What's the Latest EB-5 News From the Insiders?
The 2024 IIUSA Industry Forum - Atlanta - May 2024
I am a member of the IIUSA, which is the most visible trade group pushing the EB-5 program before Congress. Pretty much all the bigtime EB-5 players are members as well, so when you go to IIUSA’s annual Industry Forum, as I did on May 20-22, 2024, in Atlanta, you do get a sense of where the industry is.
Warning to Investors!
A word about IIUSA – It doesn’t represent investors. Rather, it represents the industry, and more specifically, that part of the industry that trades in Regional Center projects. Even the pricing of the ticket and the membership, and the expensive venue at which the conference was held, seems designed to weed out the dilettantes. Membership and involvement comes at a price so steep that only volume can justify one’s presence at IIUSA. As such, it’s an insider’s club.
I have no objective measure or evidence to support my belief, but I think many of the smaller EB-5 players have been pushed out of the industry as a result of the changes brought by the Reform and Integrity Act (RIA). So, like in every other endeavor, the rich get richer, in this case, thanks to the IIUSA’s lobbying efforts that allowed the expensive changes wrought by the RIA.
I do not suggest that investors cannot trust the industry’s members. After all, the big EB-5 law firms, the Regional Centers, and the other service providers like me, do want the industry to succeed, generally, and do want their investors to succeed as well. But there is a point where you the investor are a loss center – a problem, if you will. For that reason, the balance that serves an investor best – in my opinion - is a successful and experienced developer running the project, and a lawyer representative that is experienced but not too close to any one Regional Center representing the investor. Somebody like…. Me.
A Thought for Future Investors.
There are reports that rural area project I-526e’s are being adjudicated in as little as a few weeks. Hmmm…
Of Interest to Regional Centers and Projects…
A common theme that came across yet again at the Forum is the continued difficulty talking to USCIS about anything. IIUSA continues to work very hard to create a dialog with USCIS whereby straight answers might issue on all the things we care about, such as delays in adjudication, RFE confusion, failure to return receipt notices, and errors in taking fees. Personally, based on my admittedly stale experience from the time I worked at USCIS, I am pessimistic that this will ever change. USCIS is distrustful of the industry, and perhaps with good reason, because they know that anything they say will be used against them in litigation by the industry as a whole, as well as by individual investors. As a case in point, the Forum featured a segment on the litigation that IIUSA is currently funding against USCIS. If I were USCIS, the last thing I’d do would be to bind myself to anything.
Project Managers Can Relax a Little, but Get To Work!
One of results of the RIA is that Regional Centers will be audited. Stakeholders worried about what those audits would entail. Well, the first wave of RIA required audits have commenced, and Forum participants who have gone through the process report that the experiences have been surprisingly positive:
Apparently, USCIS hasn’t been giving much notice – about 15 days. The suspicion is they want to encourage the industry to maintain its books and records on an ongoing basis.
USCIS issued a document request with the notice of audit. The audit began with an initial video conference on Microsoft Teams, and the documents were due only a few days later. Site visits haven’t happened yet, but are forthcoming.
The look back appears to be 2-years – 2 years of bank statements etc.
The process seems to be a little convivial, and not adversarial or antagonistic.
The people reporting on the audits are very well positioned in the industry and suggest that USCIS seems to be feeling its way forward carefully. One wonders whether USCIS chose the Regional Centers they did for early audits because they wanted to start with RCs that might be more likely to have their houses in order.
To Conclude…
I conclude with three takeaways from the Forum:
1. I am glad I am already an “insider,” because it would be hard to break into this industry; and
2. EB-5 is doing well generally, and incremental improvements are likely as IIUSA keeps pushing its agenda; but
3. With the exception of rural project adjudication and their attitude toward audits, USCIS is as inefficient and dysfunctional as ever.