Comment: Urban EB5 Punished By Congress

Urban EB5 Punished By Congress

  1. Congress has been blaring, loudly and vociferously, since 2015, that the EB5 industry mangles and disfigures the purpose of the EB5 program–the EB5 industry did not listen.
  • The original intent, continually maintained by Congress, of the EB5 program, was to create jobs in rural areas and chronically high unemployment areas in cities.
  • The EB5 industry gamed Congress by gerrymandering TEAs. 95% of EB5 monies went into glitzy urban areas in the New York, Miami and Los Angeles metropolitan areas.
  • Congress protested loudly, publicly and repeatedly for more than 7 years, to no avail. All Congressional warnings went unheeded continuously from 2015 to 2022.
  1. With RIA, Congress has now meted out punishment to the entire urban EB5 ecosystem: urban developers, previous urban EB5 investors, new EB5 investors, and EB5 agents (agents both from times past and from times to come). This punishment is now the law of the land – these four groups have already been severely flogged (albeit most of these are yet unaware of the lashes already on their backs - the pain has yet to register).
  • RIA has banished large urban developers from the EB5 industry, since TEAs can no longer be gamed by gerrymandering.
  • RIA has flogged past urban EB5 investors with 50% longer wait times (waiting in a queue of 6,800 instead of 10,000). This is true of the retrogressed countries: China, Vietnam and India, which accounted for over 2/3rds of urban EB5 investments in the pre-RIA world.
  • New EB5 investors who still want to invest in urban projects are upbraided by taking away attractive areas of US cities as an EB5 option (or having to pay $1,050,000 for EB5 immigration benefits for investors from countries other than China, Vietnam and India - investors face 20 year waiting times from China and 10 years from Vietnam and India at the $1,050,000 level).
  • EB5 agents are doubly punished: for their past investors & future investors. For their past investors, they now have to hold irate investors' hands–in China for upto 20 years and Vietnam/India for up to 10 years. And for their future investors: they are now faced with selling unattractive projects.
  • Make no mistake, Congress has punished the entire urban EB5 ecosystem - further chastisement doubtless awaits should the EB5 industry not make a wholesale shift away from large, glitzy urban projects.
  1. Wake up and smell the TEA
  • With RIA Congress codified into statute the heart of the TEA rule that was supported by 3 completely different administrations–Obama, Trump and Biden. With RIA, TEA is no longer a game that urban developers can play to subvert Congressional intent for EB5 investments. 
  • Turning a deaf ear to Congress, the urban EB5 industry is still trying to get around the strict TEA definition using the temporary scrambling of unemployment data due to Covid–using one-time blips in unemployment to pass off hearts of downtown as chronic unemployment areas. But TEA is no longer a game, and using covid data as a subterfuge will not work. Congressionally mandated policy for the United States is to use EB5 investments to alleviate chronic unemployment. If technical unemployment measures are too far from Congressionally set policy, RIA gives USCIS a suite of tools to intervene.
  • Under RIA, USCIS can now enforce Congress’s will in a myriad ways including: site visits from hell, indefinite delays of 526E processing for urban developers with questionable TEAs (possibly 5+ years), and many other prosecutorial tools, turbo-charged by RIA.
  1. Conclusion
  • Congress has had it with the TEA shenanigans of the large urban EB5 developers, and has banished them from the industry, and has severely punished those agents and investors who put their trust in large urban EB5 developers in the past.
  • RIA is simply the codified expression of long standing intent by an exasperated Congress. RIA is now the law of the land. Wake up!
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