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Missed EB-5 opportunities in India.

Article Discusses Potential Missed EB-5 Opportunities in India

This article is copyrighted by ILW.COM and is republished here with permission.

The original article can be viewed here: http://discuss.ilw.com/articles/recent-issues/389787-december-31-eb-5-industry-misunderstands-retrogression

EB-5 Industry Misunderstands Retrogression

There is $3 Billion India EB-5 Opportunity:

India generated close to $500 million in EB-5 investments in 2018, and it is on track to generate $1 Billion in 2019 and $2 Billion in 2020. The Indian EB-5 market is a $3 Billion opportunity in the coming two years. USCIS published data on pending I-526 petitions showing that for the month of September 2018, India has already reached the number one position with 284 petitions compared to 165 from China and 137 from Vietnam.

Those Who Misunderstand Retrogression Will Miss the Opportunity:

  • Most of the EB-5 industry misunderstands how retrogression works. As a result, some in the EB-5 industry believe that the roaring number one EB-5 market in India will end as soon as retrogression hits sometime middle of 2019. They also incorrectly believe that as soon as retrogression in Indian EB-5 market begins, all waiting Indians will stand in line behind the Chinese who are standing in a 15+ year long line. Nothing could be farther from the truth.
  • Misunderstanding of how retrogression works is rampant in the EB-5 industry—Those who misunderstand retrogression will miss out on the $3 billion opportunity in Indian EB-5 market.

How Does Retrogression Work – Different Gates & Different Lines:

  • Each employment and family category has a total per year world limit, and an additional per country limit. There are separate gates for separate countries for each category of visa: People for each country who have applied for a given visa category are standing in separate lines by the date of their application.
  • To figure out retrogression:
    • First Step: first each country is allotted its per country quota.
    • Second step: If as a result of the first step the entire per year for the world is not exhausted, remaining visa numbers are allotted to the oldest applications regardless of the country.
  • Analogy: Think of there being separate gates for each country and those born in that country line up at the gate for their country. The length of the line for each country is different for each visa category. For example, the line at the gate for Chinese EB-5 applicants is very long, and the line for British EB-5 applicants is very short. When the per country quota is allocated, the countries with long lines budge a little but those with short lines gallop forward. The lines at the gates for each country for a given visa category move differently.
  • Further, as long as retrogression time for a country is shorter than the processing time for the application, it has no impact at all on the time it takes to get immigration benefits.
  • Lastly, the impact of a waiting time for a visa category is viewed differently by applicants of different countries because they compare the waiting time for that category with waiting times for other categories.

Example 1: EB-5 Waiting Times for India & China:

  • For EB-5 it is 10,000 visas/year and approximately 700 visas/country. Chinese EB-5 applicants are standing at a DIFFERENT gate in a DIFFERENT line than Indian EB-5 applicants.
  • To figure out retrogression, First Step: first each country is allotted its per country quota. For example, for EB-5, only China, India and Vietnam have more than 700 applications pending. Then first 700 oldest of Chinese applications, 700 oldest of Indian applications and 700 oldest of Vietnamese applications are allotted the visa numbers. Then applicants from all other countries are allotted their visa numbers. If as a result of the first step the entire per year for the world is not exhausted, remaining visa numbers are allotted to the oldest applications regardless of the country. For example, if 6,000 visas are allotted in the First Step for EB-5, 10,000-6,000=4,000 visas remain to be allotted. They are allotted to the oldest EB-5 applications waiting regardless of the country—which in this case would be the oldest Chinese EB-5 applications.
  • Result: Indians will not be in the line behind the Chinese—as with all categories, each country has its own line. For example, by using 700 visas will move the priority dates of the tens of thousands of Chinese waiting in line by barely few months, but the same 700 visa numbers will make the Indian priority dates gallop forward by more than a year. Therefore, hundreds of Indians will move ahead of the Chinese who have been waiting longer than those Indians.
  • Further, as long as retrogression time for a country is shorter than the processing time for the application, it has no impact at all on the time it takes to get immigration benefits. As long as the retrogressed time for India is less than 2 years, it will make no material difference to applicants if their processing time is average of 2 years. We expect the flow of Indian EB-5 capital to remain unaffected by retrogression until there are 12 consecutive months of retrogressed times higher than processing times–which has been the case for capital flows from China and Vietnam when the countries retrogressed.
  • Lastly, the waiting times for the EB-2 and EB-3 categories for Indian—the primary alternatives to EB-5—are 25 years and 75 years respectively looking forward. So even when EB-5 waiting times for India rise eventually to 5, 10 or 15 years EB-5 will continue to remain an extremely attractive option—unlike for the Chinese for whom the EB-2 and EB-3 times are much shorter.

