What is the EB-5 Quota?

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2 What is the EB-5 Quota? Immigration Act of 1990 made approximately 10,000 visa numbers for EB-5 investors and accompanying or following to join family members. This allocation has never been changed. A majority of the EB-5 visas issued each year are issued to family members of investors at a rate of about 1 investor for every 3 visas issued. This translates into availability for 3,000 to 4,000 investors each year. In past years the EB-5 annual limit of 10,000 visas has been sufficient to meet demand. USCIS has reported a 700% increase in I-526 filings since 2008 EB-5 Visa Issuance has increased 1,250% from With this increased demand the number of EB-5 visas has become insufficient. 2

3 EB-5 Totals (1,250% Increase for ) [Chart Provided by Courtesy of the U.S. Dept. Of State] Agency FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014* State Dept ,099 3,222 1,139 2,879 6,678 7,312 9,228 USCIS ,252 1,464 Total ,443 4,218 1,885 3,463 7,641 8,564 10,692 *October-September (preliminary subject to change) 3

4 EB-5 Top Five Posts for Fiscal Year 2014 (ends Sept. 30) [Chart Provided by Courtesy of the U.S. Dept. Of State] FY 2014* C5 T5 I5 R5 Total Guangzhou , ,237 Seoul AIT Taipei Ho Chi Minh City Abu Dhabi Total All Posts , ,228 *October-September (preliminary subject to change) 4

5 EB-5 Top Five Posts for Fiscal Year 2013 (ends Sept. 30) [Chart Provided by Courtesy of the U.S. Dept. Of State] FY 2013 C5 T5 I5 R5 Total Guangzhou , ,198 Seoul AIT Taipei Tokyo Ciudad Juarez Total All Posts , ,312 5

6 EB-5 Top Five Posts for Fiscal Year 2006 (ends Sept. 30) [Chart Provided by Courtesy of the U.S. Dept. Of State] FY 2006 C5 T5 I5 R5 Total Seoul Guangzhou London Montreal AIT Taipei Total All Posts

7 Top Five EB-5 Countries 2014 [Chart Provided by Courtesy of the U.S. Dept. Of State] FY 2014* C5 T5 I5 R5 Total China - Mainland born , ,128 South Korea Mexico China - Taiwan born Vietnam Total All Countries , ,692 *October - September (preliminary data - subject to change) 7

8 Top Five EB-5 Countries 2013 [Chart Provided by Courtesy of the U.S. Dept. Of State] FY 2013 C5 T5 I5 R5 Total China - Mainland born , ,895 South Korea Mexico China - Taiwan born Venezuela Total All Countries , ,564 8

9 Top Five EB-5 Countries 2006 [Chart Provided by Courtesy of the U.S. Dept. Of State] FY 2006 C5 T5 I5 R5 Total South Korea China - Mainland born China - Taiwan born Netherlands Great Britain & N. Ireland Total All Countries

10 What is the Quota Backlog? The Immigration and Nationality Act establishes separate numerical limits which are applied to Family and Employment (including EB-5) and Diversity Lottery visa categories during each fiscal year. The maximum number of visas available to any single independent country may not exceed about 7% of annual Family or Employment limits. If demand from a particular country exceeds available visas, the country becomes oversubscribed and a cut-off date will be established to hold usage w/in 7% limit. Unused EB-5 visas may be made available to other countries. If the level of demand for a visa category does not exceed the amount of numbers available for use during a particular month by applicants from a particular country, the category is considered to be Current ( C ) for that country of chargeability. 10

11 What is the Priority Date and Why is it Important? For EB-5 applicants, the priority date is established on the date of receipt of the I-526 petition with USCIS. For an individual to be issued a visa, or their status adjusted, the applicant s priority date must be prior to the cut-off date, if any, as published by the Department of State, Bureau of Consular Affairs in the Visa Bulletin for that month. The Visa Bulletin is accessible at Cut-off dates may move forward or backward ( retrogress) or they may remain unchanged from one month to the next. They may move very slowly or progress by several months or years in one month. It is not possible to accurately predict the movement of cut-off dates or when a category will become current. 11

