Everything You Need to Know About the 5th Preference of Employment Based Immigration (EB-5)
The EB-5 Program Originated in the 1990’s
As one the greatest opportunities to obtain United States citizenship, the EB-5 program has been a valuable asset to many emigrants. It has been considered the least restrictive immigration program, with the greatest amount of latitude for allowing families to immigrate together. The EB-5 investor program is relatively simple. Investors are currently required to invest $1,000,000 into a New Commercial Enterprise (NCE) that creates at minimum 10 full-time jobs. This investment amount is lowered to $500,000 if the business is created within a rural area or an area of high unemployment, Targeted Employment Area (TEA), these zones must be officially authorized by the USCIS. The program was designed in the 1990s by congress and it was created to help stimulate the US economy by allotting ten thousand visas a year for immigrant investors, which eventually lead to green cards if the process goes successfully. For the most part the program has been considered a success, but the biggest complaint is the program was never adjusted to keep up with the times. As it stands, government designated regional centers are the only facilities allowed to act as a go between for EB-5 investors and individuals looking for investments. These regional centers are tasked with maintaining the integrity of the program from curating investment projects, preparing investors, and filing all paperwork directly with the government. For nearly thirty years this is how the EB-5 program has run, it has remained functional yet untouched for the most part.
Extensive EB-5 Program Growth has Created a Backlog
With the proof of the success of this program through multiple projects and investments, the number of applicants continued to steadily rise until around the year 2010 when the number of applicants began to skyrocket, specifically in China. Around this time the amount of applications began to surpass the total visa allotment, which began to generate a temporary backlog, and a massive amount of attention for the program. Not only was the EB-5 bringing attention because of the economic growth it provided, but also because the demand for the EB-5 visa never dropped. The number of petitions has continued to grow and remain well above the allotment of visas.
In response to the high demand for visas, Regional Centers have taken note and have been finding more creative and tailored investment opportunities, and the government has continued to try to pinpoint legislation that would help address some of the backlog created and help the sustainability of the Eb-5 program. Regional centers have moved away from the traditional investment opportunity of finding struggling businesses and helping them survive and moved into new territories of creating business opportunities by creating new restaurants, housing developments, luxury hotels, and other great amenities. Due to the diligence of these regional centers the backlog continued to grow longer and longer, to the point where it is beginning to get unmanageable for certain regions.
Congressional Legislation H.R. 1625
To address the concerns that have arisen with the EB-5 program, Congress, the Department of Homeland Security (DHS), and United States Citizenship and Immigration Services (USCIS) have all put in initiatives to help update the program, provide more security for investors, and increase the long-term sustainability of the program. The Congressional legislation was led by Edward R Royce, a congressional representative for California out of the 39th district. Royce drafted the 2018 legislation known as “The consolidated Appropriations Act, H.R. 1625.” This act was essentially the Congressional spending bill, in which the EB-5 program was approved and appropriated enough governmental funds to be able to sustain for at minimum five more years. This legislation, H.R. 1625, is a nearly 3000-page document that was signed into law in March of 2018 and has been a very assuring piece of legislation for individuals looking to invest in the program.
In attempts to do their part to help maintain the stability of the EB-5 program, USCIS and the DHS have issued multiple Notices of Proposed Rulemaking (NPRM) and submitted multiple draft law attempts. The combined effort of their initiative is to make up for the lost time of nearly 30 years, when the program has been untouched, and to set forth rules and policies that could help address future concerns of the program. To do so DHS has issued NPRMs that have come in three different waves. The first NPRM is RIN:1615-AC07 “EB-5 Immigrant Investor Program Modernization”, which is the rule that has had multiple draft laws presented about it. This rule has made it to the final rule phase meaning the rule was proposed, the public had an opportunity to voice their concerns, the concepts of the rule have been agreed upon, and the rule is being redrafted to its final form. The main concepts of this NPRM are increasing the investment amounts tied to the EB-5 program and improving on the concept of a TEA. One of the biggest concerns of the rule is determining the correct required investment rate, one that accounts for inflation for the past 30 years and can adapt to future needs. The current draft of the rule is set to be voted on in late 2018, and currently reads as:
“DHS is proposing to increase the minimum investment amounts for all new EB-5 petitioners. The increase would ensure that program requirements reflect the present-day dollar value of the investment amounts established by Congress in 1990. Specifically, DHS proposes to initially increase the standard minimum investment amount, which also applies to high employment areas, from $1 million to $1.8 million. This change would represent an adjustment for inflation from 1990 to 2015 as measured by the unadjusted Consumer Price Index for All Urban Consumers (CPI-U), [3] an economic indicator that tracks the prices of goods and services in the United States. For those investors seeking to invest in a new commercial enterprise that will be principally doing business in a targeted employment area (TEA), DHS proposes to increase the minimum investment amount from $500,000 to $1.35 million, which is 75 percent of the proposed standard minimum investment amount. In addition, DHS is proposing to make regular CPI-U-based adjustments in the standard minimum investment amount, and conforming adjustments to the TEA minimum investment amount, every 5 years, beginning 5 years from the effective date of these regulations.”
The second NPRM set to help the EB-5 Program is RIN: 1615-AC11 “EB-5 Immigrant Investor Regional Center Program.” This rule is currently in the proposed rule phase meaning it has been published and is open to the public for comments and criticism. As regional centers are such a vital portion of the EB-5 process, this rule is being proposed to help increase the difficulty of gaining regional center designation and increasing the responsibility and accountability of Regional Centers when it comes to selecting, investing in, and monitoring all selected investment opportunities.
The final NPRM issued by DHS and USCIS is RIN: 1615-AC26 which has yet to be named because it currently in the Pre-Rule phase. The issue has been opened for discussion but has not yet been written into a proposal to be viewed by the public or voted on. The current discussion on this NPRM revolves around multiple topics, including: redefining conditions for regional center operations, redefining components of the job creation aspect, encouraging investments into rural areas, changing the visas classification to reduce the backlog, and increasing the monitoring and oversight of the EB-5 program and all investment opportunities. This rule is set to be the biggest change to the EB-5 program but is in the earliest stages of development, and most likely will be whittled down before any portions of it is written in to proposal or seen by a panel, which is expected in late 2019.
Looking Towards the Future of the EB-5 Program
Though it seems that the EB-5 program will be seeing a massive overhaul, every change seems to be for the better. The price attached to the process will be increasing, but for the price many new benefits are being purchased. Investors will have a safer time when choosing regional centers to work with and projects to invest in. Delays in EB-5 visas processing is beginning to be sorted out, and the policy for including family in an EB-5 petition is being proposed to be loosened. All the efforts directed towards this project were desperately needed and promise to make this a sustainable program for many more years to come.