Example 2: EB-3 Waiting Times for Philippines and India:

  • You can more clearly see the principle of “Separate Gates and Separate Lines for Each Country” by looking at other employment and categories which have been hitting their per country quotas for over a decade.
  • The priority dates for EB-3 are as follows as per December 2018 visa bulletin: India is Jan 2010, China is Dec 2015, Philippines is August 2017. So, the wait times are India 8 years; China 3 years and Philippines 1.5 years. This is because the number of Indians standing in the Indian EB-3 line is very large as compared to the number of Philippines nationals standing in the Philippines EB-3 line. This is true even though both Philippines and India have been in retrogressed territory for many years. Philippines nationals applying for EB-3 do NOT stand in line behind the Indians who have been waiting for years—each country has its own separate gate and a separate line.

Conclusion:

  • India is a $3 Billon opportunity over the next two years. India is 50+% of the entire world EB-5 market and growing at 100% per year. For all the reasons listed, retrogression will not affect capital flows of EB-5 capital out of India in that time frame. Do not miss out on the $3 Billion Indian EB-5 opportunity.

This article is copyrighted by ILW.COM and is republished here with permission.

The original article can be viewed here: http://discuss.ilw.com/articles/recent-issues/389787-december-31-eb-5-industry-misunderstands-retrogression

Franchise Investment and Immigration Seminar

“Reside Legally In The US Through A Franchise Investment” Seminar in Costa Mesa and Seattle

David Hirson & Partners LLP, Visa Franchise, and Turquoise Tax Advisory* will host five investment immigration seminars in Seattle, Washington and Costa Mesa, California this October. The seminar, “Reside Legally in the US through a Franchise Investment,” is geared towards foreign nationals seeking to reside legally in the U.S. through the E-2, EB-1c or EB-5 visas. English, Chinese, and Spanish events will be available. Find more information on the dates and locations below.

Flyer for Hirson Franchise Investment Seminar

Seattle, Washington 7:00-8:30 PM

David Hirson & Partners LLP | 800 5th Avenue | Suite 4100 | Seattle, WA 98104

Costa Mesa, California 3:00-4:30 PM

Law Offices of David Hirson & Partners, LLP | 1122 Bristol Street | Costa Mesa, CA 92626  

Agenda

E-2, L-1, EB-1c and EB-5 Visas – The Basics, The Requirements and US Immigration Updates

The United States Franchise Market and Opportunities for Foreign Investors

*Pre-Immigration Planning, Business Tax Planning and Entity Structuring

Questions & Answers

David Hirson & Partners, LLP 

David Hirson & Partners, LLP with offices in Costa Mesa, California and Seattle, Washington, has over 30 years of experience in corporate, business and investment immigration, and the foundation of our practice is the lasting relationships we have built within the community.We proudly support a diverse client base that spans across local, regional and national levels. Our business immigration practice provides a full range of services, including an EB-5 investment immigration practice that is nationally recognized for individualized attention and expertise. From all of us at David Hirson & Partners, we look forward to serving your legal needs.

Visa Franchise

At Visa Franchise, we specialize in helping foreign nationals find the best franchise investment that will qualify them for an E-2, EB-1c, or EB-5 visa. Our goal is to simplify the process by finding and analyzing the best franchise investments for our clients and their family based on their own unique profile. We have advised hundreds of clients from over 35 countries around the world. Testimonials can be found on our website here. If you are interested in owning a franchise please reach out to info@visafranchise.com or call us at +1-888-550-7556.

