In 1990, Congress created the EB-5 Program to stimulate the U.S. economy through job creation and capital investment by foreign entrepreneurs. In 1992, Congress created the Immigrant Investor Program, also known as the Regional Center Program. The USCIS determines whether a business is eligible for treatment as a Regional Center based on the business’proposal for the promotion of economic growth. Under these programs (“EB-5 Immigrant Investor Program”), foreign entrepreneurs (and their spouses and unmarried children under the age of 21) are eligible to apply for green cards if they: (1) make the necessary investment in a commercial enterprise in the United States ($1,000,000 for a basic business or $500,000 for a business located in a Targeted Employment Area (TEA), i.e., a rural area or area with high unemployment); and (2) plan to create or preserve at least ten full-time jobs for qualified U.S. workers.
There has been a great deal of discussion about potential reform to the EB-5 Immigrant Investor Program. The Office of Management and Budget (OMB) Spring 2018 Unified Agenda states that its “final action”on EB-5 regulations will take place in August. It appears likely that projects in TEAs will be most impacted by the changes not only in increased investment amounts but in the way TEA’s are determined. Specifically, the changes would raise the minimum investment thresholds for TEAs from $500,000 to $925,000 and for projects in regular or high employment areas from $1,000,000 to $1,025,000.
Opponents to this change argue that the massive increase for TEA areas are inconsistent with the intent of lawmakers, whose objective was to create a program that gave economically disadvantaged areas an opportunity to compete for foreign capital. They argue that the substantial increase in investment capital will have a chilling effect on regional centers trying to raise EB-5 capital for projects in rural states.
A second potential reform may be the way that the USCIS determines whether a location is a TEA, which would affect the ability of an organization to offer TEA benefits. One expects a target employment area to be in rural locations and areas experiencing higher rates of unemployment. However, many of the large scale EB-5 regional center projects are found in affluent urban areas such as New York, Los Angeles, and Miami, as census tracts are often manipulated to allow for a TEA designation. Although manipulation of census tracts may be considered to be inappropriate scheming or gerrymandering, the purpose of the EB-5 program is to create jobs and, in turn, stimulate the economy. Projects in highly populated areas are more likely to stimulate the economy than if established in a rural area. Also, investments in highly populated areas are likely to attract more foreign investors due a greater probability of a return of capital.
There are also proposals to limit the number of visas available to TEA projects.
Foreign investors will be significantly impacted if the OMB approves the proposed changes to the EB-5 Program in August especially if investment amounts are increased or the $500,000 investment amount is eliminated altogether leaving the required investment amount at $1 million or higher. Investors seeking to take advantage of the current investment minimums are advised to meet with a knowledgeable immigration attorney as soon as possible to make sure they are aware of their investment options and attendant IRS obligations.
The EB5 visa program is complicated and requires extensive documentation. To learn more, contact the Pollak Immigration team today. We will learn about your unique situation and immigration objectives, clearly answer your questions regarding the EB5 visa program — as well as other programs that may be an option for you or your family members — and help you create a solid, complete, timely and impressive application.
Karen-Lee Pollak is the Managing Attorney at Pollak PLLC located in Dallas, Texas. She is a frequent speaker, author and blogger on immigration issues. She can be reached at karenlp@pollakimmigration