EB5 Reauthorization. EB-5 Industry Prepares for a Restart Amid New Rules
From June 2021 up until now, January 2022, you could not invest in a EB5 Regional Center Program. So that’s where there’s a pooled investment vehicle, and you were able to count.
The EB-5 industry received some welcome news in early March.
Nearly eight months after the regional program lapsed at the end of June 2021, stalling both capital raising from new applications and the processing of existing applications, the industry is back in business. Congress reauthorized the program when it approved the EB-5 Reform and Integrity Act of 2022 attached to the omnibus appropriations bill on March 10. However, it’s not business as usual. EB-5 regional centers are working to attract new investors and line-up new investment projects, all while adapting to host of program changes, new rules and increased regulatory oversight.
On March 15, 2022, President Biden signed a law that made changes to the EB-5 program, authorized a new EB-5 Immigrant Investor Regional Center Program, and directed that certain “grandfathered” immigration benefits be processed. The Department has resumed processing visas associated with the Regional Center Program based on approved USCIS Forms I-526 (Immigrant Petition by Alien Entrepreneur), including those filed on or before the expiration of the previous regional center program on June 30, 2021. Further, pursuant to the new legislation, processing of visas associated with the new Regional Center Program begins 60 days after enactment of the 2022 Act.
The recent legislation introduced a number of changes, including expanding designations for Target Employment Areas (TEAs) and increase investment amounts for EB-5 participants to $800,000 for TEAs and $1,050,000 for non-TEAs. However, there are three big issues that are front and center for industry participants. Foremost, the program has been reauthorized for five years and will be effective through Sept. 30, 2027.
That is a big move for a program that had previously faced a series of short-term renewals and eleventh-hour extensions for the past several years. “That brings incredible stability to the EB-5 ecosystem, and it allows for more definitive planning on behalf of regional centers and project developers,” says Aaron Grau, executive director of Invest in the USA (IIUSA), a trade association for the EB-5 Regional Center Program.
EB-5 Regional Center redesignation leaps forward with USCIS releasing new forms
The U.S. Citizenship and Immigration Services (USCIS) has released two new forms for EB-5 Regional Centers to comply with in order to complete the redesignation process. The agency stated it released the forms under the EB-5 Reform and Integrity Act of 2022. These forms are in addition to the previously released Form I-956 Application for Regional Center Designation and Form I-956H Bona Fides of Persons Involved with Regional Center Program.
One of the new forms is Form I-956F, Application for Approval of an Investment in a Commercial Enterprise, which the agency said can only be filed by an approved regional center and “is similar in some respects to an “exemplar” submission on Form I-924” under the previous program. The agency said the 17-page Form I-956F is “required by statute for regional centers to apply for approval of each particular investment offering through an associated new commercial enterprise.”
The second is the 14-page Form I-956G Regional Center Annual Statement, which is in place of Form I-924A that was used in the previous program but includes the increased statutory reporting requirements.
The filing fee is $17,795 for Form I-956F and $3,035 for Form I-956G.
The USCIS plans to release another series of forms soon on its website, which are Form I-526, Immigrant
Petition by Standalone Investor, and Form I-526E, Immigrant Petition by Regional Center Investor.
EB-5 lawsuits against USCIS
There are currently two lawsuits in progress challenging the USCIS’s interpretation of the EB-5 Reform and Integrity Act of 2022. On June 2, the Federal Court for the Northern District of California held its second hearing in Behring’s preliminary injunction lawsuit against the requirement by the USCIS to redesignate regional centers.
The second lawsuit was filed by a group of regional centers and trade organization Invest in the USA (IIUSA) to challenge the USCIS from pursuing its interpretation of the EB-5 Reform and Integrity Act of 2022.
EB-5 industry professionals say "Congress plainly intended for RCs to continue to be authorized and would allow foreign direct investment to continue to be invested in EB-5 projects.”
Meanwhile, industry stakeholders are awaiting the USCIS’s next step and what will happen with the lawsuits. USCIS did not respond to requests for comments.
Congress reauthorized the program when it approved the EB-5 Reform and Integrity Act of 2022
ANALYSIS OF NEW EB-5 REFORM AND INTEGRITY ACT OF 2022
On March 15, 2022, the United States enacted the EB-5 Reform and Integrity Act of 2022 (the 2022 Act) as part of a large omnibus budget package of legislation. It provides a 5-year reauthorization of the Regional Center Program with substantial changes, marking an achievement long-awaited by the Regional Center industry.
