Filings Almost Double for EB-5 visas

By Leon Snaid*

The EB-5 visa program gives green cards to foreign investors who invest $1m in a commercial enterprise that will create jobs for 10 people. The amount is reduced to $500K in rural and high unemployment areas.

Regional Centers are investment opportunities that are approved by the USCIS for such investments. When people hear that the Immigration Service first must approve the investment opportunity before it is designated as a Regional Center for EB-5 visa petitions, they assume that their investment will be safe and that they are guaranteed green cards. In reality, all the Immigration Service is saying by granting Regional Center status is that if everything goes according to the business plan, each investment will generate jobs for 10 workers.

The USCIS disclosed at an EB-5 Visa Stakeholder Meeting in June, 2010 that there were more petitions for green cards through the EB-5 Visa category in the first 7 months of this fiscal year than in the entire 2009 fiscal year. Investments in Regional Centers accounted for approximately 90-95% of these petitions.

According to the USCIS they received 1100 EB-5 visa petitions from October 2009 to May 2010 and approved 955 of such petitions.

The petitioner initially receives a two-year Conditional Green Card and at the second anniversary must prove that the business is operating according to the business plan and the money remains invested.

Choice of Regional Centers Expands

There are now ninety-four Regional Centers in which an investment can lead to EB-5 visa green cards for foreign investors and their families. The Immigration Service recently published their new list, which includes 29 California Regional Centers. In March 2007 there were only 17 active Regional Centers.

An investment in a Regional Center is becoming an attractive way to get permanent residence, if you have the money. The amount of the investment has not increased in 20 years, but potential investors must be careful. An investment in a Regional Center does not guarantee a green card through the EB-5 visa program.

Regional Centers offer flexibility to an investor. For example, a person may invest in one of the California Regional Centers, while operating a business in Vermont or retiring in Florida. Parents may lend money to their children for the initial investment.

 “Which are the best Regional Centers to invest in?”

The choice of investment opportunities in Regional Centers has swelled and people should select investments that suit their investment strategies and which they believe will yield the best results. There are many types of Regional Centers, which include investment opportunities in hospitality, warehousing, real estate, agriculture, manufacture and even the motion picture production.

An investor should consider the types of investments that appeal to him or her. Why would someone invest in vineyards or motion pictures if they do not know the first thing about them?

Source of Funds

There are many issues in the EB-5 visa. What is particularly important is the source of the funds. You must be sure that the source of the funds for the investment qualifies for the EB-visa. Money that is borrowed on the security of the investment or cash that comes from an investor’s corporation does not qualify. The investment must be made directly by the investor. The proof of the source of the funds is critical.

It is possible for the funds to pass through various banking accounts, provided it is possible to trace the funds as being from the investor.

Due Diligence

A person must make specific inquiries with the Regional Center that relate to the likelihood of the business being successful and the probabilities of the investment resulting in a green card.

It is essential to use the services of professionals, because once the money is invested, the investor has very little control over the business. While the EB-5 visa requires an investor to have policy-making decisions, an investor’s input is minimal, when there are many investors.

*Author: Leon Snaid is a Certified Immigration Law Specialist, who is certified by the State Bar of California’s Board of Legal Specialization. www.snaid.com

Warning: The information is the above article is not legal advice and should not be acted upon without first consulting with an attorney.

In the past a petition that may have been filed by a U.S. citizen for Permanent Residence for his/her spouse was automatically revoked upon the death of the U.S. citizen. There was certain relief if the parties had been married for more than 2 years.

Now the Immigration Service has provided guidance on petitions by deceased U.S. citizens for their spouses.

In future, surviving spouses of U.S. citizens who died before the second anniversary of the marriage, if not remarried and who were not legally separated from the citizen spouse at the time of the citizen’s death and who are residing in the United States as well as such surviving spouse’s children will now be entitled to humanitarian relief in their pursuit for Permanent Residence.

There is no question that our immigration laws need overhauling. Many people think that the only area of immigration law that is being considered is the “legalization” of illegal aliens. This is not true. There are many areas of immigration law that need review and changes.

The big question is if and how the immigration laws will be changed.

On June 25 the President, Vice President, and key cabinet members met with a bipartisan group of Senate and House leaders representing the different views on immigration. The White House characterized the meeting as the "launch" of a policy conversation and "an honest discussion about the issues...identifying areas of agreement and areas where we still have work to do, with the hope of beginning the debate in earnest later this year."

President Obama wants the leaders of both parties to get something done soon. He does not want discussions on the issues to be delayed for two, three or five years from now.
 
