Reluctancy about EB-5 fee hike but interest remains, attorneys say -

Reluctancy about EB-5 fee hike but interest remains, attorneys say Staff

By Marta Lillo

Much frenzy and uncertainty marked the days leading to the EB-5 fee hike on Apr. 1, with applicants questioning the measure and expectations over the lawsuit filed against the measure.

On Apr. 1, the U.S. Citizenship and Immigration Services (USCIS) raised EB-5 forms I-526E (regional centers) and I-526 (direct investor) prices by 204% to $11,160. The fee for form I-829 to remove conditions on residence also increased from $3,835 to $9,525. Further, filing prices for form I-956F, which regional centers must file to obtain approval for their designation, increased 168% to $47,695.

EB-5 attorneys explain the industry seems to have accepted the higher prices with resignation, albeit questions about its legality remain. They also expect the investor visa program to continue drawing attention from foreign investors.

EB-5 fees hike deadline met with reluctance, attorneys say

EB-5 attorneys explain that despite its announcement in January this year, the industry’s reaction to the fee increase was reluctant.

“The industry sentiment is very clear: the fee increases were extreme and unfounded,” Bobi Ahn, managing member at Ahn Law Group LLC, explains. “According to USCIS, the newly increased fees are a result of increased costs to adjudicate immigration benefit requests, detect and deter immigration fraud, and thoroughly vet applicants, petitioners and beneficiaries.”

Charles Kuck,  the managing partner of the immigration law firm of Kuck Baxter Immigration Partners, explains the “USCIS sees in the EB-5 investor a ‘rich’ target. So, it decided to raise the fee by 500% in order to use that money on other programs. What is clear is that USCIS is not using it to reduce its self-made and totally unnecessary EB-5 adjudication backlog.”

Also, there was much anticipation about the outcome of the lawsuit and restraining order to block the new regulation filed by American Immigrant Investor Alliance (AIIA) and IT Service Alliance a few days before Apr. 1.

Some EB-5 applicants even waited until last week to see if the litigation against the Department of Homeland Security (DHS), which mandates the fee hike, would pan out.

Kristi Ngo, associate attorney at BAL immigration law, describes: “Investors were motivated to file before the fee increase, but some wondered if the fee increase would result in faster USCIS petition adjudication (as proposed in the RIA). Frankly, EB-5 practitioners are equally curious on that. We don’t know—we can only hope.”

Despite the unsuccessful restraining order, the lawsuit is ongoing while the fee hike measure remains in place.

“There was a lot of anxiety,” says Rohit Turkhud, counsel with CSG’s Immigration Law Group. “It was disappointing when the judge decided not to, though I think many people knew that it was close enough to the deadline that the judge may not decide to do it. Maybe the judge had a valid point saying, ‘Hey, you knew about this since January; why are you filing this lawsuit at the last minute?’ But there could be lots of reasons for that.”

According to Ngo, numerous EB-5 investors managed to meet the deadline, but in a rush and with a sense of panic. “Reminiscent of prior deadlines on regional center program expiration and investment minimum increases, everyone wanted to file at the same time. In a way, many EB-5 practitioners are used to the all-hands-on-board approach. It is unfortunate because the industry was starting to have some stability after the implementation of the [RIA]. But stability does not last long when it comes to US immigration.”

The EB-5 industry’s reactions to the fee increase

It is important to note that the USCIS has yet to conduct a mandatory study about a fee increase, as required by the Reform and Integrity Act of 2022 (RIA). This absence continues to raise concerns about the legality of the new regulation. “Congress required them to give some kind of study and statistics before increasing those fees, and that was not done. Unfortunately, we didn’t get that resolved,” Rohit says.

Some EB-5 investors had additional concerns regarding their applications. In the case of Rohit’s Indian clients, their main worry was the higher tax for outbound financial transfers they must pay since mid-2023. “It’s a 20% hike. For most people remitting out of India, you not only have to send out the amount of the investment plus the admin fee, but now your filing fee has gone up by two and a half times, which means you have to pay tax on that additional remittance as well. Organizing all these things at the last minute was a challenge.”

The EB-5 attorneys explain that because many applications were rushed, completing due diligence on the source of funds, a key preliminary step in the process, was challenging.

Many clients also asked about partial EB-5 capital investment before the fee hike, Dennis Tristani, managing attorney at Tirstani Law, adds. “A majority of my clients who were filing close to the deadline, both direct and [Regional Center], opted for a partial payment (split investment) option to ensure they were able to file before Apr. 1.”

Ahn also affirms that “many regional centers and projects were accepting partial investments to facilitate the filing of new I-526E Petitions by the Apr. 1st deadline to assist investors with filing cases before the new fee increase took effect.”

Rohit notes that this concern emerged after RIA, with investors aiming to invest partially “because they’re not quite sure if they can get the full amount in one shot.”

Tristani adds that some potential EB-5 investors intentionally missed the deadline. “My firm also had quite a few clients who have opted to take more time to make their project selection and pursue their investment in April and May of 2024.”

Interest in EB-5 to continue; program not at risk due to change

EB-5 legal counsel also managed client expectations regarding believed improvements to USCIS efficiency due to the fee hike.

Ahn notes that many clients and potential applicants “who are business owners were willing to pay more if they were getting more service – i.e., their major concern was will the processing times for the EB-5 petition be much faster and more efficient if they paid more, to which the answer is no. There are not promises being made or any guarantees by the USCIS for any better service or processing time improvements.”

According to Beshara, the industry had already accepted that the fee increase would not lead to the improvement of services, as confirmed by an agency representative at the ILA EB-5 conference early this year.

Immigration attorneys suggest that for the USCIS to justify the price increase in the long run, it must improve its quality. Albeit they are cautious about the level of improvement that can be expected. They also agree that foreign investor interest in the visa program will continue despite the higher prices, but there will be repercussions.

“Life goes on,” says Rohit. “People will get used to the figure. They know that’s the figure they have to deal with. And if somebody is working and can invest $800,000, they will come up with the extra fee for paying the USCIS filing fees of $11,160.”

Tristani adds: “I have also seen a consistent flow of new inquiries as well as previous contacts resurface who are interested in pursuing the EB-5 process over the next few months, especially given the fact that there is no waiting list at present for the [Higher Unemployment Areas] and Rural set-asides,” Tristani confirms.

However, Ngo cautions that higher prices could motivate some applicants to look at other U.S. residency options besides EB-5. “An Indian national with a long EB-2/EB-3 waiting time may forego an EB-5 backup if they have some financial constraint. However, for many foreign nationals, EB-5 remains their only viable option for U.S. permanent residency. I don’t believe the fee increase will hamper EB-5 interest in the long run. Investor immigration goals will ultimately outweigh concerns about the additional USCIS fees. In the meantime, everyone will be waiting with bated breath on the results of the pending lawsuit to stop the fee increase.”

Kuck also does not “believe the raised fees will have a material impact on the demand for the EB-5 program, but they may have an impact on the regional centers themselves and certainly on the ‘administrative fee’ that many such centers charge over and above the investment amount.”

Meanwhile, Ahn concludes that “we would assume that this fee increase would temporarily slow down the demand for EB-5 filing, where the foreign business owners would take pause before considering the U.S. as their destination for investing.”

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