USCIS has published a final rule that will make significant changes to EB-5 program effective from Nov 21, 2019 under Trump Administration  in order to modernize the EB-5 program. The new reforms of EB-5 expected to drive more foreign investment into rural areas creating 10 jobs or more per investor.

The EB-5 immigrant investor scheme first launched in 1990, almost 29 years ago for $500,000 investment that creates employment and jobs for rural areas. Under the EB-5 program, individuals are eligible to apply for lawful permanent residence (green card) in the United States if they make the necessary investment in a commercial enterprise in the United States and create or, in certain circumstances, preserve 10 full-time jobs for qualified United States workers. In 1992, Congress created Regional Center Program. This sets aside EB-5 visas for participants who invest in commercial enterprises associated with regional centers approved by USCIS based on proposals for promoting economic growth.

The latest modernization reforms to EB-5 scheme almost doubles the investment threshold

• Targeted Employment Area (TEA) – $900,000 (increased from $500,000)
• High Employment Area (HEA) – $1,800,000 (increased from $1m)

Major changes to EB-5 in the final rule include:

1. Investment raised to $900K and $1.8M

 As of the effective date of the final rule, the standard minimum investment level will increase from $1 million to $1.8 million, the first increase since 1990, to account for inflation. The rule also keeps the 50% minimum investment differential between a TEA and a non-TEA, thereby increasing the minimum investment amount in a TEA from $500,000 to $900,000 and HEA for $1.8m (from $1m).

The minimum investment amounts by filing date and investment location are:

Petition Filing Date	Minimum Investment Amount – 8 CFR 204.6(f)(1).	Targeted Employment Area Investment Amount – 8 CFR 204.6(f)(2)	High-Employment Area Investment Amount – 8 CFR 204.6(f)(3)
Before 11/21/2019	$1,000,000	$500,000	$1,000,000
On or After 11/21/2019	$1,800,000	$900,000	$1,800,000

The final rule also provides that the minimum investment amounts will automatically adjust for inflation every five years.

2. Targeted Employment Area (TEA)

The final rule outlines changes to the EB-5 program to address gerrymandering of high-unemployment areas (which means deliberately manipulating the boundaries of an electoral constituency). Gerrymandering of such areas was typically accomplished by combining a series of census tracts to link a prosperous project location to a distressed community to obtain the qualifying average unemployment rate.

The rule modifies the original proposal that any city or town with a population of 20,000 or more may qualify as a TEA, to provide that only cities and towns with a population of 20,000 or more outside of metropolitan statistical areas (MSAs) may qualify as a TEA.

As of the effective date of the final rule, DHS will eliminate a state’s ability to designate certain geographic and political subdivisions as high-unemployment areas; instead, DHS would make such designations directly based on revised requirements in the regulation limiting the composition of census tract-based TEAs. These revisions will help ensure TEA designations are done fairly and consistently, and more closely adhere to congressional intent to direct investment to areas most in need.

3. Permanent residence conditions

The rule revises regulations to make clear that certain derivative family members who are lawful permanent residents must independently file to remove conditions on their permanent residence. The requirement would not apply to those family members who were included in a principal investor’s petition to remove conditions.

The rule improves the adjudication process for removing conditions by providing flexibility in interview locations and to adopt the current USCIS process for issuing Green Cards.

4. Priority date

The final rule also offers greater flexibility to immigrant investors who have a previously approved EB-5 immigrant petition. When they need to file a new EB-5 petition, they generally now will be able to retain the priority date of the previously approved petition, subject to certain exceptions.

5. Benefits from EB-5 modernization

•  Makes visa allocation more predictable for investors with less possibility for large fluctuations in visa availability dates due to regional center termination.
•  Provides greater certainty and stability regarding the timing of eligibility for investors pursuing permanent residence in the U.S. and thus lessens the burden of unexpected changes in the underlying investment.
•  Provides more flexibility to investors to contribute to more viable investments, potentially reducing fraud and improving potential for job creation.
•  Rules out TEA configurations that rely on a large number of census tracts indirectly linked to the actual project tract by numerous degrees of separation.
•  Potential to better stimulate job growth in areas where unemployment rates are the highest, consistent with congressional intent.  This TEA provision could cause some projects and investments to no longer qualify as being in high unemployment areas.
•   Increases in investment amounts are necessary to keep pace with inflation and real value of investments;  Raising the investment amounts increases the amount invested by each investor and potentially increases the total amount invested under this program. For regional centers, the higher investment amounts per investor will mean that fewer investors will have to be recruited to pool the requisite amount of capital for the project, so that searching and matching of investors to projects could be less costly. Costs: Some investors may be unable or unwilling to invest at the higher levels of investment.  There may be fewer jobs created if significantly fewer investors invest at the higher investment amounts.
•  For regional centers, the higher amounts could reduce the number of investors in the global pool and result in fewer investors, thus potentially making the search and matching of investors to projects more costly.
•  Potential reduced numbers of EB-5 investors could prevent certain projects from moving forward due to lack of requisite capital.
•  An increase in the investment amount could make foreign investor visa programs offered by other countries more attractive.
•  Conditions of Filing: Benefits adds  Adds clarity and eliminates confusion for the process of derivatives who file separately from the principal immigrant investor. Total cost to applicants filing separately will be $91,023 annually.
•  Conditions of Interview: Benefits:  Interviews may be scheduled at the USCIS office having jurisdiction over either the immigrant investor’s commercial enterprise, the immigrant investor’s residence, or the location where the Form I-829 petition is being adjudicated, thus making the interview program more effective and reducing burdens on the immigrant investor.
•  Some petitioners will benefit by traveling shorter distances for interviews and thus see a cost savings in travel costs and opportunity costs of time for travel and interview time.
•   Investors obtaining a permanent resident card: Benefits include Cost and time savings for applicants for biometrics data.

EB-5 Quotas

The total number of investor visas is capped at 10,000 annually, includes all family members.  Assuming 3 members per family, close to 3000 families receive EB-5 visas annually.  According to USCIS, Maximum visas capped at 7.1% of the worldwide level, not less than 3,000 of which reserved for investors in a targeted rural or high-unemployment area, and 3,000 set aside for investors in regional centers by Sec. 610 of Pub. L. 102-395.

Regional Centers

Regional centers can offer an immigrant investor already defined investment opportunities, thereby reducing the immigrant investor’s responsibility to identify acceptable investment vehicles.  A regional center can be associated with one or more new commercial enterprises.

As of July 8, 2019, there are 880 USCIS approved regional centers.

TEA vs HEA

Here are important difference between Targeted Employment Area (TEA) and High Employment Area (HEA) where the investment limits apply.

A TEA can be, at the time of investment, either:

• A rural area; or
• An area that has experienced high unemployment (defined as at least 150% of the national average unemployment rate).

A rural area is any area other than an area within a metropolitan statistical area (MSA) (as designated by the Office of Management and Budget) or within the outer boundary of any city or town having a population of 20,000 or more according to the most recent decennial census of the United States.

A HEA may be any of the following areas, if that area is where the new commercial enterprise is principally doing business and the area has experienced an average unemployment rate of at least 150% of the national average unemployment rate:

• An MSA;
• A specific county in an MSA;
• A county in which a city or town with a population of 20,000 or more is located; or
• A city or town with a population of 20,000 or more outside of an MSA.

 

Please contact us if you are interested in applying for EB-5.