Washington, D.C., September 25, 2017 – The EB-5 Regional Center Program, approved by Congress in 1993 as a temporary program to stimulate economic growth and create jobs, is turning 25 years old in 2018. As the EB-5 Regional Center Program reaches maturity, U.S. elected officials, legal advisors and investors throughout the world are aware of the contrasting narratives surrounding its remarkable trajectory.
The EB-5 Regional Center Program offers both an extraordinary tool for creating jobs, transforming communities and offering access to visas to deserving investors with economic capital, and a platform for risk-prone investments tied to complex visa processes. In the last two decades, the EB-5 Regional Center program has seen thousands of visa applicants – primarily from China – who have completed the full cycle of investment, from conditional green card status, to job creation, and then removal of conditions with return of their investment capital. Some investors can point with pride to the fact that their capital was used to help build landmark projects in major American cities while creating thousands of jobs for U.S. workers. At the same time, the EB-5 Regional Center Program has experienced projects that have failed, or been mismanaged, or were simply paper-thin schemes to enrich promoters at the expense of investors.
Legislators in Congress and industry leaders throughout the U.S. have been negotiating for approximately two years on changes to the EB-5 Regional Center Program. To some, these negotiations have yielded little more than a series of improvised short-term extensions of the EB-5 Regional Center Program. Yet, the negotiations themselves have brought about a fundamental awareness that EB-5 Regional Center Program has been tremendously successful as a tool for investment and job creation. The challenges for the future, therefore, concern reaching agreement on how best to direct investment of EB-5 capital to communities throughout the U.S.; how to decrease the potential for project failures and mismanagement, and how to reduce visa waiting lists to reasonable levels for Chinese EB-5 applicants.
As discrete negotiations among elected officials continue, observers do expect a legislative solution, but few are predicting when the U.S. Congress will resolve the challenges. Recent events are indicative efforts by legislators and U.S. Citizenship & Immigration Services (USCIS) to continue seeking solutions. First, the U.S. federal government has postponed issuance of new EB-5 regulations by USCIS until April 2018. The proposed new regulations were originally released to the public in January 2017, and public comments were accepted until April 11, 2017. Second, the EB-5 Regional Center Program was extended until December 8, 2017 without changes, after it was set to expire on September 30, 2017. Most observers believe that these two actions give legislators needed time to reach agreement on changes to the EB-5 Regional Center Program.
Most proposed new EB-5 legislation and the proposed USCIS regulations for the EB-5 Regional Center Program will increase the minimum investment amount from its current $500,000 for Targeted Employment Areas (TEA’s) and $1,000,000 for non-TEA’s. One recent EB-5 reform bill was released in late July 2017 by Congressman Fitzpatrick (R-PA). The Fitzpatrick EB-5 bill proposed to continue the EB-5 Regional Center Program, but increase TEA investments to $800,000 and increase the investment threshold to $1.2 million for all other investments. This solution is similar to two proposed laws presented in April 2017. The first, by Sen. Cornyn (R-TX), would raise TEA investments to $800,000 and non-TEA’s to $925,000. The second, by Sen. Grassley (R-IA), would raise TEA investments to $800,0000 and maintain non-TEA’s unchanged at $1,000,000.
In contrast to these proposed bills, on August 2, 2017, Senator David Perdue (R-GA) and Senator Tom Cotton (R-AR) introduced a proposed bill to entirely revamp the U.S. system for granting lawful permanent residence (i.e., a “green card”) and, in the process, eliminate the EB-5 Program and all other Employment Based immigration categories. The Perdue-Cotton bill, known as “Reforming American Immigration for a Strong Economy Act,” or “RAISE Act”, would create a points system for granting green cards, while simultaneously reducing the total number of green cards issued each year. The RAISE Act seeks to create a long list factors that would allot points to applicants. Points would be granted to applicants for factors such as: knowledge of the English language, completion of university education, achievements showing extraordinary ability, or making an investment in the U.S. For example, a RAISE Act applicant would be granted 6 points for investments of at least $1.35 million, and 12 points for investments of at least $1.8 million. Such an investment must last at least 3 years, and the applicant must play an active management role in a new commercial enterprise. Despite making an investment under the RAISE Act, an applicant is not assured of having sufficient points to qualify for a green card.
In a context of uncertainty about the EB-5 Regional Center Program, EB-5 investors remain interested in pursuing EB-5 Regional Center investments, with a preference for projects with fewer immigration risks, either because of the quality of the project or because the project has received an I-924 exemplar approval from USCIS.
Regional Center operators are making cautious plans for slowing EB-5 demand from mainland China and increased EB-5 demand from India. Regional Center operators are also doing internal house-keeping by studying in detail the redeployment guidance from USCIS in the EB-5 Policy Manual, and gearing up to submit the I-924A Annual Certification. Form I-924A must be filed by USCIS-approved regional centers between October 1, 2017 and December 29, 2017 – with a new filing fee of $3,035.
Both EB-5 investors and Regional Center operators are welcoming two recent positive news from the USCIS. First, the October 2017 Visa Bulletin shows a one-week jump for the Mainland China EB-5 category Final Action Date, which is now at June 22, 2014. Second, we have seen a recent uptick in USCIS issuance of decisions on I-829 petitions. By June 2017, average USCIS processing time for I-829 petitions exceeded 24 months. Recent USCIS statements to stakeholders had promised a shift in personnel at the Investor Program Office to address the daunting backlog of I-829 petitions. That promise appears to be bearing fruit. A new wave of investors is getting the good news that they have been waiting years to receive.