Turquoise Tax Advisory

Turquoise Tax Advisory is a Washington State CPA firm that specializes in providing tax services for cross border taxpayers and businesses.  US tax law is one of the most complex fields of law in the US legal system.  Providing accurate and thorough tax advice requires a lifelong commitment to developing the necessary expertise to advise international clients. Deniz Kiral has been a CPA since 1991 and developed his tax expertise through his experience in top internationally public accounting firms and collaborating with leading tax attorneys and accountants in the profession.

*Turquoise Tax Advisory will be in the Seattle, Washington event, but not in Costa Mesa, California

Reach out to us at +1 949.383.5369 or info@hirsonimmigration.com with any questions regarding the event!

EB-5 Program extended through September 2018

EB-5 Regional Center Program Faces Another Extension Through September 30, 2018

EB-5 industry groups announced today that the EB-5 Regional Center Program will be granted another extension (with no program changes) through September 30, 2018. This decision comes after weeks of negotiations over proposed program changes not reaching a consensus.

Some of the proposed changes that were being negotiated include:

  • Increasing the minimum investment amount from $1,000,000 to $1,025,000 for normal investment projects and from $500,000 to $925,000 for projects located in certain high-unemployment or rural areas or for certain infrastructure projects.
  • Increasing the job creation requirement from 10 full-time permanent jobs per EB-5 investor to 12 full-time permanent jobs per EB-5 investor in a normal investment project, or decreasing the job creation requirement to 9 full-time permanent jobs per EB-5 investor in a project that meets certain criteria such as being located in a rural area, high unemployment area, or in a closed military base.
  • A certain number of EB-5 visas being set-aside/reserved each year for projects that meet certain specifications (i.e. located in a rural or high unemployment area).
  • Increased reporting requirements for EB-5 Regional Centers (along with more annual fees to help fund increased integrity measures/programs).

These and other proposed changes are now being postponed until the end of the government’s fiscal year (September 30, 2018). There are already more rumors that another extension will simply follow this extension because of the fall elections this year. David Hirson & Partners, LLP is closely following all EB-5-related legislation and will let you know of more changes to the program when they occur.

Our experienced EB-5 team at David Hirson & Partners, LLP can help you apply for your EB-5 visa or help with your EB-5 project. Contact us today for help and advice regarding your EB-5 needs.

 

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

eb5 direct vs regional center investment

EB-5 Financing: Direct Investment vs. Regional Center Investment

The EB-5 Visa program is a tried-and-true method of U.S. job creation that enables foreigners to seek a green card while investing significant funds into U.S. enterprises. Foreign nationals from many countries, but most particularly China and India, pursue the EB-5 path to U.S. residency. An increasing number of U.S. businesses rely upon EB-5 money to fund projects which create jobs for U.S. workers here at home.

 

The minimum investment for EB-5 immigration is currently either $500,000 or $1,000,000, depending upon whether the project is located in a Targeted Employment Area (TEA). If the area is designated as a TEA, that means it is either rural or experiencing an unemployment rate of at least 150% of the national average. Regardless of whether someone seeking an EB-5 immigration path chooses to invest into a TEA, there are two main ways that they can invest their funds: direct investment or investment through an EB-5 regional center. Either way requires the foreign investor to create at least 10 full-time U.S. jobs, however, the methodology for counting created jobs is quite different depending upon the method of investment.

 

Direct EB-5 Investment

 

The first method is through direct investment. An example of a direct investment project could be an investor choosing to open a small hotel that will employ at least 10 people full-time. Unless the proposed hotel is located in a TEA, there is a minimum $1,000,000 investment requirement and the investor must clearly show that there is direct job creation of no less than 10 full-time positions to work at the hotel. Examples of direct job creation in this scenario would be a full-time manager, concierge, or maid. Under many circumstances, the minimum investment requirement does not feasibly create 10 jobs. The job creation requirement becomes particularly difficult when the minimum investment amount is lowered because the project is located in a TEA.

