Potential Changes and Recent Trends for EB-5 Industry and Its Investors

May 13, 2021 | Podcasts

Following a shift in U.S. presidential administrations and changes due to the COVID-19 pandemic, Jackson Walker partner Christian Triantaphyllis, who leads the Firm’s Investment Immigration practice, covers some potential changes and current trends in the EB-5 industry and for its investors.


Christian Triantaphyllis Named to ‘EB5 Investors’ List of “Top 25 Immigration Attorneys” for Fourth Consecutive Year »
‘EB5 Investors’ Quotes Christian Triantaphyllis on the Newly Reinstated USCIS Policy »

Greg Lambert: Hi, everyone. I’m Greg Lambert, and this is Jackson Walker Fast Takes. I’m joined today by Christian Triantaphyllis, an immigration partner here at Jackson Walker and recently recognized as a “Top 25 Immigration Attorney” from EB5 Investor Magazine. And I think, Christian, this is your fourth year in a row for the recognition. So, thanks for taking the time to talk with me today.

Christian Triantaphyllis: Absolutely, Greg. Happy to speak with you. And yes, I was honored to be on that list once again—voted in by my peers. So, I was happy to see that.

Greg Lambert: Congratulations. Well, you focus a lot of your work around EB-5 issues and recently talked about some of the potential reforms in this area. I’m going to back up just a bit and ask: What does the EB-5 visa program cover, and what are some of those reforms that you see happening or should happen to improve the program?

Christian Triantaphyllis: So, EB-5 is just one of our categories to immigrate or become a green card holder in the United States. EB-5 particularly focuses on investment of a certain amount of money into a U.S. business. That business then needs to create 10 new jobs on behalf of the investor. So, you can see it’s really a job creation program mixed with an immigration benefit. In addition, there’s an investment factor that you have to consider as well. The qualifying amount is $1.8 million unless where you’re investing your money into qualifies as what’s called a targeted employment area – those are rural areas or high unemployment areas in the United States. If it does qualify as such an area, the investor can qualify based on a $900,000 investment. The idea behind the program is to be able to create jobs in areas that need these jobs for developers or investors who are setting up new businesses and other developments.

Greg Lambert: How about some of the reforms that you see there happening or should happen?

Christian Triantaphyllis: Sure. One of the key issues behind the EB-5 program is that the regional center program of EB-5, which is sort of the more commonly used aspect of the program, needs to be renewed every year or so at this point. So, it has been riding with the omnibus spending bill—the government spending bill that we see, how we keep our government lights on—and it has been renewed as the government has been funded. Recently, it was decoupled from the government spending bill, and it has an upcoming expiration date or renewal date of June 30, 2021. Our government spending bill is up for renewal on September 30, 2021. So, we know that that we want to see the government act on EB-5 legislation before the actual government spending bill this year.

Now, one of the first things we want to see is a longer term reauthorization of the program. Since 2015, we’ve been dealing with these 12 month or nine month or six month renewals of the program. Well, there is draft legislation that’s been floated out there that extends the program through 2026. Now, that draft legislation really focuses on integrity and transparency measures for the EB-5 program. So, what do we mean by that? Well, extra protections against any kind of fraud that the EB-5 investors may be subjected to in terms of how the developers use the money and where that money is being spent on their behalf. In addition, USCIS, the immigration agency that manages the EB-5 program, is really focused on creating more assurances about all the different parts of the program, all the different parts of the investor’s petition coming together to work for the benefit of the investor. What do I mean by that? In this draft legislation, they’ve said we want to see each project go ahead and give us their business plans and investment contracts ahead of time so we can sort of “pre-approve them” before the investors dive in with these investments.

I would also like to say that one of the big issues behind the EB-5 program right now is processing times. It is now taking two years or so – sometimes longer, sometimes hopefully shorter – for an investor to get an approval on their EB-5 petition. One of the things that they’ve added in this potential reform is extra fees that can create faster processing times for investors. We get something like that, and we’re gonna see a real explosion in the popularity of the program.

Greg Lambert: Well, over the past five years or so, we’ve had some shifts in immigration policy as a whole, whether that’s through shifts in the U.S. presidential administrations or over the past year-and-a-half or so due to the COVID-19 pandemic. So, what are some of the changes or trends that you see coming in the near future for the EB-5 industry and its investors?

Christian Triantaphyllis: Sure. Well, let’s start with leadership. The Biden administration in its first 100 days has, in my view, attempted to create a more welcoming United States to immigrants and foreign nationals—a sense of sort of removing this administrative wall that had been put up over the last four years in our previous administration. We saw delays and other policies put into place that really slowed down all areas of immigration to the United States.

So, when I talk about leadership, we have the recent appointment of Alejandro Mayorkas, the Secretary of the Department of Homeland Security. Now, why do I touch on him? Because he is the former head of USCIS’ EB-5 immigration unit. He really helped shepherd EB-5 into the modern era about eight, nine years ago when he was put into that position. For the handful of years that he held that position, we saw vast improvements in the program, lots of predictability, and even, really, implemented some very user-friendly business aspects of the program. So, I expect that Alejandro Mayorkas to be a very real benefit to the EB-5 program going forward. It’s great to have someone in leadership who’s already familiar with EB-5.

In addition, there was recent litigation called Zhang v. USCIS that finally got determined or, you know, the outcome was in favor of Zhang in federal court, where we saw that investors can use proceeds coming from unsecured loans for making their EB-5 investment. There was some, I thought, some bad policy that was implemented by USCIS where they said ‘we don’t consider that to be cash, therefore, you haven’t made an investment if you use proceeds of unsecured loans.’ Well, that was litigated because that doesn’t make much sense to the real world. But here’s why this goes to your question of trends from USCIS: Well, not only was that case won in federal court, USCIS recently approved the petition. So, that’s helped solidify the concept of use of unsecured loan proceeds for making an EB-5 investment. That’s a really big development in our space and really opens up the number of people who might be able to afford the program.

Another issue that’s going on in the background is litigation against some of these new regulations that were implemented in 2019 that increased the EB-5 investment amount from $500,000 to $900,000. Well, it turns out the individual who was in charge of USCIS at the time of the Trump administration was appointed illegally, or not under the proper procedure. Therefore, the argument was if he signed these new regulations, they don’t count because he wasn’t really properly appointed. That litigation is going to come to fruition on May 13th. I bring this up, because while we thought that the new leadership would be in favor of the group saying, look, the person before did not really have the power to sign this new regulation, Mayorkas actually ratified it in the middle of this litigation and said no, actually, we’re going with the new regulations. It’s actually not that surprising, because the new regulations sort of came from the old Obama-era and then were actually put into place during the Trump administration. But you can see that there’s a lot of kind of back-and-forth to be had here.

I have one other item: The Biden administration recently said we are going to move forward with the entrepreneur payroll program, which is sort of a step down from the EB-5 in terms of ways to do startup businesses for foreign nationals who might co-invest with U.S. individuals. That’s a huge development if this does actually start to happen, because it kind of will work hand-in-hand with EB-5, and I look forward to being able to use that as an option for clients.

Greg Lambert: There’s definitely a lot going on. Christian Triantaphyllis, thank you very much for taking the time to talk to me.

Christian Triantaphyllis: Thanks, Greg. Appreciate it.

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The music is by Eve Searls.

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