Opinion

The 11 Most Important Issues for the EB-5 Market in 2024 – And How We Think They’ll Play Out

Mona Shah, Esq.
New York City

Rebecca S. Singh, Esq.
New York City


2023 started with a bang in the EB-5 space—with the industry in full swing, inuring itself with the post-Reform and Integrity Act (“RIA”) changes, such as more stringent compliance, along with complex new F, H, and K forms from U.S. Citizenship and Immigration Services (“USCIS”). 2023 saw in-person marketing events reminiscent of 2018, though there was a marked difference: The rural phenomenon and the return of China.

Some of 2023’s fireworks started early on: For example, public outrage over proposed fee hikes from USCIS made it clear even in January that the months ahead were going to be challenging. Yet 2023 ended with more of a nod than a whimper, given the industry’s feats, including a lobbying effort that elicited a carveout in a particularly thorny piece of Florida legislation.

That does not, however, preclude concerns over the ambiguous deadline for public comments on the fee proposal, the return of the Equal Access to Green Cards for Legal Employment (“Eagle”) Act, and the Supreme Court’s word on the Chevron deference, all potential obstacles for 2024 that summon up remembrances of past, unresolved puzzlements.

Then there is perhaps what may be the most existential question of all: Will the EB-5 program remain the top choice for immigrants, or will it be replaced by competing citizenship-by-investment (“CBI”) and residency-by-investment (“RBI”) initiatives from other countries, including Greece and Hungary?

While shutdowns of the CBI program in Montenegro, and Portugal closing its doors to real estate (though investments are still possible in other areas) has raised eyebrows, the investment migration sector has shown no signs of slowing down. Could EB-5’s stepping stone to the American Dream be surmounted by more economical, less-risky endeavors in nations outside the United States?

These and other inquiries call for a bit of informed speculation. As such, we have prepared a list of the 11 most important issues and predictions relating to EB-5, with an eye to preparing the industry for whatever rude awakenings await it, as well as for any potential positives that come the sector’s way.

Enough said; read on for the list:

1. Top Countries for Investors

The numbers reflect that the US has traditionally been the first choice for investors. Notwithstanding this, the pattern is shifting. Any list of the top countries for investors to obtain permanent residency must include Greece, which in 2023 reportedly received 7,752 applications for its Golden Visa program, a rise from 4,362 in 2022. Competition last year also came from countries such as Hungary, Indonesia, and Malta, as well as Caribbean nations such as St. Kitts and Grenada. 

Prediction

Outbound investment from the US has increased dramatically. We predict that 2024 will continue to see outbound immigration grow. If the United States is to remain competitive in the investment migration arena, it needs to keep close watch on programs in countries such as Greece that are becoming more appealing to immigrant investors for their low costs, high standards of living, and relative lack of complexity. 

2. EB-5 Adjudication Times and the Rural Phenomenon

Made possible by provisions in the RIA allowing for a certain percentage of visas to be set aside for rural projects, the upsurge in such high-unemployment efforts continued to swell as investors, attracted by the potential for speedier application processing and a lower investment minimum ($800,000) than that required for a non-TEA/non-rural project ($1,050,000), made a beeline for this category. The industry was quite taken aback!

Prediction

With USCIS delays spanning 3-4 years in pre-RIA petitions, the now lightning speed with which rural petitions are adjudicated has resulted in a bounty of projects within this sector. Through some initiatives, such as those involving solar power, have demonstrated a distinct appeal, other tried-and-true types (such as hotels) have maintained their value for investors. Our prediction: 2024 will see continued demand for rural projects, at least from backlogged countries such as China and India, until the visa quota is not exhausted.

3. The End of Redeployment, But Not For Pre-RIA Cases

Finally providing guidance on the issue of sustainment and redeployment in October 2023, USCIS just partly answered questions from a befuddled industry about the ambiguous requirements for the sustainment of EB-5 investments, including the period during which they are mandated to be invested.

Although the redeployment requirement for post-RIA investors mandating the reinvestment of their money has been quashed – with post-RIA investors no longer needing to retain their investment for the entire duration of their conditional residence (the requirement period now is at least two years, as long as the project has met job-creation mandates) – uncertainties remain about how this may apply, if at all, to the pre-RIA set.

