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Update on Legislation to Extend the EB-5 Regional Center Program – Immigration Lawyer New York
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Update on Legislation to Extend the EB-5 Regional Center Program

By Michael H. Markovitch, Esq. on October, 01, 2015

The EB-5 Regional Center Program where one can get a Green Card by investing either $500, 000 or $1,000,000  is fast approaching its periodic renewal date on September 30, 2015. The EB-5 Regional Center Program has always been renewed over its 20+ years of history.

 

There are presently two proposed laws pending before the U.S. Congress which seek to extend the EB-5 Regional Center Program. The first is Senate Bill S.1501, sponsored by Senator Patrick Leahy (Democrat from Vermont) and Senator Charles Grassley (Republican from Iowa). The second is the EB-5 JOBS Act of 2015, a House Bill sponsored by Representative Zoe Lofgren (Democrat from California).

 

Both proposed laws extend the EB-5 Regional Center Program, and introduce important changes to it.

 

In this article, we review some of the proposed changes in the EB-5 Regional Center Program to identify general trends on the possible direction the EB-5 Regional Center Program after 9-30-2015.

 

Proposed Changes After 9-30-2015

 

A. Increased Capital Investment Amount

The most probable change to the EB-5 Regional Center Program after 9-30-2015 is an increase to the minimum capital investment amount. Currently, the minimum capital investment is set at US$500,000 for projects in high unemployment areas, and US$1,000,000 for all other areas. These capital investment thresholds have not changed in over 20 years.

 

Now that the annual maximum number of 10,000 EB-5 visas has been reached for the first time in May 2015, an increase in the minimum capital investment amount seems almost certain.

 

For example, Senate Bill S.1501 (sponsored by Senators Leahy and Grassley) would cause an increase in the minimum investment to US $800,000 for high unemployment areas, and $1,200,000 for all other areas, with possible adjustments thereafter.

 

Thus, after 9-30-2015, regardless of whether a project is located in a high unemployment area or not, investors can expect to pay more for an EB-5 investment.

 

B. Pre-Approval of Projects by USCIS

Pre-approval of projects has been sought by the EB-5 industry for years. It appears that legislators have listened. Both Senate Bill S.1501 and the EB JOBS Act of 2015 require the development of a system to ensure that new EB-5 capital investment projects are pre-approved for investors.

 

Pre-approval of investment projects will bring more certainty to investors, who will be able to have safeguards ensuring that the USCIS has reviewed the same investment documents that are being delivered to investors, and approved their project as a qualifying investment for the EB-5 Regional Center Program.

 

This should provide more security to investors with more predictable USCIS processing of visa applications.

 

C. New Standards for Investor Source of Funds

It is likely that the standards and practices for an investor’s sources of funds will become more stringent after 9-3-2015. In recent months, we have already witnessed efforts by USCIS in this direction, seeking, for example, to bar the use of loans without collateral security from EB-5 investments.

 

These efforts are likely to continue, whether through legislation or new rules by the USCIS.

 

For example, Senate Bill S.1501 proposes detailed new rules limiting gifts of funds, expanding the source of funds analysis to include the administrative fee and requiring 7 years of income tax returns from investors.

 

Thus, after 9-30, investors will be required to provide more information about their finances and employment than required in previous years by the EB-5 program.

 

D. Background Checks on Regional Center Owners and Managers

Another likely improvement of the EB-5 Regional Center Program after 9-30 is that there will be more background checks on the persons who own and manage EB-5 Regional Centers.

 

This will give investors more transparent information than ever about a Regional Center’s management, fees and expenses, project risks, and the relationships between the Regional Center and the project developer.

 

E. Newsflash

As of September 30, 2015, Congress has passed a Bill that included extending the current Regional Center Program until December 11, 2015.  After this period, changes as discussed above may very well change.

 

Conclusion

On September 30, 2015, the U.S. Government is aware of the EB-5 Regional Center Program’s benefits, making it likely that program will be renewed. Nevertheless, there appears to be consensus in the U.S. Government to update and improve the program to adapt it to increased worldwide demand for EB-5 visas, combined with the introduction of better safeguards to regulate regional centers, protect investors, and bring more predictability to USCIS processing.

 

For further information or questions you may have, please do not hesitate to contact The Law Offices of Michael H. Markovitch

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