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7 Things We Learned from New EB-5 Program Chief Sarah M. Kendall





By: Joseph Barnett


Earlier this week, new Immigrant Investor Program Office Chief Sarah Kendall addressed the EB-5 community at the AILA/IIUSA EB-5 Industry Forum in Chicago, Illinois. We are happy to see this type of engagement by USCIS and are hopeful for continued dialogue to address the concerns of immigrant investors and regional centers. Here are seven things we learned from Ms. Kendall:


1. Minor Investors


Ms. Kendall confirmed there is no age limit for minors filing as the principal investors but indicated that USCIS will continue to look at issues of contractual capacity and voidability of investment contracts.


2. Bridge Financing


Ms. Kendall indicated it was difficult to provide specific guidance on the issue of bridge financing because of the “diversity of work and financial arrangements and structures.” She noted that the term of the loan, by itself, does not disqualify financing as a bridge loan that would receive credit for job creation purposed and that USCIS will look at interim nature of loan and contemplation of future receipt of EB-5 (or other) capital to repay the bridge financing. This is inconsistent with language in RFEs previously issued by USCIS. Additional guidance clarifying this important issue is required to provide certainty for all participants in EB-5.


3. Compliance Reviews


Ms. Kendall stated that, as part of its emphasis on “integrity measures,” USCIS will look at a Regional Center’s organizational, administrative, and management capabilities (internal financial controls and processes for due diligence) as well as evidence of purported job creation, to confirm what has been submitted in Form I-924A applications (due December 29, 2018!). USCIS will perform a site assessment after issuing a “Notice of Compliance Review” and document the results in a compliance report, which becomes part of the regional center’s record.


4. No Substitution of Minor for Parent


Ms. Kendall indicated that USCIS does not see a legal basis to allow parent to substitute child as investor and retain the parent’s priority date. We’ve previously blogged on the practical side of accomplishing a substitution in compliance with EB-5 rules.


5. Redeployment


Ms. Kendall noted that, when determining whether redeployment is “consistent with the scope of the new commercial enterprise’s ongoing business,” USCIS will look at the NCE’s organizational documents, private placement memorandum, and business plan for JCE. This is another area in EB-5 that needs better guidance for the industry to have predictability.


6. Material Change


Ms. Kendall announced that USCIS is conscious of the human element in EB-5 but noted that lack of statutory clarity for USCIS to provide guidance that encompasses all issues surrounding the concept of “material change,” which become increasingly important with EB-5 visa waiting times and extended investment periods.


7. Reduction of Pending I-526 Petition Backlog


Ms. Kendall noted the increased production at IPO in reducing the backlog of I-526 petitions, with fewer pending now since FY 2014. We are hopeful that I-829 adjudication timelines will soon drop too.


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