When Congress created the EB-5 program in 1990, the aim was to provide immigrant investors with a path to lawful permanent residency.
But a backlog in the program—caused by a combination of lengthening petition processing times and lack of a sufficient number of available visas each year—has reached a point where investors are practically discouraged from participating in the program. Lawmakers in Washington must act, and act soon.
The program’s intent to spur economic activity remains the same today as it was 30 years ago. So while it might be tempting to shrug off the protracted wait times, the reduction in foreign investments that would result from this lack of participation could hurt the broader U.S. economy and leave job growth on the table.
The problem is gravest for investors from mainland China, Vietnam, and India because “retrogression” means visa applicants from those countries may have to wait as long as 16 years to get a permanent green card. With predictions that South Korea, Taiwan, and Brazil could find themselves in a state of retrogression next, experts are expressing concern.
“EB-5 is directly linked to job creation for American workers,” said Leon Rodriguez, Partner at Seyfarth Shaw LLP and former director of the U.S. Citizenship and Immigration Services (USCIS). “It is in America’s interest to resolve the backlog.”
Legislative Proposals Fall Flat With Industry
The EB-5 visa backlog has become so significant that it has garnered the attention of legislators, but few of their proposed solutions have met the approval of industry participants. How exactly the backlog can be resolved is unclear, a multipronged solution is likely necessary.
Tom Rosenfeld, president and CEO at CanAm Enterprises, a leading regional center operator active in the EB-5 industry for more than 15 years, believes that Washington should step in to ensure the EB-5 program’s long-term viability. “Prioritizing legislative changes that afford visa relief is imperative for all EB-5 stakeholders,” he said.
One solution could lie in an examination of what many observers believe was Congress’ original intent 30 years ago: to admit 10,000 investor families annually, not 10,000 individuals—i.e., visas granted to the principal investors plus all derivative family members listed on up to 10,000 I-526 petitions each year.
“Because each petition results in an average of about three visas, eliminating derivatives from counting against the annual limit of available EB-5 visas would shorten the backlog by approximately two-thirds,” said Bernard Wolfsdorf, managing partner at Wolfsdorf Rosenthal LLP.
Pool of Untapped Visas
Additional relief may be found in the pool of untapped visas. All visas available to EB-5 applicants have been granted each year since 2014. But before that, many went unused, and recapturing them could go a long way toward addressing the backlog. Alternatively, strides could be taken if the EB-5 category could “borrow” from other categories, such as any of the underutilized employment-based visa categories or the lottery-based diversity visa category.
While accessing additional visas may only be a partial solution, it would certainly be impactful. An analysis by Suzanne Lazicki, founder and president at Lucid Professional Writing, found that reallocating 1,500 visas from the diversity category could cut expected EB-5 wait times by up to 15%. Not only does this mean faster processing and reduction of the backlog, but the additional visas could do a lot to spur economic activity.
“Adding even 1,500 extra visas will have a meaningful impact on wait time and job creation,” said Reid Thomas, executive vice president of NES Financial, a specialty financial administrator serving sectors characterized by high administrative complexity, increased transaction security needs, and challenging regulatory compliance requirements, including EB-5.
Thomas, along with Robert Divine, leader of Baker Donelson’s global immigration group and former chief counsel of USCIS, pointed to a 2013 study by the U.S. Department of Commerce that highlighted the significant job growth that has resulted from the EB-5 program.
According to those statistics, an extra 1,500 visas would translate to about 8,000 permanent U.S. jobs. “Given that the U.S. welcomes well over one million new permanent residents annually, providing 1,500 additional visas to create 8,000 new jobs seems like a relatively small ask,” Divine said.
While the exact solution to the EB-5 visa backlog has yet to be identified, what matters most is to maintain the momentum that this issue has gained due to its dramatic impact on an increasing number of EB-5 investors.
Industry participants and political proponents agree that EB-5 is beneficial to the country’s economy and job growth and that legislative relief is necessary. The EB-5 program has finally received meaningful attention in the Senate, and it is being actively discussed. The time is now to help our legislators design the right solutions and get them implemented.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Jill Jones is assistant general counsel at NES Financial Corp., providing legal and strategic advice on technology-enabled EB-5, 1031 and opportunity zone fund administration services. She provides the principal direction, management, and support for all legal issues related to the company’s EB-5 visa products and services and is an active member of IIUSA, having served on its board of directors and best practices committee.