The coveted EB-5 program is reaching its time of testing when Congress will decide whether to renew it or not. The EB-5 investor immigration program, created in 1990, has a sunset provision that could lead to its expiration by June 30, 2021. This has not caused much concern, as Congress can automatically renew certain programs, including the EB-5 program, by passing the omnibus bill to approve a new budget.
EB-5 Investor Program
EB-5, the employment-based fifth preference category, is an investor-based program. It was first enacted as a pilot program in 1992 and has been regularly reauthorized since. Under this program, investors may qualify-for EB-5 classification by investing through regional centers designated by the United States Citizenship and Immigration Services, based on proposals for investment growth. An investor must invest a minimum of $1.8 million, or $900,000 for a Targeted Employment Area investment.
The investor must invest in a new commercial enterprise that will create full-time positions for at least ten qualifying employees. The enterprise can create jobs either directly or indirectly. Investors can also invest in a troubled business, which is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period before the priority date of the immigrant investors. As an incentive to the investment and the resulting creation of jobs, the foreign investor and their derivatives will get Legal Permanent Resident status, leading to the ability to naturalize as United States citizens.
EB-5 Investor Approvals
In the last omnibus appropriation bill passed when Donald Trump was president, the EB-5 program was decoupled from automatic approvals. This means the program must gain re-approval from Congress, which will determine the destiny of the EB-5 program.
Biden’s Immigration Bill
EB-5 investors and their family members are counted towards the cap on the number of immigrants allowed in the country. The Biden administration’s recent immigration bill has proposed to recapture the unused visas and exclude the family members against the cap. The proposal also eliminates the per-country limits in green card allocation. The immigration bill will be debated and amended before it is passed.
Senator Chuck Grassley (R-IA) and Senator Patrick Leahy (D-VT) have co-sponsored the bipartisan EB-5 Reform and Integrity Act. Changes the bipartisan legislation would bring include the following:
- Extend the program through September 2024
- Increase the Department of Homeland Security’s (DHS) authority to deny or terminate applications involving fraud, criminal misuse, or threat to public safety or national security
- Establish an “EB-5 Integrity Fund” into which the regional centers and investors would pay fees to be used by the DHS to perform audits and site visits, and investigate fraud
- Require background checks of the regional center and project principals
- Require more disclosures to investors regarding business risks and conflicts of interest
- Require more oversight of projects and closer monitoring for securities compliance
A national trade association – Invest In the USA, which represents more than 200 EB-5 capital formation – recently assembled 425 supporters to back the bill. The bill has received support from the hotel and lodging industry, the real estate industry, national and local chambers of commerce, economic development organizations, and mayors from across 19 states.
The EB-5 program is pivotal to many industries that directly benefit from this program. Will they still have those benefits when June 30 comes rolls around? To learn more about this blog post or if you have any other immigration concerns, please feel free to contact me at email@example.com or (484) 544-0022.