 

EB-5 Regional Center Investment

 

The second EB-5 investment method allows investors to invest in a qualifying project through an EB-5 Regional Center. By investing through a regional center, EB-5 investors can pool together funds into a single project and also be allowed to count indirect and induced job creation toward their 10-job minimum. An indirect job example would be a job created at an equipment manufacturer that supplies parts to an EB-5 project. Induced jobs would be jobs created within the community based upon the project’s needs or upon income spent by employees of the project (those that have “direct jobs” and do their shopping in the community).

 

There are many variables and moving parts when it comes to the EB-5 immigration path to residency. The best thing that a potential investor into the EB-5 immigration program can do is to hire an experienced and qualified law firm, specializing in EB-5 Visas, to guide them through the process. Contact the experienced EB-5 lawyers at David Hirson & Partners, LLP today to discuss your options with us.

 

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

Tips to Ensure a Smooth Immigration Process

Relocation to a new country is exciting, but also challenging. The immigration process to the U.S. in particular is not always an easy one. However, there are many preventive measures that can be taken which increase the odds that any given immigration will go smoothly. David Hirson & Partners, your Los Angeles EB-5 visa lawyers, can offer several tips for those seeking to enter or remain in the U.S. under any program.

Tips to make the immigration process smoother

 

Prepare for delays

It is well-known that the U.S. Citizenship and Immigration Services (USCIS) is very backed up and takes a long time to process applications. Those needing to submit an immigrant application should submit ahead of time for any deadline. Do not wait until the last minute to turn in paperwork – those that have an expired legal status can be arrested or deported.

Explore various visa options

Sometimes, immigrants have several paths to citizenship available to them. The EB-5 visa is available to those who meet specific investor requirements. Other visa programs can be pursued if the investor’s family members are currently living as citizens in the U.S.

Follow program regulations

It is critical that the requirements for your visa, work permit, or green card application are thoroughly and correctly understood. Violating a seemingly small requirement can delay the processing of your visa, possible cancellation of your visa, or even deportation for you and/or your family members.

Hire a qualified law firm

The best tip is to hire an experienced lawyer to help you with the process. Trying a “do it yourself” approach often ends with your visa being denied based upon technical issues, such as lost paperwork or missing minor documentation. Working with the skilled lawyers at David Hirson & Partners will maximize your chances of a smooth immigration process from start to finish.

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

David Hirson & Nima Korpivaara Recognized by Eb5 Investors Magazine

David Hirson and Nima Korpivaara of David Hirson & Partners, LLP Recognized Again as Two of the Top Twenty-Five Immigration Attorneys by

Eb5 Investors Magazine

Hirson and partners recognized by eb-5 magazine top 25

Both Mr. David Hirson and Mr. Nima Korpivaara were again recognized as being two of the top twenty-five immigration attorneys in the EB-5 industry. Every year, Eb5 Investors Magazine polls the EB-5 industry to find out who is contributing most to the industry. David and Nima, both partners at David Hirson & Partners, LLP (“DHP”), have been recognized by this poll for the last few years. David and Nima are grateful and proud to be recognized by their hard-working peers. Both would like to thank the hard-working attorneys and staff at David Hirson & Partners, LLP who work tirelessly to ensure their clients achieve their corporate immigration goals.

The same issue of Eb5 Investors Magazine also included an article co-written by DHP’s Mr. Phuong Le (along with Aaron Goforth of Baker Tilly Capital and Osvaldo Torres of Torres Law P.A.). “Practical Steps for Investors in Traditional & Merging Markets Considering Regional Center Versus Direct EB-5 Investments” discusses some considerations potential investors should take into account when it comes to selecting the route for their EB-5 investments.

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

 

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.

Why The EB-5 Program is Essential to the U.S. Economy

The immigrant investor program, also known as the EB-5 program, was part of an overhaul of the U.S. immigration system. The purpose of the program is to stimulate the U.S. economy and to create jobs by giving foreign investors the opportunity to permanently live and work in the United States after they have invested in a job-creating U.S. business.

In short, if a foreign entrepreneur invests money in a U.S. business and, because of that investment, at least 10 full-time U.S. jobs are created, the foreign investor, his spouse and his children (under the age of 21) will receive U.S. green cards. Read more