The 2022 Act has major implications for existing and future investors, regional centers, developers, and promoters. A summary of these changes is below (IIUSA) :
“Grandfathering.” The 2022 Act preserves the eligibility of all pre-enactment investors as of the time they filed their I-526, for both I-526 and I-829 adjudication. The immediate repeal of the prior regional center (RC) law does not prevent adjudication and visa allocation for pre-investment RC investors. This should “moot” pending litigation about the “lapse” of prior law.
Investment Amounts. For all new filings, the minimum investment is $800,000 in a Targeted Employment Area (TEA), either rural (same definition as before, but now they receive priority in USCIS processing) or high unemployment (using narrower “bulls eye” definition from the 2019 regulations). High unemployment TEAs are determined only by USCIS and are valid for two years from project request filing, renewable in two-year increments. The $800,000 amount can also be used in “infrastructure projects” in which a government entity contracts for EB-5 financing to develop public works (something like a private municipal bond deal) even if not located in a TEA. Otherwise, the minimum is $1,050,000 (a $250K spread). Amounts increase with inflation every 5 years.
Reserved Visas. As a separate issue from investment amounts, visas are “reserved” each fiscal year: 20% for rural, 10% for high unemployment, and 2% for infrastructure; unused reserves carry over to add to reserves for the next year, but in the third unused year go without reservations. It is expected that the reserves will be allocated only to post-enactment investors, potentially allowing Chinese investors who use it to immigrate within one or two years instead of 10 to 15 years. Investors born in India and Vietnam might also use reserves to avoid visa number waits after I-526 approval. The rural and infrastructure reserves are most likely to attract such investors who might otherwise invest differently. Most other investments are likely to be in high unemployment areas anyway, and how the reserves are allocated depends on how the government will interpret and implement this tricky provision.
Investment Arrangements. Numerous USCIS interpretations under prior law are locked in by statute, including prohibited redemption and debt arrangements, and gifted and loaned investment funds. Purchase of publicly available bonds (municipal or for profit) no longer can qualify.
Adjustment of Status. Investors and family already legally in the U.S. and eligible for a visa number may concurrently file applications for adjustment of status (avoiding consular visa processing) along with or while awaiting adjudication of the investor’s I-526 petition. EB-5 investors now join other employment-based immigrants in enjoying, under INA section 245(k), forgiveness of up to 180 days of status violations when they apply for adjustment.
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EB-5 is an incentive program for foreign investment into the U.S. that trades green cards for capital. Its supporters have long touted it as an important economic stimulus tool for economic development and job creation that has attracted billions of dollars in capital since the program was first introduced three decades ago.
Developers like it because it provides an attractive source of low-cost debt for the capital stack. At the same time, some believe that reforms to the program were sorely needed.
“The whole reason that the program lapsed was because the program has been plagued by some bad actors,” notes Reid Thomas, managing director and chief revenue officer at JTC Americas, a company that provides fund administration solutions and services to EB-5 regional centers. Positive aspects of the program have been tainted by cases of fraud. The new legislation takes aim at shoring up some of the weaknesses in the program and protecting immigrant investors. * * *
Multiple petitioners, US citizens and green card family members
“USCIS says that most I-526 cases are adjudicated in 46.5 months.
This is much more than the lower limit of 24 months that we were seeing prior to COVID"
How do USCIS calculate EB-5 processing times Posted processing times provide information to understand processing times for various forms. Times are defined as the number of months from the date USCIS receives an application, petition, or request and the date the agency issues a decision. Estimated processing time is based on the length of time the USCIS took to approve or deny a certain percentile of completed cases over the prior six-month period. Individuals will be able to find the processing time information for their case type.
Other changes by USCIS include the addition of drop-down menus for form categories that show processing times just for that case, case inquiry tools that allow users to insert their receipt date and get an immediate response on whether the agency should be contacted with questions about the case and then provided a link to submit a case inquiry online. Other changes include showing a single 80th percentile processing time instead of a range to help estimate the length of time USCIS will take to process a benefit request.
The agency said it will also revise, streamline and add more content to the webpages on processing times, such as a FAQ page and improved More Information page.
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E-2 Visa: A Second Plan B
If you’re waiting too long for the EB5 visa like Chinese, Indian and Vietnameses,
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But you have also the franchise option, It’s set, you have the data, you have the information.
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