Could 2024 be the year when USCIS makes redeployment a thing of the past for pre-RIA investors, too?

Prediction

Although removal of the redeployment requirement for the pre-RIA contingent would be welcome, USCIS is not likely to go back on long-held policies in this area.

The agency should, however, put out further guidance on these concerns in 2024, and the clamor around the need for such changes should be vocal. A final decision on redeployment for pre-RIA investors is essential to clarify requirements for them specifically, with amounts and time periods outlined in plain language.

This would reduce the chances of petitioners receiving denials owing to missed deadlines or an inability to pay the requisite sums. Hopefully, a loud response from the sector this year will elicit such communications.

4. New Regional Centers Springing Up

In the days following enactment of the RIA, a host of regional centers sprang into existence, populating the industry with myriad opportunities for EB-5 project development in coveted rural and other high-unemployment areas.

According to USCIS, the number of approved regional centers stands at 640 as of April 4, 2023. While this number is not as large as those attained from 2015-2019 (when regional centers numbered between the high-700s and high-800s), the increase suggests more and more regional centers are taking advantages of the benefits the RIA has to offer.

And although USCIS sometimes seems indifferent to RCs’ needs for clarification on matters ranging from the Integrity Fund to termination, the agency’s approach has not been a deterrent to the creation of regional centers.

Prediction

We expect this space to remain robust. As existing “rental” regional centers realize the extent of RIA’s obligations, rental costs will drive projects into filing for their own regional centers.

In fact, it is more than likely that RCs will reach the numbers attained in 2015-2019 and even go beyond them, given the health of the industry and solid prospects for growth.

When you consider the extensive backlog of petitions from investors in countries such as China and India, the bolstered interest in the rural category, and investors’ growing need for professionals to traffic and manage their funds in EB-5 projects instead of conducting these duties directly, prospects for regional centers this year are sanguine indeed.

5. Fees

Fury over USCIS’s proposal intensified after a lackluster January 11 listening session, during which the agency allowed participants to voice their opinions but did not respond to specific inquiries.

Given that the proposed increases include $11,160 for I-526/I-526E forms (marking a 204% jump from the current $3,675 fee) and $47,695 for the I-956 and I-956F forms (a 168% leap from $17,795), the lack of specificity surrounding these concerns was extremely disappointing.

Indeed, many issues—such as whether a regional center wishing to recertify or make a simple amendment to structure or geography would be compelled to pay the new, $47,695 I-956 fee—remain unclarified, and USCIS still has not communicated its decision on this matter. 

So, what should the industry expect on the fee front?

Prediction

At this juncture, we suspect that USCIS will adopt the increases outlined in the proposal, especially in the wake of news that the agency reportedly submitted to the White House a final fee schedule.

Another factor supporting this scenario is the fact that USCIS recently elevated its premium processing fees owing to inflation—suggesting that this economic phenomenon, which has been curtailed to a certain extent by the Biden administration but still is not low enough, could impact the financial aspects of the EB-5 process. Plus, USCIS’s pattern of releasing vague guidance that only partly assuages practitioners’ concerns likely will come into play here.

In other words: The fee hikes probably will be implemented. So, brace yourselves.

6. China/Wailian

Things looked pretty bleak for China’s EB-5 market in the wake of Chinese authorities’ arrest of Linda He, the high-profile President of investment-migration powerhouse Wailian Group.

Worries that the government’s campaign to prevent money from leaving the country would put a crimp in Chinese investors’ petitions abounded, and with US-China relations in flux, concerns over a substantial downswing in the sector proliferated. If the mainland market collapses, the entire EB-5 space could be thrown for a loop, reshaping the landscape for thousands of applicants, including myriad Indian investors who have been waiting many years for USCIS approval.

Prediction

Have no fear: China’s EB-5 space will not contract in 2024; rather, it will continue to expand, as we alluded to in the most recent installment of our long-running podcast series EB-5 Investment Voice.

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Moreover, He’s arrest related to money transfer transactions made in 2016, so these are not recent activities.

