In the midst of an overall push for immigration reform, Congress has extended the EB-5 Regional Center Program again. It happened several times in 2017 and 2018 and was only extended on a short-term basis in 2019 to February 15th. This time, however, the Spending Bill reauthorizes the EB-5 program through September 30th, 2019 through the Consolidated Appropriations Act 2019. This keeps the federal government and EB-5 program in business and “as-is” through Sept 30th, 2019.
This is great news for foreign investors who might be trying to file their EB-5 application before potential new regulations are enacted, which include proposed fee increases, and increased minimum investment requirements. In its current state, the EB-5 program requires that applicants have a minimum amount of capital of $500,000 to invest in targeted employment areas (TEAs) or $1 million to invest in non-TEA areas. These amounts are at the top of the list for proposed changes and could be increased to a $1.35 million investment (for TEA areas) and a $1.8 million investment (for non-TEA areas) when lawmakers next meet on the topic.
EB-5 Quick Overview
The U.S. government set up the EB-5, or employment fifth preference, back in 1990. It was designed to attract wealthy foreign investors, who wanted to invest in the United States economy by setting up businesses and employing a minimum amount of ten American citizens. Foreign nationals who qualify can acquire permanent residency in the process and can also bring along their immediate family, which includes a spouse and any dependent children under the age of 21. The program does not cost American taxpayers but instead adds much-needed tax dollars to the U.S. economy, including the resultant employment of U.S. workers.
The EB-5 program has been an important economic driver since it came into effect, with the program pulling in over $21 billion in foreign direct investment since 2008 to present times, according to Invest in the USA (IIUSA) industry analytics. It is often seen as a luxury-investment immigration program due to the caliber of investor applicants it attracts but has created hundreds of thousands of jobs in the U.S. since it launched, especially in recent years. This is due to the nature of the program, which requires that EB-5 investors create at least 10 full-time U.S. workers jobs within a 2-year period. The program currently creates, on average, 16 jobs per EB-5 investor.
Who can Apply for EB-5
Almost any foreign national, who meets the criteria, can apply for the EB-5 visa, although it has been dominated by a handful of countries for several years. China tops the list by far, with over 7,500 EB-5 visas issued to Chinese nationals for the 2016 financial year, followed by Vietnam, South Korea, Taiwan, and Brazil.
Why EB-5 Reform?
Already re-authorized nearly a dozen times, the latest push to reform the EB-5 program is part of a thrust to revamp immigration laws by the current administration. They include the Deferred Action for Childhood Arrivals (DACA) program and the President’s plans to erect a wall along the U.S.-Mexican border, both of which have been major talking points in recent times.
The new regulations were first proposed in January 2017 under an EB-5 Modernization Rule but have not been able to get the green light due to other immigration, budgetary, and security issues on the table. Senator John Cornyn is the man behind the proposed changes, which are expected to address – in addition to increasing the fees – procedures for applications, how TEAs are determined, and measures to deal with rogue investors who may bring the program into disrepute.
What’s Next for the EB-5?
Only time will tell if the proposed reforms to the EB-5 Foreign Investor program do come to pass in December 2018, or if they get extended on a short-term basis again. Nonetheless, many feel the changes are needed, but without such extreme increases in the minimum investment threshold, for the EB-5 to continue being beneficial to both foreign investors and the U.S. economy.