12 Visa Availability based upon Country of Birth, Not Country of Citizenship Country of birth is what determines applicant s country of chargeability. The country of birth of a spouse may be used to determine chargeability. Cross chargeability does not rest on principal immigrant If there is a quota backlog for mainland China, the country of birth of the principal immigrant/investor, may be cross-charged to Hong Kong, if accompanying spouse was born in Hong Kong. Hong Kong and Macau have separate quotas. Child may cross charge to country of birth of either parent, but a child s country of birth cannot be used to determine chargeability. 12

13 EB-5 Petition Filing Increase 700%

14 China EB-5 Quota Reached for the First Time in FY 2014 August 23, 2014, the Department of State announced that effective immediately, the EB-5 preference category had become unavailable. A new allocation of about 10,000 visas became available on October 1, 2014, the beginning of the Fiscal Year The Visa Bulletin for November 2014 continues to show that a China EB-5 cut-off date has not yet been established -- it remains Current and will remain so for the next few months. The State Department has indicated that current demand will require the establishment of a cut-off date, near the end of the third quarter of Fiscal Year 2015, possibly as early as May

15 Visa Bulletin for November 2014 Employment- Based All Chargeability Areas Except Those Listed CHINAmainland born INDIA MEXICO PHILIPPINES 1st C C C C C 2nd C 08DEC09 15FEB05 C C 3rd 01JUN12 01JAN10 22NOV03 01JUN12 01JUN12 Other Workers 01JUN12 22JUL05 22NOV03 01JUN12 01JUN12 4th C C C C C Certain Religious Workers C C C C C 5th C C C C C Dates noted are cut-off date for that visa classification and country; meaning there is a quota backlog If preference category is backlogged, can t file adjustment I-485 or obtain immigrant visa until priority date is reached Priority date must be prior to cut-off date for visa to be available to the applicant

16 Will Other Countries Become Oversubscribed and Require Cut-Off Dates? No, oversubscription will only affect China % of the world s EB-5 petitions were filed by Chinese nationals last fiscal year. Based on the current level of demand there would be no reason to impose an EB-5 cut-off date for any country other than China for the foreseeable future. 16

17 What Does the Impending Quota Backlog Mean for Chinese Investors? Chinese investors will still be able to invest. Chinese investors will still be able to file I-526 petitions. Chinese investors will still be able to have their I-526 petitions approved. However, the final step of the process issuance of the conditional immigrant visa or adjustment of status to conditional permanent residence will not occur until there is an EB-5 visa number available for the investor. 17

18 China EB-5 Cut-off Date of May 1, 2013? [Wolfsdorf/Gaffney not State Dept. Official Data] The Million Dollar Question : What will be the date gap be when announced in May or June 2015? Missing Critical Data: How many pipeline cases approved in FY 2013 are currently at the NVC and how many petitions will USCIS approve in the next 6-8 months? Absent NVC data, we can make some preliminary estimates based on the following assumptions: 10,375 petitions pending as of July 1, ,200 filed in July 2014 alone 4,015 petitions approved in the first 9 months of fiscal 2014 Average of 600 petitions adjudicated monthly with an average approval rate of approx. 80%, 5,353 petition approvals likely for fiscal 2014 Visa usage rate of 66.5% per petition approved, Total (including dependents) of approx. 3 visas issued for every petition that is used From these assumptions it is estimated there will be a need for about 11,000+ visas just to meet the demand for FY 2014 I-526 approvals. Now add cases pending from before FY 2014 (FY 2012 & 2013 ) and add about ¾ of FY 2015 approvals to get total demand for 3 rd quarter 2015 that is from April-June 2015 and 4 th quarter (July-Sept. 2015) 18

