Over the next few weeks, you will see and hear many media reports on the upcoming proposed legislation which may affect the EB-5 (immigration through investment) program. It is important to put this and any other EB-5 topic in context.
While the EB-5 “Pilot Program” is scheduled to sunset on September 30, 2015, the statute related to EB-5 will not; as such, individual investors currently investing $1 million and creating a minimum of ten jobs will not be affected, aside from the potential increase to $1.2 million investment contemplated under the new legislation;
The proposed legislation is just that: “proposed.” There is nothing final and it will be challenged by the IIUSA (Invest in the U.S.A.) lobbying organization and the EB-5 stakeholder community;
As it stands, the proposed legislation is a small miracle in the making. It has been co-sponsored by Senator Grassley (R-Iowa), an ardent challenger of the EB-5 program, and Senator Patrick Leahy (D-Vermont), an ardent supporter of the program. Both Senators have high level positions in U.S. government and politics.
Among the specific proposals from the new legislation include extension of the EB-5 Pilot Program for an additional five years, as of passage of legislation. We will need to see the final modifications once the legislation takes effect.
Investments in Targeted Employment Areas (TEAs) will be raised due to cost of living increases to $800,000 (from $500,000 as provided in the 1990 legislation currently in effect). Investments in non-TEAs will increase from $1.0 million to $1.2 million.
The cost of living adjustment will be increased every FIVE years, not annually; this will allow some stability in the program, at least for the near future.
A single census tract can qualify as a Targeted Employment Area so long as the qualifications established by the new legislation are met.
If the TEA is in a Metropolitan Statistical Area (MSA), no less than 50% of the jobs created must be within that MSA to be counted as EB-5 qualifying jobs.
No more than 90% of indirect jobs can be credited to an EB-5 project job creation calculation.
No more than 30% of total jobs created can be a result of non-EB-5 investment.
Recognized economic models will be accepted by USCIS for job calculations.
Exemplars and pre-approvals of EB-5 projects (in 4 months) will be required.
Premium processing for an additional fee will be implemented.
Target goals for processing I-526 applications for immigrant visa under the EB-5 program (at 150 days) and I-829 applications to remove conditions (at 180 days) have been set as an objective under the new legislative proposal.
All administrative fees paid to the regional center will be analyzed as to the source of funds in addition to the investment amount.
Investors will need to provide last seven years of tax returns.
Gifted funds that will be acceptable should be from immediate family members only including: spouse, parent, child, sibling, or grandparent.
Loans used for investment must be collateralized based on personal assets.
Loans must be made from “reputable” financial institutions.
Concurrent filing of I-526 petitions and I-485 adjustment of status applications will be accepted only if a visa number is available (note: the EB-5 category for China is currently retrogressed).
Derivative children may receive added benefits on denied I-829 applications with new I-526 submissions.
Each regional center will be charged $20,000 per year as a contribution to the “integrity fund” for site visits, audits, etc.
Some fee arrangements may be limited by USCIS.All interested parties will need to adhere to securities laws and related compliance matters.
The Secretary of the Department of Homeland Security will have final discretion and decision making authority regarding the EB-5 program. This condition is controversial because it usurps due process and the integrity of the program.
Regional center and new commercial enterprise principals will need to be either U.S. citizens or lawful permanent residents in the U.S. with no criminal records.
The effective date is to be determined but exemplars and pending cases will be grandfathered in, if filed before the deadline.
As we see it on a global perspective, the proposed changes are natural, a progression of this particular component of the program, and in line with other present or past country requirements. Some will be hard to accept and will severely impact some clients, others are administrative adjustments. For most EB-5 investors, the program remains a good path to U.S. residency.
SOURCE: BEHAR LAW GROUP JUNE 2015