Although United States Citizenship and Immigration Services (USCIS) has yet to release detailed data on petition processing for the last half of FY2020, as of January 12, 2021, statistics for the first two quarters are available. Following one curveball after another throughout 2020, suffice it to say the statistics paint distinctive pictures for I-829, I-526, and I-924 petitions. Here’s a quick peek:
I-829 Processing Volume Up
Some good news is emerging from the chaos of FY2020 for EB-5 investment participants who are waiting on I-829 petitions—namely, that petition processing volumes for them have increased. This is something industry professionals have attributed to the Immigrant Investor Program Office (IPO) moving forward on an intent to prioritize I-829 petitions over I-526 petitions. Which brings us to some not-so-good news…
I-526 Processing Volume Down
I-526 petitions, on the other hand, have maintained the lower processing volumes experienced in FY2019. Accompanying this low volume, petitioners have experienced record-high estimated processing times. Thankfully, actual processing times have outpaced USCIS’s estimates, but it is still not a comforting trend.
I-924 Petitioners and EB-5 Regional Centers Hit Hard
I-924 petitioners have faced a set of hardships all their own. Closely following the Modernization Rule effective date (November 21, 2019), the EB-5 Regional Center Program seems to have taken a pummeling. USCIS has been issuing terminations left, right and center, and the challenges faced due to shutdowns since the COVID-19 outbreak have been brutal for regional center operators. Even now, the virus still looms as we move into Q2 of FY2021.
While it is impossible to understand the full implications of such a tough year until USCIS releases data for the second half of FY2020, Q1 and Q2 figures don’t offer much consolation to EB-5 regional center owners. Rampant regional center terminations and unreasonably high estimated processing times signal aftershocks through the EB-5 regional center landscape for years to come.
Mass Regional Center Terminations Reverse 6+ Years of Growth
One of the modifications the Modernization Rule enacted involved targeted employment area (TEA) designation. Essentially, these changes profoundly disrupted EB5 investment activity at regional centers across the country, and many were unable to act swiftly enough to accommodate them. A lack of investor activity is grounds for termination, according to USCIS, and termination letters were distributed to EB-5 regional centers at an unprecedented pace in 2019 and 2020.
USCIS terminated 140 regional centers and approved zero new ones between November 2019 and October 2020, resulting in a 20% drop YOY. That said, it is important to understand that the Modernization Rule only accelerated the timeline on regional center terminations.
Regional center numbers have been in decline since 2018, and most of those that received termination notices in FY2020 were initially approved in FY2015 and FY2017. When a regional center shows no investor activity over a span of three to five years, USCIS tends to close it down. So, it shouldn’t be surprising to learn that most were terminated due to a lack of investor movement.
The most important takeaway for prospective EB5 investment participants is the necessity to thoroughly vet any regional center prior to entrusting one with your capital. Another key consideration is understanding—and planning for—potential delays.
Extreme Fluctuations in I-925 Processing Times Necessitate Extra Planning
The massive regional center terminations aren’t the only limitations affecting EB-5 investments. The overwhelming lack of new approvals is a major setback as well. The estimated processing times for I-924 petitions hovered between 16 and 22 months in spring 2019—a steady pace for more than a year. In November, however, the Modernization Rule exploded estimates to between five and 10 years. Mind you, this petition is simply a request for approval on a regional center opening!
EB-5 investors have since seen a fall from the peak of 115.5 months, but estimates have never returned to pre-April 2019 levels. Additionally, heavy fluctuations since November 2019 have ranged anywhere from just over a year all the way up to almost 10 years. This has made true predictions on I-924 petition processing times virtually impossible. For this reason, regional center owners continue to bide their time in USCIS limbo with no indication of actual operation start dates.