19 The China EB-5 Date-gap Unofficial Guesstimate 85.37% or 9,128 of I-526 s approved in FY-2014 chargeable to the China quota. This exceeds the 8,700 visas which the State Department has indicated will be available to Chinese EB-5 applicants for Fiscal Year 2015 (from October 1, 2014-September 30, 2015). But how many of these cases will reach NVC by May/June 2015 to be included in FY-2015 for visa issuance? And how many cases approved in FY-2013 (and before) will need to be included in the FY-2015 demand? An approved petition would have to reach the NVC no later than March 1 st to have any chance of consideration for use of an FY-2015 number. Take Away: Visa demand for FY 2015 and date gap determination will depend largely upon number of pending cases at the NVC and USCIS processing times which may pick up by the end of this year when the IPO should be fully staffed. Unofficial Guestimate Establishment of an initial backlog of about months in May or June 2015 growing to as long as 36 months may be possible if current rate of filings continues, and decreased adjudication times. Presently at 13.8 months. 19

20 Who will be Impacted by the Likely China EB-5 Cut-off Date of May 2013? If a 24 or 26 month backlog is established in 2015, this will not seriously impact applicants with priority dates in January or February of 2013 or earlier unless the numbers retrogress much further in June or July With an approval rate of approximately 80%, we can expect at least 7,000-8,000 approved petitions in the next 12 months requiring at least 20,000-25,000 visas. We can therefore expect a 2-3 year wait for applicants with priority dates in the later half of 2013 and in In October 2015, absent Congressional or Administrative relief, the China EB-5 category could open with a cut-off date of up to 2 years. 20

21 A Major Chinese EB-5 Quota Issue - RISK OF AGING-OUT- The China EB-5 backlog will have the biggest impact on derivative children who turn 21 years old after the I-526 petition is filed. The Child Status Protection Act (CSPA) formula provides for an artificial determination as to the age of the child on the date that a visa number becomes available. CSPA provides some relief but not complete protection. The law permits the subtraction of the number of days the petition was pending, from the child s age at the time of visa availability. If the petition is filed immediately before the child s 21st birthday, and it takes 12 months to adjudicate, but the quota is backlogged 26 months, then the child will age out if approved after a months cut-off date is established. If the child is under 21 at the time of petition approval using this formula, he or she may benefit from CSPA age-out protection, provided the second step to lock-in the age is taken. Investors with children 18 and over are advised to file as soon as possible. The quota backlog will have the biggest impact on derivative children who turn 21 after the I-526 petition is filed. 21

22 The Risk of Aging-Out If the child s CSPA age is under 21 when the visa becomes available, he or she must still seek to acquire a green card within one year of visa availability in order to preserve derivative status and eligibility. If the child fails to do this, the CSPA protections will not apply, and the child s actual biological age will control. The requirement of having sought to acquire LPR status has been narrowly defined by the USCIS and Department of State. For the USCIS, filing an I-485 adjustment of status will freeze the child s age; for the Department of State, the DS 260 forms must be filed, and the fee bill paid. When parents adjust by filing the I-485, derivative children abroad can be protected by filing form I-824 with the I-485 adjustment. 22

23 Other China Cut-off Consequences In brief Job Creation: A one to two-year initial delay before filing the I-829 provides more time to create jobs, but its also a double edged sword as it could require the jobs to be maintained for a longer time. Longer period of sustaining investment: Investment must be sustained throughout the period of the applicant s residence. With a delay of at least 1-2 years after the approval of the I-526 petition and before Chinese investors can immigrate, USCIS will need to recalibrate adjudications policy and develop new rules as many projects have a 5 year loan maturity. Material Change: Businesses must adapt and change and the additional waiting time before filing Chinese I-829s increases the likelihood and possibility of changes in the business. Direct or Stand-alone Investors: may not be able to enter the U.S.to run their businesses for 1-2 years. 23

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