While the deteriorating state of US-China relations is something to keep an eye on, there is no reason to believe the Chinese EB-5 market will dry up anytime soon, and demand continues to be high.

Furthermore, the aforementioned carveout has given the industry hope that state legislatures, as well as Congress, will address any bills that could conceivably put a damper on the EB-5 space with regard to business from China.

These and other factors spell one result: more petitions from the mainland in 2024.

7. Integrity Fund

Still recovering from the paucity of business during the period following the expiration of the regional-center program from June 30, 2021 until at least May 2022 (60 days after the seminal Reform and Integrity Act was set into law), regional centers faced a particularly perplexing obstacle in 2023: USCIS’s mandate to contribute to the EB-5 Integrity Fund.

The enormous, prescribed fees – $20,000 for regional centers with more than 20 investors and $10,000 for those with 20 or fewer investors – come with plenty of baggage, including questions relating to how these calculations, informed by the approximate number of total regional-center investors, are made.

While USCIS in a letter finally addressed the confusion over some of the questions pertaining to the Integrity Fund (e.g., the agency clarified the term “purely administrative noncompliance,” cited as a reason for regional-center termination), verbiage in the epistle such as “The potential impact of noncompliance by regional centers on associated investors will be evaluated on a case-by-case basis” does not inspire confidence in the likelihood of any further clarity illuminating this issue.

If a regional center makes a mistake, such as paying the fee late (or, for that matter, at all), these kinds of vague communications could have a deleterious effect on regional centers’ projects.

Prediction

Unfortunately, it appears that USCIS’s Integrity Fee directives will not change, though additional clarifications from the agency on this issue could be on the horizon for the New Year, especially with regard to the dates by which regional centers must deliver their annual fees.

That means regional centers will have to suck it up and roll with the financial punches, even if they knock these entities out of the business. As USCIS relies on fees to keep it going, there is little doubt that the agency will maintain its course vis-à-vis the Integrity Fund, and those amounts are not likely to decrease.

8. REFs, NOIDs, and Denials

A deluge of requests for evidence (“RFEs”), Notices of Intent to Deny (“NOIDs”) and straight-up denials sloshed through the EB-5 industry last year. This was the apparent result of the personnel exits elicited by the COVID-19 pandemic, a phenomenon known as “The Great Resignation.”

This influx of bad news from USCIS likely was fueled by a mixture of incompetence and poor human-resources judgment, as the job movements seem to have spurred adjudication inefficiencies fostered by filling important adjudicator roles with unqualified employees who are not trained to assess financial or legal information.

Additionally, a focus on more stringent vetting practices, reflected in further attention to relatively unimportant petition details, has further complicated the process, with delays and other issues coming to the fore. Understaffed and overwhelmed with petitions, USCIS in 2023 appeared to be entering a leaner, meaner adjudication era.

Prediction

Despite the agency’s penchant for requesting extra information (as well as outright denying applications), some experts already are pointing to improvements, including the possibility that USCIS will expand its job openings for more highly trained adjudicators.

Though adding employees is not necessarily better, an augmented staff should at least alleviate the petition burden on current personnel. In turn, that could lead to fewer or less lengthy delays, as well as a downswing in RFEs, NOIDs and denials. When you consider that USCIS has been in hiring mode of late, the prospects for a more efficient EB-5 process look relatively rosy.

9. Delays and Backlogs

Differences in the ways pre-RIA and post-RIA applications are handled, plus a slow-as-molasses trek through backlogs of petitions from investors in China and India, were among the major factors informing the delays surrounding EB-5 approvals in 2023.

The monthly waits for USCIS’s Visa Bulletin numbers have not always resulted in progress on the Dates for Filing or Final Action Dates, sparking disappointment from petitioners who have spent years in adjudication limbo.

Meanwhile, those pesky staffing inefficiencies at USCIS has placed investors’ applications at the mercy of overworked, undertrained adjudicators, whose thin numbers and oft-officious quibbles with minutiae have dragged down the process.

Can this system be fixed?

Prediction

The answer is yes, but a complete correction will not happen in 2024 or, for that matter, any time soon.

