-5 program more than anything else.  Leadership to improve the speed at which USCIS staff work should be encouraged even if it also lowers morale.

Congressional action is needed.  The pilot program portion of the EB-5 program expires September 30, 2015, as it has every three years since enactment.  Every three years, Congress waits until the last minute and then votes to renew the program for another three years, sometimes taking action only after the program expires.  Every three years this creates uncertainty for the American workers whose jobs are created by the EB-5 program, the American businesses that rely on the EB-5 immigrant investors for financing, and the immigrant investors themselves who rely on the EB-5 program to create a new home for their families in the United States.  Congress needs to act quickly to renew the program and not jeopardize this important tool for American job creation.

The full text of the report is available at the DHS OIG web site.

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Much ado about nothing

EB5 immigrant investors: Comparison of Traditional and Pilot Programs

EB5 Puzzle

Investors, their spouses and unmarried children under 21 can become US permanent residents by creating (or saving) jobs for US workers through investment. This is the employment-based fifth preference immigrant visa (EB5), of which there are two types.

The first type of EB5 was created by Congress in 1990, has no expiration, and is called the “Traditional” or “Basic Program.”

The second type was created in 1992 and is commonly referred to as the “Pilot Program” or “Regional Center.” The Pilot Program, as the name suggests, is only a temporary law that  expires. It has been regularly renewed every few years.  The current Pilot Program expires in 2015.

While some of the requirements for the Traditional and Pilot Program EB5 are the same, there are very important differences. The choice of what type is best often varies depending on the needs of the individual investor and the investment project.

Here is a comparison of the two EB5 programs:

Expiration.  The Pilot Program EB5 expires; Traditional EB5 does not. This is an advantage of the Traditional EB5.

In 2012, the Pilot Program was extended for three years. Since it became law in 1992, Congress has regularly extended the Pilot Program. Sometimes the extension becomes law before the Pilot Program expires and sometimes after. The 2012 extension happened almost on the expiration date.

The temporary nature of the Pilot Program is a concern for the government-designated regional centers authorized by the Pilot Program. Investors are often concerned by the uncertain nature of the Pilot Program as a temporary law. This concern is especially acute every time that the Pilot Program nears expiration. Unless the EB5 immigrant petition is granted before the Pilot Program expires, it will be denied and the chance to immigrate through the investment lost.

Many ask if Congress will permanently authorize the Pilot Program.  Although this proposal is often discussed, there is no pending proposal before Congress at this time to make the Pilot Program permanent. In contrast, the Traditional EB5 does not expire. Individual investor immigrant petitions can continue to be processed at all times.

Job creation.  EB5 is the employment creation visa, not the investment visa. Creating jobs is key to approval of the EB5, regardless of whether the investment realizes profit or loss. Both Traditional and Pilot Program EB5 require the creation (or preservation) of at least ten full-time equivalent jobs for US workers.

Direct jobs. Both the traditional and Pilot Program EB5 count direct employment with the company in which the EB5 investment is made. The government looks to the payroll tax W-2 records and other evidence of direct employment.

Indirect and induced jobs. Only the Pilot Program EB5 counts indirect and induced jobs at other companies that are considered to be created as a result of the investment.

A typical example of indirect or induced jobs are the construction jobs created as a result of an investment in a company developing residential property. The construction company is their employer. The EB5 investor invests in the company that hires the construction company, which in turn hires the construction workers.

There are many types of indirect and induced jobs. The possibility to include these in counting the job creation can result in much higher job creation numbers. This allows for more investors to be involved in a common project, which in turn means there is more investor money available to fund larger, more expensive projects.  These are the types of investment opportunities that benefit from the Pilot Program.

But it is harder to count indirect and induced jobs. The normal payroll record approach is not an option.

Pilot Programs must apply to the government to be designated for the specific types of jobs that they plan to create to obtain government permission to count indirect and induced jobs. Additional rules apply to constructions jobs, which the government considers to be temporary and not counted except where the construction work will last for at least two years. This prevents the count of any (direct, indirect or induced) construction jobs for any shorter construction projects. Traditional EB5 does not require any government preapproval for specific types of job creation. Pilot Programs must submit detailed business plans that provide a detailed explanation of how and when the jobs will be created. The government reviews business plans carefully. Requests for Further Evidence or Notices of Intent to Deny are not uncommon if the government believes the business plan is insufficiently detailed or unsupported with sufficient backup documentation. Industry expert opinion statements may be required to substantiate claims about revenue projections, occupancy levels, etc. Traditional EB5 also requires business plans, except if all of the jobs are created prior to filing the immigrant petition.

