Updated legislation for the Regional Center Program that focuses on the EB-5 Immigrant Investor Program could be released this month.
The EB-5 program is a permanent program written into law in 1990. The Regional Center program, however, was introduced in 1992 and relied on temporary, periodic reauthorization ever since.
The Office of Management and Budget (OMB) is now reviewing a final regulation that is expected to introduce changes to the EB-5 Immigrant Investor Program. In January 2017, the Department of Homeland Security (DHS) published a proposed rule to raise EB-5 investment minimums and to give complete control to the federal government to designate Targeted Employment Areas (TEA).
TEAs are rural and high-unemployment areas that qualify for the lower EB-5 investment threshold designed to boost underdeveloped regional economies.
A brief overview of the proposed EB-5 rules:
1. HIGHER INVESTMENT THRESHOLDS
- To raise the minimum investment amount for targeted employment areas from $500,000 to $1.35 million. This translates to a 170% increase for TEAs.
- To increase the non-TEA or regular investment rate from $1 million to $1.8 million.
- To subject investment thresholds to an automatic increase every five years based upon the Consumer Price Index.
2. GIVE THE FEDERAL GOVERNMENT SOLE AUTHORITY TO DESIGNATE TEAs
USCIS is seeking sole authority to designate TEAs. The new policy would allow USCIS to place further restrictions on investment locations.
The proposed rule has stoked concern that USCIS’ new methodology of designating TEAs would curb the types of investment projects most desirable to foreign investors. Previously, individual states enjoyed broad authority to designate TEAs based on local demographics and unemployment numbers.
3. PRIORITY DATE RETENTION
If finalized, priority date retention would overwhelmingly benefit foreign investors by setting their place in line for an immigrant visa number. Foreign investors are sometimes forced to file a subsequent EB-5 petition in circumstances where a Regional Center is terminated, or there are significant changes to the initial business plan.
People from countries with multi-year immigrant visas have the most to gain from the proposed change.
4. SEPARATE REMOVAL OF CONDITIONS (I-829) FILINGS
Another positive provision would allow spouses and/or children of an EB-5 investor who were not included in the principal investor’s petition to file independently to remove conditions on permanent residency status.
5. The final rule and the next steps for prospective foreign investors:
The current EB-5 provisions will remain in effect until new regulation is implemented. OMB has up to 90 days to make a final decision on the proposed changes but could take less time. The specific EB-5 changes will not be disclosed until the final rule is released for publication.
Any part of the EB-5 program is susceptible to change. DHS may finalize the originally proposed regulation or make changes per public feedback.
There is still time to make a qualifying capital investment and file an investor petition to benefit from the existing EB-5 rules. Changes may render certain EB-5 project types ineligible for future investment. Should USCIS be given exclusive authority to designate TEAs, it remains unknown as to when they would take the process away from U.S. states.
In the unlikely event that there is a complete overhaul of the Regional Center Program, it is not clear what would happen to the investors who have already demonstrated their investment in a suitable EB-5 project (I-526) and are in the process of having their permanent residency conditions removed (I-829).