 The subject is highly sensitive and will draw inflame opposition to any changes. The good news is that at least immigration reform is being discussed.

On March 20, 2009 the law making Religious Workers eligible for permanent residence as Special Immigrants was extended to September 30, 2009

Priority Dates and How they Work

The USA has an annual quota on the number of green cards it gives out to immigrants in the various categories that qualify for green cards. The annual quota is for the fiscal year (“FY”) of the USA, namely October 1- September 30.

There are the family categories (or as they are known, the Family Preferences e.g. Sons and daughters of U.S. citizens, Spouse of Permanent Residents etc.) and the Employment categories (Employment Preferences e.g. People of extraordinary ability in the sciences; People with Bachelor degrees whose skills are in short supply in the USA etc.)

In most of these “Preferences” there is a backlog, which means that there are more people who are eligible to get green cards, than there are green cards available from the quota each year. So there are lines in the different categories.

When a person applies for permanent residence in one of these categories, the date of the application is basically his/her “priority date.” This is provided that the application is ultimately approved.

So a person’s application may be approved, but because of the backlogged quota system in most of the Preferences, there probably will not be a green card available at that time.

How does a person know, when they are at the front of the line to get their green cards?

Each month the State Department issues the Visa Bulletin, which informs the public, which people in the various preferences are at the front of the line to get their permanent residency.

The State Department does not mention the people by name, but rather gives the priority dates that are “current.”

When a person’s priority date is current,  they are entitled to file for the final processing for their permanent residence (green cards.)

Guestimates on when a person may expect his/her priority date to be current

I have carefully used the word “guestimates,” and not “estimates,” because the only information that is available in the Visa Bulletin is how long the person, who now at the front of the line had to wait to get there.

So if a person’s Priority Date is June 1, 2005 and their priority became current on June 1, 2009, they had to wait in the line for 4 years in their preference category. This information does not guarantee that someone, who applies in the exact same preference category on June 1, 2009, will have to wait the same amount of time. There could be many more people in front of the person, who applies on June 1, 2009, than were in front of the person who applied in June 2005.

The calculation is further complicated by the fact that there is a limit on the number of green cards that may be given to any particular country in any given year. For the most part all countries are equally backed up, except China, India, Mexico and the Philippines, which are backed up further.

For many years people were able to get green cards by opening a business in the USA and transferring themselves from their foreign business to the USA, under the Intra company Transfer Visa (L-1 visa) This option is still available, but the requirements to qualify have become far more onerous than in the past.

In 1990, when it was relatively easy to obtain green cards through this intra company transfer method, Congress created the EB-5 visa, also known as the Employment Creation Visa.

This visa allows foreign investors to gain permanent residence to the United States if they invest $1 million in a new commercial enterprise that directly employs 10 U.S. workers. The amount is reduced to $500,000 if the business is located in a high unemployment area.

The procedure is that a person (family) receives a conditional green card for 2 years and then applies for an unrestricted green card by proving that the money is still invested and 10 people are still employed.

When this EB-5 visa law passed, the Immigration Service expected a run on the 10,000 green cards that are available each year. Instead there was not much more than a nibble by foreigners. The reason was that it was still easy to get a green card by setting up a business with far less than $1m and it was not necessary to have at least 10 employees. Also 18 years ago, a million dollars was worth far more than it is today.

Then in 1993 Congress created a pilot program known as the Regional Centers, which allows private and governmental agencies to set up prepackaged investment opportunities for foreigners, which require certification by the Immigration Service. Many of these investments only require a $500,000 investment for the EB-5 Visa.

The advantage that Regional Center investments offer to investors is that investors do not have to concern themselves with the day-to-day management of a business, as long as they are involved in policy decisions. This allows someone to live in a different city to where the investment is made and even conduct a different business at the same time.

 History of the Regional Centers

Since sophisticated business people, using sophisticated lawyers created the investment opportunities in the Regional Centers, they wanted to make it as easy as possible for people to invest in their Regional Centers.

Some of the investment structures in Regional Centers were extremely creative so before offering them to the public, the Regional Center operators asked the Immigration Service for clarification. They wanted to know whether certain types of investment situations would qualify for EB-5 Green Cards.

The Immigration Service provided “advisory opinions.” Advisory opinions by the Immigration Service do not bind the Immigration Service, but they were the best source of information on the meaning of the new law.

Obviously the Regional Centers and investors relied on these advisory opinions.

