Thank you to everyone who joined IIUSA on Friday 12/7 for our webinar on the potential backlog of EB-5 visas for Chinese applicants due to demand trends for the total number of immigrant visas available per year (both family and employment based) and the high demand of EB-5 visas generally – but particularly from China (who accounted for over 75% of the EB-5 visas issued in FY2012. The webinar featured a diverse panel of experts who discussed the potential ramifications for the EB-5 Regional Center industry if the warning issued in the U.S. Department of State’s December Visa Bulletin came to fruition later this FY.
Stephen Yale-Loehr (President Emeritus, IIUSA; Of Counsel, Miller Mayer, LLP; Adjunct Professor of Immigration Law, Cornell University) served as moderator, with Robert C. Divine (Vice President, IIUSA; Head of Immigration Practice, Baker Donelson Bearman Caldwell & Berkowitz; Former Chief Counsel and Director, USCIS) and Michael Homeier (Founding Shareholder, Homeier & Law, P.C.; EB-5 securities expert) serving as panelists. As a special guest, IIUSA welcomed Charles Oppenheim (Chief, Office of Visa Controls and Reporting, U.S. Department of State) in follow up to his appearance at the 5th Annual IIUSA EB-5 Advocacy Conference in Washington, DC in October 2012 where we were first alerted to the potential backlog for Chinese EB-5 visa applicants.
After an overview of the U.S. visa allocation system and latest trends in EB-5 visa demands, Mr. Oppenheim delivered a couple of important updates before taking questions. First, due to changes in the total number of employment visas available, there are now approximately 1,000 more EB-5 visas available during the current fiscal year than there were in October – thereby providing some more time before a “cut-off date” would be established. However, he also stated that even if a backlog is avoided in FY2013, it is nearby impossible that it can be avoided again in FY2014 absent a higher annual visa allocation from Congress. Second, Mr. Oppenheim reminded that the warning issued in the December 2012 Visa Bulletin was a “worst case scenario” – but that planning for the possibility was essential. IIUSA greatly appreciates the proactive communication from Mr. Oppenheim and will stay in close contact on these developments in order to keep the Regional Center industry informed.
Mr. Divine spoke on immigration-related issues that would result from a backlog, such as: (1) immigrant investors not being able to apply for a visa until their priority date became current (i.e., when – in the hypothetical world where a “cut-off” date has been established – the date reported in the EB-5 China category on the monthly U.S. Department of State visa bulletin was later than the date the I-526 petition was filed); and, (2) the child status protection act (CSPA) or “age-out” issue where the principal investor’s child is under 21 at the time of filing the I-526 petition but over 21 by the time a visa is available for allocation – with special reference to the 2003 Department of State CSPA cable paragraph 33 tool for calculating age for when CSPA protection exists.
Mr. Yale-Loehr spoke on Regional Center investment related issues, such as: (1) escrow implications; (2) job creation timelines; and, (3) capital redemption timelines. Whether the timing for release of escrow, job creation (the current USCIS policy of 2.5 years for job creation to occur was the topic of much discussion at the 12/3 Conversation with Director Mayorkas), or redemption agreement that does not violate the “at risk” requirement of the EB-5 Program, all of the timelines that had developed into somewhat of an industry standard would be called into question if the backlog were to occur. More questions than answers are available at this time on these subjects, and will require the deliberation of numerous program stakeholders from across sectors going forward.
Mr. Homeier spoke about the new “risk factors” that these developments represented for EB-5 investment offerings and how Regional Centers would need to articulate these risks in their private placement memoranda (PPMs). Furthermore, there are now risks for those immigrant investors already partially through the EB-5 process that Regional Centers will have to consider how to disclose to disclose this new and material information. Regional Centers should consult with their own legal representation on these matters – especially since there are currently a number of “unknowns” that need to be included in the PPM disclosures.
IIUSA will continue to lead the effort to cultivate a deep industry understanding of this new development from multiple disciplines, and closely consider how it plays into our advocacy platform. Through deliberations at the leadership and committee level, well informed by invaluable input from the membership, and continued outreach to the public and private sectors, we can discern answers to the current “unknowns” and what policies are necessary to keep the EB-5 Regional Center Program as productive as possible.
Those that missed the webinar and would like to view a recording, email email@example.com. Only $60 for IIUSA members ($135 for nonmembers).