Pilot Programs must obtain an economic analysis that uses one of the government approved economic models to forecast indirect and induced job creation. There are a number of private economists working with Pilot Programs. The process to obtain the economic analysis can be expensive and slow. The government recently hired its own economists to review the privately prepared economic analysis. The government economists have raised new questions in areas seemingly long resolved by the government. Some of their work has resulted in much lower job count, which means less EB5 investment money to fund projects. This has detrimentally impacted many Pilot Programs. Traditional EB5 does not require economic analysis.

Finishing quickly.  EB5 projects involving a single investor or a very small group of investors generally move through the immigration process faster than projects that involve large or very large groups of investors.

This is because most projects need a specific amount of investment from EB5 immigrants in order to hire all of the US workers and do business, including construction, if any. Until the project receives enough investors to proceed, the success of the project is in jeopardy. Big projects that require large numbers of investors can be under intense pressure to attract a sufficient number of investors quickly enough too proceed with the project. Small projects that require only a single or small number of investors are more likely to be able to immediately proceed.

Even EB5 investors granted two-year conditional residence status remain at risk until the required number of jobs are created and the conditional basis of their residence can be removed. Job creation and business operations must be scheduled so that all investors have their funds committed to the project. Even after individual investors have the conditions removed from their resident status, the investment and business operations are likely to need to continue until the last investor’s conditions are removed.

Traditional EB5 projects usually involve an individual or a very small group of investors. Pilot Program EB5 projects usually involve large or very large groups of investors. Because of this, traditional EEB5 projects tend to start and end more quickly than Pilot Program projects.

Annual reporting. Pilot Programs are required to file annual reports with the government. Traditional EB5 does not.

Pilot Programs report annually on their amount of investment and job creation.  This information is also allocated by industry category and each investment opportunity at the designated Pilot Program. Pilot Programs also report on the status of immigrant investor petitions and removal of conditional resident petitions. These reports are filled with the government, not individual investors.

The time and money involved to prepare the annual reports depend on the complexity and number of ongoing projects within the Pilot Program. Failure to timely file can result in lose of the regional center designation required for the Pilot Program and the denial of all pending individual investor petitions. No equivalent annual reporting requirement is imposed on Traditional EB5.

Investment amount.  A $500,000 investment can qualify for both Traditional and Pilot Program EB5.  In general, all types of EB5 require a minimum $1,0000,000 investment. To encourage job creation in targeted employment areas ( TEA), Congress lowered the investment requirement to $500,000.  TEAs are generally either areas with higher than normal rates of unemployment or areas defined by the government as rural.

Both traditional and Pilot Program EB5s can be located in TEAs.

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EB5 immigrant investors: Comparison of Traditional and Pilot Programs

EB5 Escrow FAQ

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The employment-based, fifth preference immigrant visa (EB5) is an increasingly popular way for foreign nationals to immigrate to the United States by making a business investment that creates jobs for American workers.  EB5 is also an important source of business investment for local governments and entrepreneurs in search of funding for business development.  Lengthy processing times by US government agencies and the types of escrow terms used on many projects have delayed the creation of jobs for American workers, and increased the likelihood of denial of the EB5.  Now is the time to better understand and re-evaluate the EB5 escrow.

Here is a list of frequently asked questions regarding EB5 escrow intended to help Regional Centers, developers, and foreign investors to better understand how use of an escrow can hurt the chances of getting conditional residence and getting the condition removed two years later for the permanent residence.

Frequently Asked Questions – EB5 Escrow

What are escrow provisions for EB5?

For those EB5 projects that have escrow provisions, the escrow typically works as follows:

First, each immigrant’s funds are held by a financial institution and are not directly received by the new commercial enterprise (NCE) in which the immigrant invested.  The funds remain there and cannot be accessed by the NCE to create the jobs for American investors required for EB5.

