EB-5: A Tool for U.S Economic Revitalization [Infographic]

Hurricane Harvey and Hurricane Irma ravaged the southeastern United States late in 2017, leaving behind billions in damage- both to homes and to businesses.

Rarely thought of, the capital raised by the EB-5 program is ready to be utilized in the rebuilding efforts: $274 Million in Houston and $885.5 Million in Miami.

This highlights the extraordinary power of the program to do good for local communities affected by natural disasters. Check out the following infographic to learn more.

EB-5 Capital & Disaster Relief

eb-5 visa vs eb-2 visa

Why the EB-5 Visa is a Better Option than the E-2 Visa

An ever-growing number of foreign investors are establishing their livelihood and their lives in the U.S. by choosing to inject their capital into the U.S. economy. Many investors are choosing to apply for one of the EB-5 visa spots, while some are going a more temporary route using the E-2 visa. Our Los Angeles EB-5 lawyers understand that the significant differences between the two require taking a look at the pros and cons of each for every prospective applicant. However, while the E-2 visa has many attractive attributes, including a significantly lower capital investment requirement, the EB-5 is a better and broader alternative for those looking to resettle in the U.S. Here are three important differences between the two types that showcase reasons why the EB-5 visa is the superior route.

 

The EB-5 Visa Allows You to Bring Family Members

 

The EB-5 visa can allow your immediate family members to come to the U.S. with you. This includes spouse and children only, but it is a significant advantage in the world of visas. The E-2 visa is only for the investor himself or herself and does not facilitate the entry of family members.

 

The EB-5 Visa is Open to a Broader Range of Countries

 

EB-5 visa holders come from a broader range of countries because this type of visa has fewer limitations on country of origin. E-2 visa holders must come from a treaty investor country, i.e., a country that is a party to the Treaty of Commerce and Navigation. For many prospective visa applicants, this restriction bars them from applying for an E-2 visa altogether, but does not bar them from applying for an EB-5 Visa.

 

The EB-5 Visa Paves the Way for a Permanent Resident Card (Green Card)

 

The EB-5 visa is an immigrant visa, which can lead to a green card and permanent resident status for its holder. An E-2 visa is a non-immigrant visa, which can be renewed without limit but cannot lead to obtaining permanent residency in the U.S. This immigration intent is one of the reasons for the higher investment requirement of an EB-5 visa, which in most instances is $1,000,000 but in certain cases can be as low as $500,000. While an E-2 requires an initial investment of only $100,000, the applicant must show “non-immigrant intent” when applying with the United States Citizenship and Immigration Services (USCIS). Therefore, for those applicants seeking a way to permanently establish themselves in the U.S., the EB-5 visa is the obvious choice.

 

If you are considering the EB-5 visa or have further questions about the differences between the EB-5 and E-2 visas, contact David Hirson & Partners, LLP today.

 

Telephone: (949) 383-5358       Email: info@hirson.com       Website: www.hirson.com

eb-5 immigration attorney

The Importance of Using an Experienced EB-5 Immigration Lawyer for Your EB-5 Application

Through the EB-5 visa program, foreign investors who contribute a minimum of $1,000,000 to a qualifying U.S. venture can enter the U.S. with their immediate family members (their spouse and unmarried children under 21 years of age). Under certain conditions, the minimum investment can be lowered to $500,000 for projects operating in Targeted Employment Areas. Successfully finding and investing in a qualifying EB-5 project  is one of the first steps toward obtainment of a U.S. green card and lawful permanent residency. However, the immigration process is littered with traps for the unwary, which is why hiring and working closely with an experienced EB-5 attorney is especially important. One small misstep may put you months or years behind in your immigration process, or can very well cost you the approval of your immigration petition. Here are some of the most compelling reasons to use an immigration lawyer when applying for an EB-5 visa.

There Are Requirements Beyond Simply Investing the Minimum Investment Amount

When talking about the EB-5 visa program, the most common preliminary question is the cost of the initial investment. (It is important to note that a significant increase in the minimum investment amount is expected to occur within the next six months or so.) However, there are many requirements beyond the monetary investment, and the application process is hindered whenever a step in the application process is taken without fulfilling or submitting all necessary requirements. By working with an experienced EB-5 visa lawyer directly, you can rest more assured that every requirement is met in a timely manner, including having a well laid out report documenting the source(s) of investment funds.

Working With Your EB-5 Lawyer From the Beginning Helps Pave the Way to Your Future in the U.S.A.

The short-term immigration goal is to apply for and obtain an EB-5 visa for the immigrant investor and his or her immediate family members. In the long-term, though, most investors desire to stay in the U.S. with their families as permanent residents. Establishing a relationship with an experienced EB-5 immigration lawyer now will mean you have the advantage of a lawyer’s advice for how to transition from EB-5 visa applicant to green card applicant. When the goal is to become a lawful resident, it is even more important to have the wisdom and experience of a knowledgeable EB-5 lawyer on your side from the very beginning.

