On August 3, 2015, United States Citizenship and Immigration Services (USCIS) published updated processing times for EB-5 immigration benefits. The news continues to be bleak. USCIS is taking at least 13 months to review and adjudicate I-526 petitions. Applications for regional centers and similar filings (e.g., EB-5 exemplars) are now also taking in excess of one year in many cases, though the stated processing times for I-924 cases is 11.5 months.
As those of us in the trenches of EB-5 financing know, actual processing times for cases can well exceed 13 months for all EB-5 petitions. This is not even in the same universe of processing times predicted by USCIS at the end of 2012, when the agency announced the establishment of a new EB-5 Program Office. In a stakeholder's meeting on December 3, 2012 announcing the EB-5 Program Office, USCIS projected an ambitious goal of adjudicating benefits in 90-120 days. Nearly three years later, we are nowhere near these processing times. We expect delays on EB-5 adjudications well into the next year, absent introduction of any premium processing option at USCIS. This brief alert considers what investors and EB-5 projects and regional centers should be thinking about as we see continued delays at USCIS.
What do longer processing times mean for EB-5 investors?
If you are an EB-5 investor, plan now for a potentially long I-526 processing period. What we do know anecdotally is that USCIS may be receiving more I-526 petitions and requests for project exemplars before the Regional Center Program expires on September 30, 2015. This increase in volume will not help reduce processing times with an already backlogged agency. If you have an I-526 petition pending or you are filing a case, be prepared to wait longer than you may have anticipated. Consult with your immigration counsel on how a delay with your I-526 impacts your options.
What should EB-5 regional centers and projects be thinking about when facing USCIS adjudication delays?
If you are an EB-5 project or regional center and you are waiting for USCIS adjudication of I-526 or exemplar petitions to release funds from escrow, revisit your project's funding timelines and escrow agreement. Know your deal before you take any steps to change it, and before you talk with bridge lenders.
Lengthy processing times of I-526 petitions may result in you needing to restructure the economics of your project, at least in the interim as you await a release of EB-5 funds from escrow. Get the right advisors involved early on in your planning so that you know the options. An investment prospectus or private placement memo and other deal documents may need to be amended before any action is taken. Understand the securities law implications of changes to your deal before you make those revisions. Above all, communication with investors is important. If there are material changes to the economics of your EB-5 deal, communicate clearly and timely with investors.
Don't presume bridge loans can work for your deal. You need to consider the totality of the facts and overall structure of your transaction before moving into a bridge loan scenario. Bridge loans are expensive and may be suitable for some projects, but not others. We see projects rushing to term sheets with bridge lenders only to learn that this is simply not an option for economic or legal reasons. As with all transactions, involve counsel early on as a term sheet is being negotiated.
Conclusion: Our EB-5 take-away for today
The outlook for processing times of EB-5 immigration benefits will not turn a corner for the better any time soon. A potential influx of EB-5 petitions and exemplars into the system in the coming few months will translate into overall lengthier processing times. Additionally, with proposed legislative changes on the horizon, USCIS will be under additional increased scrutiny to ensure that there is integrity behind every approved I-526, I-829 and I-924. It is pie in the sky to think we will see processing times improve anytime soon.
The EB-5 take-away for today: If you are either an EB-5 investor or developer waiting for news on an I-526 petition, expect to wait longer than you anticipated for USCIS adjudication. At least for the months ahead, don't expect streamlined processing at USCIS. And seek counsel to understand the implications of a delay to your immigration plans or EB-5 project.