 Suddenly in 1998 the Administrative Appeals Office (An appeal court of the Immigration Service) overturned some of these advisory opinions, which Regional Center operators and investors relied upon and suddenly what previously qualified under the law was no longer valid.

EB-5 visa investors, who were hurt by these 1998 decisions lobbied Congress for help. Eventually in 2002 Congress enacted changes to the EB-5 program, which gave some relief to people who filed petitions for EB-5 Investor Green Cards and had them approved between January 1, 1995 and August 31, 1998.

This fiasco was a significant detriment to attorneys recommending this visa to their clients from 1998 until recently.

Three reasons why the EB-5 visa investment is gaining renewed interest.

Three reasons have all converged at the same time to make the EB-5 visa more attractive to investors.

1. The Dropping dollar offers a deep discount.

In 1992, when the Euro became legal tender, it took 560,000 Euro to make the $500,000 investment.

In March, 2009  it takes 366,611-00 Euro for the $500,000 investment

The same is true for many other currencies.

The drop in the value dollar results in many foreign investors risking less of their net worth in Regional Centers, where they are not in control of the day-to-day management of their investment.

2. Greater Certainty in the Law

For years there was confusion and chaos in the interpretation of the EB-5 visa law, which led to uncertainty in the law. People need to know what is permitted under the law and the last 19 years have given clear definition to many of the qualifying requirements.

3. Involvement by the Immigration Service

The Immigration Service has been directing a lot more attention to this EB- 5 investment visa.

In September 2004 they organized a Public Information Meeting on Regional Centers and the Immigrant Investor Pilot Program. A few months later they established a special division in the Immigration Service that now oversees the development of their policies and regulations as well as guidance and training of their personnel to adjudicate these investment visas. So they are now organized.

The Pilot Program for the Regional Centers was scheduled to sunset in September 2008, but has been extended to Setember 2009. This program has been extended a number of times in increments of three years. This current extension was passed almost as an emergency measure to give Congress time to deal with the current economic crisis before reviewing the EB-5 visa program

Conclusion

Perhaps the greatest reason why businesspeople are giving the Investment Green Card (EB-5 visa) a fresh look is because the L-1, Intra Company Transfer is now fraught with obstacles and uncertainty.

In the past two years there has been a distinct increase in the number of petitions that have been filed and approved than in the previous 8 years. Even so, the number of green cards that have been granted are less than are available to investors on an annual basis. The question now is:  How long will this be the case?

The United States issues green cards on a quota basis. There are different categories through which people can obtain a green card and there is a quota on how many green cards will be issued annually in these different categories.

The quota system allocates green cards for the fiscal year October 1 to September 30.

Most of the categories have lines, because there is a greater demand for green cards than there are green cards available.

A person gets into a category line usually on the date a petition for permanent residence is granted. This date is known as a priority date. A priority date for skilled workers is usually the date that they file their labor certification applications.

The quota system is erratic. For example, during March 2009 skilled workers, who had a priority date of May 1, 2005 were getting visas in March 2009. Yet next month, April 2009, this category will regress to people with priority dates of March 1, 2003 or earlier.

All indications are that the 3^rd preference will regress even further or the visas in this category may become totally unavailable until the new fiscal year.

Selective Service is the way the U.S. Government prepares for a military crisis. A person is not inducted into the military by registering, but may be drafted in a military crisis. www.sss.gov

Illegal aliens living in the USA must register and do not require a social security number to do so.

Tourists, students and members of a diplomatic corp or trade mission and their families need not register.

If you fail to register when you were required to do so, you may find yourself being denied naturalization. It is possible to apply for Naturalization after you turn 32, if you failed to do so. However, you must provide good reasons why you did not register, when you should have done so.

Since the bill was previously passed in the House of Representatives on 3/4/09, it now  moves to the White House for presidential signature, which is expected to occur in the coming days.

Good news for people waiting for FBI clearances. The backlog for FBI name checks pending more than six months has been eliminated. 

Just 16 months ago, more than 349,000 name checks were pending; of that, nearly 150,000 had been pending for more than six months.  All USCIS requests pending for six months or more as of February 28, 2009, have now been responded to by the FBI’s National Name Check Program (NNCP).   

USCIS says that the FBI are on schedule to meet their next two goals:  all name checks requests pending longer than 90 days to be completed by May 30, 2009 and, by the end of June 2009, the FBI will complete 98 percent of USCIS name check requests within 30 days and process the remaining two percent within three months.  USCIS says that it will in conjunction with the FBI continue to focus on sustaining a rigorous and efficient.