The Paperwork is Important – But Often Confusing

EB-5 visa applicants are some of the smartest people out there, and they’re ready to put in the time and invest the money necessary to make their dreams a reality. Even the smartest investor, however, can easily become buried in the paperwork surrounding visa applications and immigration processes in general. For those who are not used to U.S. laws and regulatory workings, it is a huge chance to take on what is already a very competitive slot for an EB-5 visa. Using an experienced EB-5 visa lawyer is the smartest way to ensure you have every advantage in the application process.

Contact David Hirson & Partners, LLP today to learn more about how we can assist you in your EB-5 immigration process.

Telephone: (949) 383-5358       Email: info@hirson.com       Website: www.Hirson.com

EB-5 CLIENT & PARTNER ALERT

DATE:            November 10, 2017

FROM:           David Hirson & Partners, LLP

SUBJECT:      Summary & Analysis from USCIS IPO EB-5 Stakeholders Meeting – November 7, 2017

*NOTE: The following is not intended to be legal advice. Please consult with your counsel for advice specific to your situation and needs.

The U.S. Citizenship and Immigration Services’ (“USCIS”) Immigrant Investor Program Office (“IPO”) hosted an EB-5 Stakeholders meeting in New York on November 7, 2017. IPO representatives provided some valuable guidance into issues while leaving many questions yet to be answered. Please see below for a summary/analysis of pertinent points:

  1. Processing Order for I-526 Petitions – No “FIFO;” Project First, I-526 Petitions Second

IPO went as far as to admit that they do not adjudicate I-526 petitions on a strict “First In, First out” (“FIFO”) basis. Rather, IPO organizes adjudication of EB-5 petitions by individual projects and each adjudication team is assigned certain projects which are adjudicated after coming in and the team has capacity to move on to adjudicating that project.

The main takeaway is that project review always comes first, followed by the associated I-526 petitions on a FIFO basis. Thus, there are two scenarios that illustrate when the FIFO “clock” for the investors actually begins:

  1. Projects with Exemplar

In this situation, IPO will review project documents first and then adjudicate all associated I-526 petitions afterwards.

  1. Projects without Exemplar – Project Review begins after Two I-526 Petitions are Received

If an exemplar has not been filed, IPO will generally wait to receive at least two (2) I-526 petitions for a project before reviewing the project documents. If the project is EB-5 compliant, IPO will then adjudicate the remaining I-526 petitions.

Thus, it may become a practical necessity for Regional Centers/Projects to file exemplars, whenever feasible, if the goal is to speed up I-526 adjudication. It is already becoming a standard expectation from the EB-5 market, so not much may change.

  1. Exemplar Filings – Include a List of Associated I-526 Petitions

IPO made it clear that when filing an I-924 Exemplar, it would make their life easier if a cover letter listing all I-526 petitions filed under that exemplar was included. Note that Regional Centers should already have this information on file and the list would be similar to the supplement that is filed with the I-526 petitions. On approval of an exemplar, it may be advisable to update the list of filed I-526 cases associated with the project.

  1. Filing of Form I-924A

For the annual I-924A report, IPO stressed that they want RCs to provide accurate accounting/estimates of job creation for all projects under sponsorship.

Specifically, IPO expects “live updates” on the number of jobs created for the Fiscal Year being reported on. Regional Centers should calculate job creation by using (1) the same economic methodology that’s contained in their project’s economic report and (2) updating the corresponding job creating inputs for the past Fiscal Year.

In plain English, projects need to take the budget (or other input used in the economic report) they submitted with their business plan and update what progress they have made that fiscal year. Essentially, it is a yearly update one usually prepares for the Form I-829 petition’s job creation analysis.

Note that the information must be based on the past Fiscal Year to be credible and it’s no longer acceptable to merely count jobs based on the number of approved I-829 petitions.

Finally, the I-924A must be filed at the California Service Center (not the IPO office) by December 29, 2017.

  1. Material Change & Switching Projects/RCs after I-526 is Filed

This was the longest discussion during the call. All roads lead back to Matter of Izummi and Chapters 4 & 5 of the Policy Manual, but even then, it is unclear if IPO is understanding the questions being asked.[1] This will probably be revisited in a future stakeholder engagement.

One major issue that was discussed was when can an investor safely transfer to a second project if there’s a problem with the Regional Center or project. Part of the answer here depends on if the contemplated switch is to occur before or after the investor receives Conditional Permanent Residence (CPR). However, not much clarity has been provided after that.

  1. Before CPR (I-526 Pending Adjudication)

Unfortunately, there are not many options for the investor here. IPO stated that the following scenarios will be considered a material change if it occurs before an investor attains CPR and consequently will result in grounds to deny an I-526 petition: RC termination/loss of designation (even if another RC takes over the project), switching NCEs, and switching projects/JCEs.