Second, the immigrant’s investment funds are released to the NCE only after the US Citizenship and Immigration Services agency (USCIS) finally completes its long, slow process to make a final decision on the Form I-526 immigrant petition.

This process is repeated for each individual immigrant.  The result is that funds trickle into the NCE slowly.  USCIS processing times vary, but are always very slow. The USCIS web site reports an average processing time of 13.4 months as of June 30, 2014, but that only reflects how long it takes before the agency begins to work on a petition.  The USCIS also reports that investor petitions awaiting adjudication are at an all-time high.  Requests for Further Evidence (RFE) are very common and the time it takes for the agency to prepare the RFE, for the immigrant to prepare a response to the RFE, and for the USCIS to then make a final decision often means the I-526 approval often takes 2 years.  If funds are held in escrow during that time, then the funds are unavailable to create the jobs and the project is delayed for all investors.

There are many reasons why an RFE may be issued, but one of the most common is because the USCIS wants further documentation to show how the funds will be used to create the required jobs.  In cases where the funds are immediately available and job creation starts sooner, it is easier to minimize the risk of an RFE and to successfully respond to an RFE by showing how the funds are already being used to create jobs.  In contrast, the USCIS has delayed/denied I-526s where a business plan timeline is substantially delayed, even though the delay is a result of funds being held in escrow longer than intended due to slow USCIS processing times.

Does US law require escrow provisions for EB5?

No.

The USCIS regulation 8 Code of Federal Regulations Section 204.6(j)(2) requires documentation that the required amount of capital be placed at risk and actually committed to the NCE.  There is no endorsement or requirement of escrow provisions in the statute or regulations.

Can escrow provisions hurt the chances of obtaining approval of the conditional or permanent green card?

Yes.

Escrow provisions delay the release of funds that NCEs need to create the jobs for American workers that are required for EB5 success.  Ten new, full-time equivalent jobs for American workers are generally required to be created for each immigrant.

These jobs must be created before (or reasonably soon thereafter) the USCIS will grant the Form I-829 petition for the removal of the conditional residence and approve permanent residence.  If all ten jobs are already created before the I-829 is filed, then the petition is much easier and faster for the USCIS to approve.  If a delayed release of funds slows the required job creation, then the USCIS is more likely to deny the I-829 and then resident status can be lost.

Can escrow provisions be waived?

Yes.

An immigrant can waive escrow provisions and authorize the escrow agent to release funds to the NCE at any time. The NCE can then apply the funds to the required job creation activities and issue documentation faster.  The documentation can then be submitted in support of the I-526 when it is filed, used to supplement an I-526 already pending and/or used to better respond to an RFE.

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EB5 Escrow FAQ

Update for Immigrant Investors in the US

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The US Citizenship and Immigration Services agency reports faster processing times for immigrant investors in the US under the employment-based, fifth preference immigrant visa (EB5).

The agency reports an average 13.4 month processing time on individual investor petitions and a 5.7 month processing time on the petition to remove the two-year conditional basis of resident status.  The agency reports a 6.1 month processing time on applications to designate new regional centers, amend the designation for existing regional centers, and exemplar petitions for investment opportunities at regional centers.

The USCIS has devoted a number of resources to improving the EB5 process.  The volume of EB5 petitions received, approved, and pending almost doubled from fiscal year 2011 and 2012, and the number denied almost tripled.  The growth in 2013 was not quite as dramatic, but there was growth and the numbers reported for the first two quarters of FY 2014 show that this is likely to be a banner year.  In August 2014, the USCIS added a document library to facilitate submission of digital copies of documents to supplement paper-based filings and this is expected to help reduce lengthy processing times.

At the same time, the USCIS is working more closely with the Securities and Exchange Commission (SEC) and other agencies to improve immigrant investor confidence in the program and reduce fraud.   The SEC posted an Investor Alert to recommend the due diligence investors should take when evaluating EB5 opportunities.

Common industry practices are evolving in the EB5 sector to catch up with new government practices and enforcement patterns.  The leaders who adopt best practices early on have the best opportunity for success in securing immigrant investor funding for their ventures and resident status for their immigrant investors.  Dentons provides clients with a comprehensive and integrated suite of EB5-related legal services – from project finance, securities, immigration and employment to hotel, real estate, franchise, and much more.

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Update for Immigrant Investors in the US