Congress is set to renew the EB-5 program

On the evening of March 9, the U.S. House of Representatives passed a $1.5 trillion spending bill that would fund the U.S. government for the remainder of the fiscal year and provide $13.6 billion to respond to the Russian invasion of Ukraine. Buried in the 2,700-page bipartisan legislation is a 39-page EB-5 immigrant investment reform bill that will revive the EB-5 Regional Center program.

The EB-5 program was created in 1990 to attract foreign capital to American projects while creating jobs in the United States and stimulating the economy. In return, foreign investors receive immigrant visas for themselves and their families. The program has been used successfully by property developers and other project developers as an alternative financing vehicle. However, the Regional Center portion of the EB-5 program (which accounted for over 95% of EB-5 investments) expired in June 2021 when Congress failed to renew it. Assuming the Senate passes the spending bill and is then signed into law by President Biden, the EB-5 Regional Center will once again be open for business through 2027.

Reform and Integrity Act EB-5 includes the following significant changes to the program:

Investment amounts

  • $800,000 in Targeted Employment Areas (TEA) – rural and high unemployment areas

  • $1,050,000 in non-TEA

  • On January 1, 2027, and every five years thereafter, investment amounts adjust to inflation.

High Unemployment TEAs are to be determined only by USCIS (not state or local authorities) and are valid for two years from the filing of the draft copy, renewable in two-year increments.

Reserved EB-5 visas

  • Reservations represent a percentage of the 10,000 EB-5 visas available each year.

  • 20% for rural projects

  • 10% for projects in urban areas in difficulty

  • 2% for infrastructure projects

  • Unused visas “carried over” in the same category to the following year

  • Unused visas in any category made generally available for any project, within one year immediately following the “carry-over” year

Indirect employment limits

  • Cannot count for more than 90% of jobs

  • Only 75% of jobs can come from construction impacts lasting less than two years (and these only count to the extent of a fraction of a two-year period).

Project requests

  • A regional center must file for project approval with USCIS, but investors can file I-526 petitions after the required project application is filed.

  • USCIS must conduct a site visit prior to each project, giving at least 24 hours notice.

Increased oversight and regulation of regional centers

  • Undergo a USCIS audit every five years

  • Demanding applications and annual reports must include general securities certifications and other compliances and conditions, including all marketing fees paid.

  • Sanctions for misrepresentation or non-compliance, including suspension, fines of up to 10% of capital raised, exclusion of persons or termination

Integrity Fund

  • To support a new “Integrity Fund”, in addition to all application fees, each regional center must pay an annual membership fee of $20,000, or $10,000 for those with 20 or fewer investors per year. and each regional center investor must pay $1,000 with an I-526 petition.

I-829 Amendments

  • Investors who file I-829 petitions can still be “actively creating the required job,” but the investor must make an additional filing one year later showing that the jobs were created.

Application fees

The reauthorization of the EB-5 Regional Center program will attract billions of dollars in foreign investment annually for U.S. projects while providing a low-cost financing vehicle for U.S. sponsors.

© 2022 Bradley Arant Boult Cummings LLPNational Law Review, Volume XII, Number 69