There are still many unknowns regarding the progress of EB-5 since the RIA, but what’s clear is that investors are seeking projects, and investment is hitting American communities like never before.
The passage of the EB-5 Reform and Integrity Act of 2022 (RIA) reauthorized the Regional Center Program for five more years, allowing Regional Centers to apply for designation and submit new projects for approval. Investors once again gained the opportunity to invest in new projects, including those qualified to meet the newly-created reserved categories.
Even though the program was reauthorized, it took some time for activity to ramp up. It has been difficult to get information out of USCIS, with legal challenges over how the RIA would be interpreted. Regional Centers and investors also had to learn the nuances of the law’s integrity measures and the unique challenges of rural investment projects. The wait times for I-956F approval alone meant it would take some time before we knew how well the industry has been able to rebound.
2024 has had its own issues, including lawsuits over increased EB-5 filing fees, the USCIS guidance on the sustainment period, and the rollover of unused visas. Despite all this, EB-5 has gained momentum. The amount of investment infused and the number of new projects released to the market reveal an industry that’s stronger than ever, demonstrating the value of the Regional Center Program.
The level of investment since the passage of the RIA shows the industry has rebounded from its dormant period
With the lack of clarity after the RIA’s passage, numbers for projects introduced to the market in 2022 were predictably sluggish. But 2023 showed a significant increase in the number of applications filed for Regional Center designation and project approval, as well as investor visa petitions. The amount of capital raised in the first half of FY2023 alone was more than $800 million . According to industry trade association Invest In the USA (IIUSA), FY2023 saw I-526 and I-526E filings “increase by 215% year over year and the amount of fund raising through the EB-5 Program rebounded back to the pre-pandemic levels (over $2 billion).”
While we don’t have complete data for 2024 yet, the information that has been released has been encouraging. It’s been estimated that since the passage of the RIA, over $4 billion dollars has made its way to the U.S. economy because of the program.
The reserved visa categories created by the RIA are also spurring investment. As pointed out by the American Immigrant Investor Alliance (AIIA), “Congressional representatives should be delighted to hear that foreign EB-5 investors have already committed over $874 million into rural areas and $1.7 billion into distressed urban areas since the RIA was passed.”
Additional reports showed that there were 185 project applications (I-956F) received in FY2023, with 274 Regional Centers applying for designation (I-956), meaning many more potential projects in the pipeline. These projects will be necessary to accommodate increased demand from investors: according to currently available 2024 data, demand for EB-5 visas post-RIA is outpacing even the most hopeful expectations.
Where visa availability stands in 2024
Not only is EB-5 investment up, but visa issuance is as well. IIUSA examined data released by the U.S. State Department and found that “between October 1st, 2023 and January 31st, 2024, more than 3,140 EB-5 visas were issued via consular processing, representing a year-over-year increase of 97%.”
This upward trend has continued throughout 2024, with the organization stating that “visa usage in FY2024 has now reached the highest level in the history of the EB-5 Program.” So many visas have been issued that the unreserved category reached its annual limit for FY2024 in August, causing a pause in the issuance of green cards for the unreserved category until the beginning of FY2025 on October 1st, 2024.
IIUSA touted the importance of this development as a sign of the resurgence of the program, stating that, “with more than 14,000 visas available under the unreserved category in FY2024, fully utilizing these visa numbers is significant and positive news for all EB-5 applicants.”
It should be noted that these adjudications are for applications filed prior to the 2024 increase in filing fees. Would filing fee increases affect the number of project applications or investor petitions?
According to Suzanne Lazicki, “Receipts fell in Q3, especially for I-526E, but not as much as I expected after the April 1 USCIS form fee increase.” And as far as new Regional Center filings, “The number of I-956 regional center application filings hardly dropped in Q3, despite the massive filing fee increase.” It seems that even with increased fees, the value of being involved in EB-5 is too great to deter investors and issuers.
With unreserved visa issuances reaching their limit, reserved categories such as rural and high-unemployment will be increasingly valuable to investors. It can be difficult to assess just when rural and high-unemployment filings will exhaust the supply of set-aside visas because so many of those visas have yet to be issued, meaning all we can do is try to estimate future visa availability based on the number of petitions filed and their expected adjudication times. That said, an analysis from AIIA estimates that while the rural category still seems to be wide open, the high-unemployment TEA category may soon fill up, potentially leading to new backlogs.
“By the end of October 2023, cumulative pipeline visa demand significantly exceeded annual high unemployment visa availability, even in a year with extra carryover visas. Meanwhile, the rural demand pipeline appeared still below near-term visa supply, but high enough to absorb all available visas in a normal year,” said the organization, which continued that “the high unemployment category was clearly already headed toward a significant backlog and visa wait times as of November 2023, the end of last year, while the rural category appeared to have some cushion but is approaching the backlog rapidly.”
If the question is whether EB-5 is back, the answer is a resounding yes. And to the question of whether the tumultuous year we’ve had would discourage investors, the answer seems to be no. EB-5 continues to be so popular that it looks to exceed current visa availability, and soon. The only thing limiting EB-5 right now is the constraints placed upon it.
The looming 2027 deadline and what EB-5 needs
Faster adjudication is always on the minds of those in the industry – figuring out how to get USCIS to move more quickly has long been a priority for industry organizations. But adjudication times become even more important when unused visas aren’t carried over in perpetuity. If USCIS doesn’t act fast enough, EB-5 applicants will lose out on visas that should have been allocated to EB-5.
As explained by AIIA, “The RIA specifies that unused set-aside EB-5 visas, at the end of the succeeding fiscal year (FY), are transferred (i.e., ‘carried over’) into the unreserved EB-5 category and, if unused there, they are transferred to other employment-based immigration categories.”
This problem can be solved in several ways: 1) more resources for USCIS to allow for the adjudication of more petitions, 2) rescinding the policy that requires unused rollover visas to be transferred to other visa categories instead of remaining with EB-5, and 3) allocating more visas for EB-5 applicants by not counting the associated derivatives.
AIIA explained that “the current visa numbers are insufficient to accommodate the investments made under the EB-5 program, highlighting the need for legislative action.”
They continue: “Congress should also realize that the current law under RIA only provides sufficient annual visas to actually deliver about $640 million in rural EB-5 investment and $320 million in high unemployment EB-5 investment annually.” EB-5 is thriving, but it can do so much more.
As we work to make EB-5 more efficient and effective for petitioners, we also need to appreciate how close we’re getting to 2027, when the current authorization of the Regional Center Program will again sunset. We need to fight for renewal sooner rather than later. In fact, what we really need is to secure permanent reauthorization so investors and issuers can pursue projects with the confidence that the rug won’t be pulled out from under them.
To achieve that, we need to demonstrate to lawmakers, and the public at large, not only the benefits of EB-5, but how it has been improved since the RIA. EB-5’s reputation has been negatively affected by bad actors in the past, and while the RIA did wonders for rooting out fraudulent activity, we can continue to do more.
That’s why JTC supports the passage of legislation that supports the integrity and sophistication of the program while also involving lawmakers and industry leaders in the process. We also support the implementation of best practices in EB-5 administration as a way to help the best in EB-5 rise to the top so the industry can finally be seen for those who do things right.
The data shows that investors are going to have a lot of projects to choose from in the near future, meaning they can be picky. Choosing Regional Centers that they can trust will become increasingly important. That’s why JTC, as a leader in EB-5, helps Regional Centers implement best practices to protect investor funds, offer full transparency, and go above and beyond in compliance measures. EB-5 is building momentum, and by promoting a high standard, we can lead the way.
CTA: To learn more about JTC’s best practices in EB-5, click here.
