By Marta Lillo
EB-5 project data for this year seems to follow the same positive steps as last year.
According to estimates by the fund administration platform PRXY, more than 400 I-956F projects were filed last year. Regional Centers (RC) must submit an I-956F form before the U.S. Citizenship and Immigration Services (USCIS) to make a public project offer.
“USCIS reports on a fiscal year basis and is typically well behind in releasing this information. However, based on the reporting we’ve seen, we estimate approximately 415 I-956Fs (filed in 2023),” PRXY co-founder and CEO Connor Irish says.
With an estimated market share of 17% of all the EB-5 projects with an approved I-956F form, Irish explains 68 new projects were onboarded to the tool last year. “We have anecdotal evidence from many of our clients confirming that their 956Fs have been approved but we cannot confirm the exact number at this time as the system does not currently track this metric. However, we can confirm as of Apr. 1 that only three projects withdrew from the PRXY platform in 2023 and their withdrawal was due to losing TEA [Targeted Employment Area] status.”
As for PRXY’s market share estimates, he says, “There are projects in the market that did not retain a fund administration solution, so a more accurate description would beat at least 17% of the total market adopted the PRXY system, and if we limit the market to projects who elected fund administration, then PRXY’s year one adoption is even more promising.”
In addition, 24 EB-5 projects joined the platform between January and March in 2024, Irish adds.
Regarding the type of projects onboarded on PRXY, Irish describes: “As of Apr. 1, every project on PRXY’s platform is located in a TEA. Of those, the simple majority are standard TEA projects, but we also have quite a few rural projects which came online in 2023 and which continue to come online in 2024. The most common asset classes we see are in the hotel, master-planned community, and multifamily or condo space. That being said, we are also seeing a few more nascent projects in green energy, manufacturing, and infrastructure.”
Meanwhile, the total value of active EB-5 transactions between New Commercial Enterprises (NCE) and Job Creating Entity (JCE) for projects recorded by the software since its launch in October 2022 reached $878 million; this amount increases significantly considering the funds still being held in escrow. On average, the EB-5 offering size for 2023 was $39.8 million, according to PRXY.
Preparing for EB-5 fee hikes, Regional Center audits, and program extension in 2027
March was a particularly high-volume month given the Apr. 1 EB-5 fee hike deadline set up by the USCIS. “It is clear that the fee increase is not well received, and we understand the frustration. In any industry, you would expect a fee increase to correlate with some attempted advancement by the agency imposing the higher cost. USCIS hasn’t tethered this imposition to any persuasive, identified benefit in the EB-5 space, so many in the market are simply asking, ‘What are we paying for?’ We believe this could have had a softer landing if the increase was rationalized by a clear initiative at USCIS that correlated increased EB-5 filing fees with a better EB5 experience. It’s unfortunate that this isn’t the case, as the opportunities for innovation at USCIS internally and externally are immediately identifiable and attainable,” Irish says.
He adds that, for now, the EB-5 market will continue to speculate on the implications of the fee increase until these challenges are resolved. “However, even if the fee increase remains effective, the market will go on, but it’s likely that these costs, beyond I-526E fees, will ultimately be passed on to investors, which is unfortunate and easily foreseeable. Our anticipation is new projects who were not able to meet the deadline will simply wait until the dust settles prior to filing any additional 956Fs post April 1.”
PRXY co-founder and EB-5 attorney Sam Newbold explains the software provider is also preparing for the upcoming USCIS auditing of Regional Centers, which will involve over 600 corporations in the next three years. “I fear that many RCs without robust software tools will be unprepared for the audits, causing unnecessary exposure to investors and projects,” the attorney says.
Regarding the potential extension of the EB-5 program in 2027, since its renewal in March 2022 by the Reform and Integrity Act of 2022 (RIA), Irish says the industry needs to show U.S. Congress that it’s really evolving responsibly in response to the RIA. “The only way we can do that is with better tools, policies and procedures that reduce risk and contribute toward further increasing trust in the EB-5 program and the stakeholders therein. We’re proud to be an instrument in that chorus.”
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