EB-5 Visas and the Chinese Waiting Line. Ten Things I learned from Mr. Charles Oppenheim, Department of State (DOS), Chief, Immigrant Visa Control and Reporting (including the fact that $1,794,259,000 – almost $2 billion was invested in the U.S. in Fiscal Year 2015)
By Bernard Wolfsdorf Esq., Managing Partner, Wolfsdorf Rosenthal LLP
On October 22, 2015, Mr. Charles Oppenheim released critical information at the IIUSA conference in Dallas, Texas regarding the EB-5 program, including predictions as to the Chinese EB-5 waiting line.
In May 2015, the DOS announced the establishment of a cut-off date for the Chinese EB-5 category of May 2013, establishing a waiting line of 2 years for persons chargeable to the China quota. Remarkably, in the seven months from May 2015 to November 2015, the waiting line has not retrogressed once and has moved forward at the rate of about one month in every one of the 7 past visa bulletins. Fortunately, this trend continues for the entire first quarter of Fiscal Year (FY) 2016 (October 2015-December 2015), and slows down only slightly in the second quarter of FY 2016 (January 2016-March 2016). It may be noted Mr. Oppenheim has refrained from making predictions for the March 2016 EB-5 Visa Bulletin. This is despite the unprecedented surge in filings leading up to the critical September 30, 2015 sunset date when the program was extended for 10 weeks to December 11, 2015 as part of a continuing resolution.
Highlights of Mr. Oppenheim’s comments are:
1) The ACTUAL Final Action Date or cut-off date for China EB-5 for December 2015 will be December 15, 2013.
2) The ESTIMATED Final Action Date for China EB-5 for January 2016 will be January 8, 2014.
3) The ESTIMATED Final Action Date for China EB-5 for February 2016 will be January 15, 2014. Note for February the forward movement is only one week per month because of the workload implications associated with the start of the Chinese New Year, as opposed to January 2016 which represented a forward movement of three weeks. The rest of the world remains current with no with limit on the processing of cases ready for final action.
4) Most important, Mr. Oppenheim explained that based on current demand patterns, for September 2016, the last day of the FY 2016 year, a best case scenario for a China EB-5 Final Action Date would be May 2014 and the worst case would be April 2014. This of course could be April 1, 2014, and that date could be “frozen” at April 1, 2014 at any point during the summer months to hold visa issuances within the FY-2016 annual limit.
5) This means the waiting line for applicants chargeable to the China quota would continue to be about two years for the next few months and would only increase to about 2 1/2 years by the end of the 2016 Fiscal Year on September 30, 2016. Since most cases take at least 18 months to be scheduled for final interviews abroad, this means that for FY 2016 the additional waiting line caused by the China quota is a mere 6-12 months, hardly the catastrophe anticipated by the surge in EB-5 filings.(USCIS IPO average processing times) are presently 13.8 months and scheduling an interview in Guangzhou takes another 4-5 months).
6) On October 1, 2015, the FY 2016 limit of 9,940 EB-5 visas became available for use under the worldwide distribution.
7) For FY 2015 ending September 30, 2015, 9.764 EB-5 visas were issued of which 8,157 or 83.5% were from China with the rest of the world providing only 16.5% of applicants.
8) Vietnam provided the 2nd largest number of EB-5 immigrants with 280 immigrants representing 2.87% of the total. Third was Taiwan with 139 or 1.4%. South Korea was fourth with 116 or 1.2%. In 5th place was India with 111 or 1.1%. India joined the top 5 countries for the first time. It may also be noted that for the first time Asia provided all of the top 5 countries. In prior years, Mexico (FY 2014-129 visas) and Venezuela (FY 2013-92 visas) were in the top 5.
9) Of the 9,764 EB-5 visas issued, 9,689 or 99.23% were in the T5 ($500,000 Direct-TEA/Rural) and I5 ($500,000 Regional Cetner-TEA/Rural) categories and less than 1% (.77%) were in the C5 ($1m Direct) and R5 ($1m Regional Center) categories representing almost $5 billion dollars invested in the U.S. economy. This is slightly below the 10,692 issued in FY 2014. The reduction is because the number of visas available declined slightly as a result of less spillover from unused family visas together with many visa applicant “no-shows” for September 2015 immigrant visa interviews. Some were refused, primarily for not having all of the required documents, and were classified as Section 221(g) “soft “denials.
10) Of these 9,764 EB-5 visas, only 991 or roughly 10% adjusted status in the U.S., whereas 8,773 consular processed through American consulates or embassies abroad.
These critical statistics show the vitality and continued success of the EB-5 visa program which provides billions of dollars of capital every year to developers and U.S. industry while also creating thousands of jobs for U.S. workers without costing U.S. taxpayers a penny.
Since EB-5 deal flow is presently at least 5-6 years before an I-829 removal of conditions application is approved, and the money available for return to the investor, an estimated $25-$30 billion is in play. Moreover, with an estimated 15,000 petitions currently pending in the pipeline, representing about $7.5 billion, the stakes are high. In addition, many of these immigrants purchase homes and businesses magnifying the contribution to the U.S. economy. My experience is most of my EB-5 investor clients purchase homes in the $2-$5 million range adding another $20-$50 billion annually, not to mention the businesses purchased and an average $100,000 a year spent educating each child at private schools and colleges.
It’s time for Congress to step up to the plate and pass a permanent extension to the EB-5 program and to raise the quota. The EB-5 visa category is restricted to 7.1% of the 140,000 Employment Based Immigrant Visa allocated annually. The U.S. needs to issue EB-5 visas to 10,000 investors as originally intended by Congress, not the estimated 3,500 families currently processed. Each EB-5 petition presently uses approximately 2.7 visas on average. The reason being that the Immigration and Nationality Act requires that not only the investor’s visa issuance be counted against the EB-5 annual limit, but also their spouse and child’s visas, causing long waiting lines for Chinese investors.
This quota of approximately 10,000 was set by the Immigration Act of 1990 signed into law over 25 years ago by President George H.W. Bush. The quota has never been adjusted despite an over 1,000% increase in demand in the past 10 years alone. In contrast, 55,000 visas are allocated for the Diversity Lottery Program which are randomly awarded annually to applicants with a high school diploma or two years’ work experience. In addition, tens of thousands of visas available under the annual limits were not used during most of the earlier years of the EB-5 program. From FY 2006 to FY 2008, only 3,038 visas were issued so just for these 3 years there were almost 27,000 unused visas that need to be recaptured.
IIUSA is deeply grateful to Mr. Oppenheim of the U.S. Department of State for being among the government representatives speaking at the Dallas event from October 21-23, 2015. The EB-5 Market Exchange was attended by hundreds of developers, Regional Centers, industry specialists, and others actively involved in this important and highly successful investment visa program.