In the short term, the backlogs will continue to be an albatross for the sector, though potential staff augmentation and better training for adjudicators at USCIS could help mitigate this problem.

For now, however, expectations are that delays will be just as onerous in 2024 as they were in 2023, and with a continual stream of petitions from backlogged countries such as India and China, the longeurs will remain as frustrating as they are frequent.

10. Eagle Act

Making yet another unwelcome appearance was the Eagle Act, brought back to life by U.S. Sens. Kevin Cramer (R-ND) and John Hickenlooper (D-CO) after dying in Congress nearly one year before.

Floated by Rep. Zoe Lofgren (D-CA), that incarnation – like the latest installment – would have eliminated the per-country cap for employment-based immigration. Such a scenario would have a massive, deleterious effect on the sector, as petitioners from China and India (the two biggest EB-5 markets) would be lumped together at the front of one endless line, thereby shutting out applicants from other countries.

So, although there is a precedent for failure when it comes to this bill, its bipartisan support, coupled with adherents’ apparent refusal to retire any further efforts at revitalizing this piece of proposed legislation, makes it difficult to dismiss as a legitimate threat.

Prediction

Much to what should be the likely relief of EB-5 practitioners, the senators’ Frankenstein-esque attempt to resurrect the Eagle Act will fall short.

Its recent history points to an inability to gather enough votes for ratification no matter how many tweaks are made, and the EB-5 industry’s success with regard to its aforementioned lobbying efforts demonstrates its puissance with regard to effective legislative change.

For those and other reasons, expectations are that the Eagle Act will once again fail to become law. Of course, such a development will not prevent the act from rearing its ugly head in the future, but that’s a bridge the sector will not need to worry about crossing now.

11. Chevron

Also piquing the EB-5 set’s curiosity in 2023 was the news that the U.S. Supreme Court will be reassessing the 40-year-old decision formulating the “Chevron deference,” which gives the upper hand to federal agencies when it comes to interpreting unclear language in legislation.

If the court overturns the decision, the reverberations will be felt throughout the EB-5 sector, as USCIS would find itself in defensive mode vis-à-vis its rulemaking – a scenario that could see a profusion of lawsuits over semantics.

As deference to court decisions in situations involving vague wording would be part and parcel of any decision overturning Chevron, the agency could find itself without teeth when it comes to enforcing or even stipulating regulations and guidance.

Prediction

There is little question that Chevron ultimately will be struck down by the Supreme Court, which has a political stake in this matter—owing in part to the differing stances taken on regulation by Republicans (who are against its proliferation and believe it stymies commercial growth) and Democrats (who argue that such agency regulation is necessary to prevent abuses).

With more than twice as many judges on the bench who were appointed by Republican presidents than justices appointed by Democratic presidents, the Supreme Court probably will tilt toward making Chevron a thing of the past.

That could put future USCIS decisions at risk of being contested by practitioners and investors alike, who would benefit from the favor afforded the courts over the agencies with regard to questions about unclear legislative language.

Simon Butler contributed to this article.

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Mona Shah AuthorSubscriberParticipant

Mona Shah is the Managing Partner of the firm that bears her name and a recognized industry leader in EB-5 law.

Following a legal career that spans four decades, she has attained many accolades and awards: Top 25 EB-5 attorneys by EB-5 Investors Magazine eight years in a row, recognized as a Top Lawyer by Who‘s Who International and as a ‘Top Attorney of North America.

Mona is a Lexis Nexus Practice Advisory Editor, and a published author. Mona has written numerous articles and blog pieces in all aspects of EB-5 immigration law as well as the corporate and securities aspect.

Mona also pioneered and hosts the first and longest podcast series (spanning over 6 years) that focuses on foreign direct investment and EB-5. She has been honored for her work by various groups and non-for-profit organizations.

Mona’s extensive knowledge of all facets of U.S. immigration law and her practical expertise ranges from specialist business petitions to convoluted, multi-issue deportation and removal litigation to complicated corporate and securities issues in EB-5 petitions.

Her firm, Mona Shah & Associates Global, represents individual, high profile and corporate clients from all over the world. Mona and MSA Global have raised millions of dollars for projects in the US.

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