Down to the Wire

Down to the Wire

October 30, 2017

There have been significant movements in Congress to try to come up with a final compromise bill to resolve the impasse that has been in existence for the past two and one-half years (2½) years. It is difficult to predict when the new legislation will be finalized, but there seems to be a very strong sentiment that final legislation could be finalized by the end of this year, although there is an equal chance that the legislation will not be finalized until next year.

It is difficult to predict how the final legislation will come out and when it will be effective. The following provisions will more than likely apply:

  1. No current increase in visa counts.
  2. No change in excluding derivatives in the visas count.
  3. Increase in investment amounts. It seems as though the TEA amount will be around $900,000.00 to $925,000.00 and the non-TEA will be around $1,000,000.00 to $1,025,000.00.
  4. Grandfathering of the I-526 petitions that are filed.
  5. Set asides. There has been in the draft proposed legislation providing for a 3,000 visa set aside; 1,500 visas per rural areas and 1,500 for urban poverty areas. These visa set asides could not be currently subject to retrogression, therefore making China the primary market to raise EB-5 capital since there would be no retrogression for these set aside categories. The rural description may not include luxury type projects, but that is undetermined at this time.
  6. An interesting component of the retrogression is the apparent reality that a meaningful percentage of investors who have filed I-526 petitions or received I-526 approval, but have a long wait to obtain a visa will withdraw their petitions for various reasons. I have been informed by a very reliable immigration attorney that the withdrawal rate could be as high as 30%, thus ultimately redirecting the retrogression time by the same percentage as the withdrawal rate.
  7. Redeployment is now a major fund in the industry. Reference is made to the October 25, 2017 Wall Street Journal article (Section B6) addressing this issue. It is estimated that in the next few years the amount of funds available for redeployment in other real estate transactions could far exceed the amount of new EB-5 capital being raised. This will provide a significant source of capital for real estate developers.