It appears that IPO is taking the stance that if a project is under investigation and a receiver is appointed to take over the NCE/project, then this is not necessarily a material change. It appears that the rationale is that if the underlying purpose of the NCE remains the same, the project remains the same, and that the project will otherwise be completed, then a mere change in management of the NCE will not necessarily negatively impact the investors. However, whether this is true is unclear.

On the other hand, IPO appears to be taking a hardline stance that if the RC is terminated or loses its designation, then that is an automatic material change and consequently a denial. This was a controversial point and was met with immediate resistance.

  1. Between CPR and Filing of I-829

If the investor has obtained CPR, then he has a few more options. IPO appeared to allow an investor to switch projects, but was unclear what procedures or steps must be taken. It appeared that IPO was stating that it would only be acceptable if the funds are returned to NCE1, which will then invest into NCE2 and the second project. It appears that IPO is also requiring NCE1 to remain operational during this entire process.

  1. Reinvestment of EB-5 Funds into a Second Project (Scenarios)

The following are the scenarios that were also discussed and ones that are likely to be encountered in situations involving a failed/troubled investment:

  • If a project has failed, but the EB-5 funds were not spent (i.e. money held in escrow), then can the funds be reinvested to another project where 10 jobs have been created? Likely answer is yes, but must be aware of timing so that the reinvestment is not considered a material change.
  • If the funds have been spent, and the project fails so that the investment has been completely lost, can the investor become a member of a new NCE with no further investment and no jobs created or insufficient jobs created by the first JCE? – Likely answer is no.
  • If funds have been spent, only 5 jobs have been created, can remaining funds be redeployed to another project to create 5 more jobs to meet the required 10? May have to deal with both a timing issue (for material change) and a nexus issue (would some of the EB-5 funds have to be invested in Project 1 and Project 2 to establish nexus?).
  1. Completed Project – Redeployment of Funds
  • If funds have been spent, 10 jobs have been created, however, I-829 is pending (e.g. China backlog), so funds must be redeployed to another project to ensure funds are “at risk.” If 10 jobs have already been created by the first project, is the investor required to create another 10 jobs from the second project? – EB-5 eligibility is already locked in. (this is true even if RC is terminated at this stage).
  1. Bridge Financing

There is apparently some controversy about how IPO is deciding what is acceptable bridge financing for EB-5 projects, but without specific facts, it’s unclear if this is a widespread policy change or a problem with an individual case/rogue adjudicator. One issue that IPO was adamant about was that when EB-5 funds are being used to repay bridge financing, the EB-5 funds must flow from the NCE to the JCE, who can then pay the bridge facility. The NCE cannot pay the bridge facility directly (because the EB-5 funds would not be made “fully available” to the JCE).

Typically, when discussing bridge financing, the focus is generally on 3 factors: (1) temporal (when must it be contemplated), (2) procedural (do you need a MOU or agreement), and (3) nature/purpose of financing being repaid. Of the three, the last one is arguably the most important.

Implicitly, for bridge financing to be acceptable the “short-term” financing that is being repaid with EB-5 funds must have been spent on costs related or necessary to the project (in other words, a project-related nexus). On one end of the spectrum, a short-term loan to pay for construction costs in advance of the EB-5 loan closing is uncontroversial. On the other hand, IPO has specifically rejected (including during this call) the use of EB-5 funds to buyout developer/owner equity or to pay down permanent financing. This makes sense if we look at it from an economic policy standpoint. The first situation has a direct nexus to the project’s development and thus creates economic benefits to the surrounding community. The second situation provides no economic benefit (or jobs) to the community because EB-5 is being used to facilitate a paper transfer of wealth or to refinance and help lower the cost of capital for a project.

Our firm will share our thoughts on this issue in a separate article, but we expect this topic to be revisited again in a later engagement.

  1. Miscellaneous Points:
  • I-485 interviews will become a standard requirement for all petitions, including EB-5 petitions.
  • A number of practitioners (including our office) have reported that they never received physical copies of RFEs/NOIDs despite receiving online case updates that they have been mailed out and requesting them from CIS Customer Service. Thankfully, IPO said they are aware of the issue and that it should be resolved now.
  • IPO reiterated that the only way for a RC to expand its geographic designation is through a Form I-924 filing.
  • IPO again confirmed that the “sustainment/at-risk period” ends once the two-year CPR period is over.

Contact our expert EB-5 team at David Hirson & Partners, LLP for more information about you specific EB-5 situation and needs.

Telephone: (949) 383-5358                 www.hirson.com                     info@hirson.com

PL/NP

[1] For reference, a material change is one that affects an investor’s decision-making at the time of filing the I-526 petition. Under Matter of Izummi, a petitioner must establish eligibility at the time of filing and that a petition cannot be approved if, after filing, the petitioner becomes eligible under a new set of facts or circumstances.