EB-5 Has A Strong Heartbeat, But Experts Remain Guarded
This is a report on the condition of the EB-5 industry, based on my subjective impressions of the recent U-Global/EB-5 Investors conference and expo in Miami, which took place on January 12-13, 2023.
There are two organizations that run conferences and expos serving the EB-5 and global migration community – U-Global/EB-5 Investors and IIUSA. Their quarterly and occasional conferences are held in key US and overseas cities where the demand for the American EB-5 program is strong and stakeholders are concentrated. For example, the next two U-Global events are in Ho Chi Minh City and Mumbai, and the next semi-annual IIUSA event for me is in San Diego. The conferences typically attract broad representation from the industry, including securities and immigration attorneys, developers and regional centers, bankers and escrow agents. Sometimes migration agents attend, but that’s truer the further east you go. Seldom does the great white whale – the individual investor – appear at these industry events.
Here are my takeaways from Miami:
1. The new Reform and Integrity Act (RIA) has people feeling hopeful.
When Covid first hit, the industry was devastated and pronounced dead by a lot of people. The virtual industry conferences that did take place were poorly attended, and then the suspension of the Regional Center program gutted EB-5, generally. But this is a new day, and attendance at the Miami conference was robust. During some of the first day presentations, the organizers even had to bring extra chairs into the ballroom. Nobody was wearing a mask, and none of the presenters spent much time worrying publicly about the future challenges of Covid.
One of the main reasons people attend these conferences is to meet business partners and other people in the industry. Indeed, for the most part, everybody who was anybody was there, with some regional center developers, like Pine State and the Behring Companies making a full court push evidencing a strong commitment to the future. Everybody seemed pretty relieved that we have five years to figure it all out, thanks to the RIA.
2. Nobody has any idea how USCIS and the Department of State will implement the changes mandated by the RIA.
One of the constant themes was that the many changes mandated by the RIA will require USCIS to change its forms and its internal processes and the way that it communicates with the Department of State about available visas. So, the RIA is not business as usual. For example, while the new I-526 form has a few boxes to check for rural set asides, and for infrastructure projects, does USCIS’s computerized system have functionality whereby the paper notation will properly be transferred to the USCIS’s digital environment? What about the actual physical handling and administration of files? Will the third-party contractor that handles all the paper be able to account for the files in the different categories?
A lot of the questions about the RIA will remain unanswered until USCIS starts adjudicating files submitted under the new regimen, and that hasn’t happened yet. My personal opinion is that this will roll out, if at all, amidst confusion, botched priority dates, and unintentional unfairness. I don’t believe USCIS will do this deliberately, but they have not shown the kind of leadership and organization needed to usher in a new EB-5 era.
3. Other golden visa programs are making their push.
There have always been a few other countries’ golden visa programs at attendance at these conferences. They typically buy an exhibit table and a sponsorship and give a presentation. I’m not sure if it is an effective means of drumming up business, because there so few actual investors attending, and nobody seems to listen to the presentations. However, the effort has spread from the usual suspects of Cyprus and Portugal to include Canada and Ireland. The Irish representative told me that she hoped to find investors by making friends with lawyers and service providers who – like me – have clients that opt not to pursue the EB-5 program. The main advantage the other programs advertise is speed and lack of up-front risk. For example, the Irish program allows approval before any investment is actually required.
Summary:
The problem, as always, is USCIS. What they will do internally to improve the administration of the EB-5 program is a mystery. Some commentators note a stiffening of USCIS’s position when responding to suits for writs of mandamus and wonder what it means for the future of the program. Previously, the typical mandamus case was resolved after the US District Court complaint was served. I suspect that, if this trend is real, it may be simply because of increasing complexity and disorganization at USCIS. When fighting a lawsuit becomes easier than adjudicating a case, that is what USCIS will do.
Notwithstanding, and in spite of the best efforts of USCIS and Congress to complicate EB-5 beyond the point of comprehension or anxiety, and the structural advantages of some of the other golden visa programs – like Portugal, Ireland and Canada – the US brand remains strong. Whether the EB-5 program lives up to the hopeful tenor of the Miami meeting depends on USCIS, and history has shown that to be a questionable proposition.
