On September 30th, just as the Program was facing expiration, Congress extended the EB-5 Regional Center Program through December 11th as part of a temporary spending bill that will keep the government running through that date. While it is probable that the House and Senate will again renew the Regional Center Program after the December extension (the program has already been renewed six times), many changes to the Program loom on the horizon. Six re-authorization bills are currently under consideration,[1] and most include reforms to enhance oversight, increase regulatory compliance, and make the program more efficient.[2] Though it is unknown which changes will ultimately be made, reforms to the Program are highly likely.[3]
With all the uncertainty around the program’s future form, it is natural for investors, developers, and business owners to hold back on new EB-5 projects. However, now is the best time to move, as the barrier to entry into the program might increase for all parties involved.[4] Whichever legislation ultimately passes, petitioners filing I-526 petitions and I-924 amendments before December 11th will likely be grandfathered under the existing law and thus exempt from any additional requirements, should they be instituted.[5]
For instance, at least three bills propose to raise the investment threshold. Currently, the minimum investment amount is $500,000 for projects located in Targeted Employment Areas (TEAs)[6] and $1 million for non-TEAs. The Grassley-Leahy bill aims to raise these thresholds to $800,000 for TEAs and $1.2 million for non-TEAs. Another bill, introduced in the House (H.R. 3770), seeks to increase them to $1 million and $2 million, respectively. Finally, the SKILLS Visa Act (H.R. 2131) proposes annual increases in the investment threshold based on the Consumer Price Index.[7] Notably, other bills, such as the Polis-Amodei bill (H.R. 616) and Rand Paul’s recently instituted bill (S. 2122), propose maintaining the minimum investment amounts at their current level. An increased threshold will make it more difficult for business owners and developers to attract investors, and for investors—who will now have to commit more funds—to gain access to the program.
Additionally, as we previously reported, some bills contain more stringent rules concerning how metropolitan-based TEAs are defined and how jobs (both indirect and direct) are calculated and counted. As with the increased investment threshold, such amendments—if they are ultimately incorporated into new legislation—may also present further challenges to business owners and investors.
Given all the uncertainty over the future of the program, anyone looking to get into the EB-5 space should act quickly.
Foreign investors who have not yet identified a feasible EB-5 project should watch our entertaining and informative EB-5 explainer video to learn more about how the EB-5 process works. They should also speak to a licensed broker-dealer to identify an appropriate and viable EB-5 project as soon as possible. (Investors can read our helpful article on how to vet an EB-5 broker-dealer here.) Investors may be interested in the many new and exciting EB-5 ventures that have sprung up across the country. These include large, landscape-altering development projects in urban settings; affordable housing projects; and eco-friendly renewable energy power plants.
Foreign investors who have already identified a project should compile and submit their documentation immediately. Consequently, interested investors are advised to proceed with their applications as planned.
Developers and business owners seeking EB-5 funding should enlist a team of skilled EB-5 professionals, such as the e-Council Inc.com team, to produce compliant EB-5 documentation for USCIS approval. e-Council Inc. is an experienced, full-service company with a long track record of successfully guiding its clients through the complex EB-5 process. Our team includes attorneys, researchers, and other professionals who specialize in providing due diligence services that will equip developers and business owners with the information needed to assess a project’s viability and likelihood that it will pass USCIS scrutiny.
If the project proves feasible, e-Council Inc. can create a Matter of Ho-compliant business plan and other documents designed to support the EB-5 application in a relatively short span of time. Once all the necessary materials and information have been provided, our team can produce a Matter of Ho-compliant business plan in four to six weeks.
In sum: Whether you are an investor, business owner, or developer, the e-Council Inc. team can help you file by the December 11th deadline … but only if you act quickly.
To inquire regarding our turnkey customized EB-5 services, including our best-in-class Matter of Ho-compliant business plans, due diligence project assessments and a wide range of ancillary services, please contact us at info@ecouncilinc.com.
e-Council Inc.’s website, newsletter and other forms of communication contain general information about legal matters. The information is not legal advice and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from an attorney or other professional legal services provider. For specific questions about any legal matter please consult with an attorney or other professional services provider.
[1] See http://eb5coalition.org/resources/bill-comparison-chart/
[2] http://therealdeal.com/blog/2015/09/29/the-quick-and-dirty-changes-looming-for-eb-5/; http://www.ballardspahr.com/alertspublications/legalalerts/2015-06-09-overview-of-the-bipartisan-eb-5-reauthorization-bill.aspx; https://iiusa.org/blog/government-affairs/us-congress/key-senators-introduce-bill-extend-improve-eb5-program-stephen-yaleloehr/
[3] http://www.natlawreview.com/article/september-30th-comes-and-goes-and-eb-5-regional-center-program-extended-through
[4] http://www.eb5diligence.com/articles/a-senate-bill-has-been-introduced.-what-should-regional-centers-and-issuers-do-now;
[5] For example, the Grassley-Leahy bill contains a “grandfather” clause.
[6] As of this writing, a TEA is defined as an area that, at the time of investment, is either a rural area as defined by the statute or an area that has experienced unemployment of at least 150 percent of the national average rate. In order to qualify for the reduced minimum investment of $500,000 instead of $1 million, projects must be located in and principally doing business in a TEA. Maps and census data can be used to demonstrate the rural status of a particular city, whereas a TEA designation letter issued by state government agencies can support the status of areas facing high levels of unemployment.
[7] This helpful chart summarizes the key provisions of the bills currently being considered: http://eb5coalition.org/resources/bill-comparison-chart/