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Immigrant Investor Visa and Regional Center Program Comprehensive Reform Act

March 23, 2018

Author: Robert V. Cornish Jr.

The EB-5 program was created by Congress in 1990 to stimulate the U.S. economy through job creation and investment by foreign nationals seeking to secure U.S. visas. Reforms to the EB-5 Regional Center Program (not the Direct EB-5 Program) were to be included in the Congressional Omnibus Package, but instead were objected to by a faction of Democratic senators representing large urban areas where Regional Centers would lose visas under the proposed reforms. Instead, the EB-5 Regional Center Program was extended to September 30, 2018, without further change.

Given that this is the fifth time that efforts  to reform the EB-5 Regional Center program have failed,  however, Sen. Charles Grassley has publicly stated that he will now spearhead establishment of a coalition to terminate the Regional Center Program legislation. Thus, it is vital that foreign investors planning to apply for EB-5 under the current legislation take immediate action to take advantage of the unchanged EB-5 Regional Center Program before its possible termination.

In the event that reform efforts begin again, many believe that the latest revised bill will provide the template for changes in the future.

Key issues of contention

  • While the overall number of visas would not have changed under the new legislation, there would have been “set-asides” within the 10,000 available visas: 1,450 visas for rural investments, 1,450 visas for priority urban investments and 200 visas for infrastructure. Visas available under one category would not have rolled over to another category if unused. Some EB-5 Regional Centers from large urban areas actively made known their objections to this concept, in that the set-asides take away readily available visas for projects in urban areas.
  • Investors would have had to create 12 jobs instead of the currently required 10; the number would have gone down to 9 in rural or priority urban areas, U.S. territories, base realignment and closure ( BRAC) areas, or if the investments were funded through small business lending or a franchise investment fund. There was little debate about this adjusted job count concept among the stakeholders involved the EB-5 Program.
  • The minimum investment amount would have risen from $500,000 to $925,000 for Targeted Employment Areas (TEAs). For all other areas, the minimum investment amount would have increased from $1,000,000 to $1,025,000. Many Regional Centers objected to this provision, given the perception that the EB-5 Program provides value to the global investment immigration community in featuring a low investment amount. Others believe that since the investment amount has not been adjusted since inception of the Program, it ought to be increased.
  • Investors would no longer have been able to use foreign sources of funding to invest in EB-5. They would have been required to have the cash in hand or obtain a loan on an unsecured basis in the United States. There is significant disjunction between Congress and the EB-5 Industry concerning this provision.

Given the rancor in the debate over the reform of the EB-5 Program and the road map of changes that the latest legislation presented, immigrant investors considering participation in an investment through an EB-5 Regional Center should not risk being shut out from opportunities should legislation urged by Senator Grassley succeed in making it through both houses of Congress. Those investors should now investigate suitable investments in Regional Centers so that they have sufficient time to retain service professionals and gather documents in time to deploy their money before the Program may be terminated.

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