In January 2017, under the Obama administration, United States Citizenship & Immigration Services (“USCIS”) issued a proposed rule to modernize the EB-5 Immigrant Investor Program. USCIS wants to amend the regulations to increase investment amounts and re-constitute the Targeted Employment Area (“TEA”) designation process such that it is consistent with the original intent of Congress, among other things.
If the proposal takes effect, the minimum investment amounts will be raised from $1M to $1.8M for standard investments and from $500,000 to $1.35M for TEA investments. The increases would account for inflation given that EB-5 investment thresholds have not changed since the inception of the programs. Additionally, under the TEA designation process, the ability of the states and local governments to declare areas of high unemployment would be eliminated. Rather, TEAs would be redefined in terms of their composition.
The proposals, if implemented, would significantly affect the EB-5 program. Redefining the composition of TEAs could disqualify many projects from receiving the designation, thereby requiring investors to meet the higher standard investment threshold. Consequently, the pool of foreign nationals who could then afford to invest may be reduced, thus causing less foreign investment dollars in the U.S. through the EB-5 program.
The proposed regulations issued by the Obama administration were open for comment until April 28, 2017, after which they were supposed to be finalized and operational. Since President Trump took office, these final regulations have been delayed. Meanwhile, a bi-partisan group of senators have been working to reform the EB-5 program legislatively; these senators have, however, been stymied by special interest groups. While the EB-5 program was extended without any changes in January, we have seen little with respect to finalizing the Obama-era EB-5 regulations.
A few months ago, however, USCIS tweeted about working on a proposed rule that would reform and modernize the program, increase investment levels, end gerrymandering, and better reflect congressional intent. It has been rumoured that these proposed rules will be issued in late summer or early fall of this year. So now it seems as though EB-5 reform and modernization may be imminent – Washington time.
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