At NES Financial’s recent EB-5 Innovation Summit, EB-5 industry leaders discussed some of the foremost opportunities and challenges emerging in the EB-5 marketplace. As expected, visa retrogression in China was a major topic of discussion. With China providing the largest source of EB-5 program participants, reaching the visa cap will have major implications throughout the industry.
Prior to the EB-5 program’s recent explosion of growth, the visa quota had not presented much of an issue. The current law provides that a per country limit of 7% of all visas will become operative in any fiscal year where the program limit of 10,000 worldwide visas is reached. In August 2014, the United States Citizenship and Immigration Services (USCIS) announced that the program had reached its limit of 10,000 visas for the first time, and visas for Chinese immigrants became unavailable until the start of the next fiscal year.
Since Chinese investors in recent years have accounted for 80% or more of the total EB-5 immigrant visas issued, when the worldwide limit is reached, the per country limit for China results in a waiting list for Chinese investors to obtain conditional immigrant visas. This is also known as retrogression. The quota for fiscal year 2015 is expected to be reached again in May-June, which could lead to far more substantial, yet unpredictable, delays for Chinese immigrants. As will be discussed in a later post, the anticipated retrogression is one of several forces compelling a more global search for EB-5 investors.
It is important to recognize that retrogression has a substantial impact on the investors and their families. Retrogression does not affect an investor’s ability to file an I-526 petition or even get an I-526 approval, but it creates a delay in the availability and issuance of the conditional visas and rights to enter the country.
Many immigrants making use of the program do so, at least in part, to obtain visas for their children. With retrogression in effect, many investors who filed I-526 petitions while their children were under the age of 21 run the risk of their children aging out of visa eligibility before the conditional green cards can be issued. While a child’s age is technically “frozen” during the I-526 adjudication process, the clock begins to tick again as soon as the I-526 is approved. If the wait period stretches to two years or more, as some fear it will, many children will become ineligible to immigrate under their parents’ I-526 petition approvals. Ron Klasko explains more:
For EB-5 issuers and project developers, retrogression introduces additional complications. As was discussed at our recent Summit, retrogression does not delay the time when funds are to be used in the project or the jobs to be created, but it significantly impacts the timeframe within which the investment can be returned. Each investor must satisfy a two year conditional residency period after his/her green card is issued before filing an I-829 petition to remove the conditions.
Because investor funds must remain “at risk” to qualify for the program, they cannot be returned to the investor before approval of that I-829 without jeopardizing the investor’s immigration status. If the project is designed to be completed in a shorter period of time, the New Commercial Enterprise must be very careful to properly manage the funds (and maintain their “at risk” status) until the immigration process is complete.
NES Financial’s EB-5 Fund Administration Solutions help provide solutions to these problems. By streamlining the escrow, accounting, and repayment processes, as well as managing immigration and financial documents, our Solutions can simplify the process’ many complexities, leaving issuers and developers free to recruit investors and manage project execution. Additionally, our EB-5 Reservation Account Solution helps ensure investor funds can be received early in the EB-5 process, regardless of potential USCIS delays or freezes.
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