The EB-5 Situation: Back to US$ 500k or 900k for investors?
The EB-5 program's most basic concepts are extremely complicated and things are not stable. A major court case invalidated comprehensive regulatory reform last june.
The Direct EB-5 program was created in the Immigration Act of 1990 and originally required direct investor-employer to employee job creation.
In 1992, the US Congress created the "Immigrant Investor Pilot Program in order to encourage greater immigrant investment in a range of business and economic developinent opportunities sponsored by Regional Centers. Although we dropped the word "Pilot" about nine years ago, the Regional Center EB-5 visa program is subject to continued renewal by the U.S. Congress.
The latest renewal of the RC Program needed to happen before June 30, 2021 It failed. Accordingly, we call this a "lapse" of authorization.
THE EB-5 ISSUES FOR INDIANS
Under the EB-5 visa programme, the US government has announced that the new minimum investment limit of the EB-5 visa programme would be set to $900,000 for target employment areas (TEAs), and the minimum investment made outside TEAs is set to increase to $1.8 million. This change is expected to be applicable from November 21, 2019.
Due to a huge demand for EB-5 - which is seen as an alternative to H-1B - there is a long wait-list of eligible Indians who have applied for the visa. This visa gives permanent residency to those who invest the requisite amount and also help create a set number of employment in the US. It appears that the massive new infrastructure legislation contains, at the moment, no effort to revive the EB-5 program. The EB-5 program was allowed to lapse on June 30 by the Senate. Some think it might be revived by inserting a provision into an infrastructure bill, or in the looming reconciliation act.
EB-5 was a program that allowed alien investors to buy a family-size batch of green cards when they made a Homeland Security-approved, but not guaranteed, pooled investment of at least $500,000 or $900,000, depending on when the investment was made.
A financially insignificant part of the program, in which aliens promise to manage specific businesses (direct investments), continues and was not covered by the June 30 shutdown.
Filing a Direct EB-5 Petition:
Presently there is a large interest by EB-5 investors in filing an I-526 Petition following the Behring federal court decision, which invalidated the 2019 EB-5 regulations. With the minimum investment amount decreased from $900,000 to $500,000 for targeted employment area investments, a window has opened for investors to potentially file an I-526 Petition at the $500,000 investment level. However, the EB-5 regional center program has lapsed and currently requires Congress to pass legislation reauthorizing it before new I-526 Petitions can be filed with USCIS.
Because the regional center EB-5 program is paused, until it is reauthorized by Congress, many investors are eager to pursue a “direct” EB-5 investment at the lower $500,000 amount. For those investors considering investing in their own start up business or a pre-packaged “direct” project, evaluation of the project structure and job creation is critical to approval. The limitations on job creation in the direct EB-5 context must be understood, and the investment structure must be developed properly to ensure USCIS will approve the job creation
The $500,000 EB-5 ruling
On June 22nd, the U.S. District Court for the Northern District of California ruled in Behring Regional Center LLC v. Chad Wolf, that Former Acting Homeland Security Secretary Kevin McAleenan was not properly serving in his position when he promulgated the EB-5 Modernization Final Rule, and accordingly, the new EB-5 Program regulations which took effect on November 21, 2019, must be “set aside.”
Specifically, the Court said, the former DHS secretary “…was not properly serving in his position when he promulgated the Final Rule in July 2019.” Based on this, as well as the ineffective attempt to ratify the new regulations by the new Biden Administration-appointed DHS Secretary, the Court vacated the regulations in their entirety.
The court’s decision restores the original rules for the EB-5 program, which was created by the Immigration Act of 1990 as a method for providing qualified immigrant investors the opportunity to obtain a permanent green card. The program required a minimum $500,000 investment in a U.S. business that would create at least 10 full-time jobs for American workers. The now-defunct EB-5 Modernization Rule of 2019 increased this minimum investment threshold to $900,000 — an update that contributed to stifling participation in a program that was already in need of reform.
In addition to the prohibitive investment threshold, the Modernization Rule made problematic changes to the program’s Targeted Employment Area (TEA) designation process, removing the states’ authority to determine TEA eligibility without a viable replacement and resulting in processing times that could take years to complete. As a result of these changes, new EB-5 investor petitions dropped by more than 99 percent since November of 2019. Investors have an opportunity to invest at $500,000, and to invest in a geographic area that is considered a Targeted Employment Area (TEA) under the pre-November 2019 rules. It would also throw out any protections some investors may have sought to preserve their Priority Date based on their investment in a failed project or regional center.(By Michael Harris)
The fight for EB-5 legislation continues
What is the path, timeline, and content for regional center program reauthorization legislation?
The regional center program can be reauthorized as soon as (1) there is a vehicle to which reauthorization legislation could be attached, and (2) Congress agrees to reauthorization legislation that satisfies the EB-5 industry.When Congress misses the September 30 deadline to fund the new year, as usual, they fill the gap with one or more Continuing Resolutions, which extend the deadline on the previous year’s appropriations act.
The timing for the second reauthorization condition – agreement by Congress to industry demands – is an open question.
Apart from Grenada, Turkey, Montenegro, an individual can apply for and use a similar route to apply for an E-2 visa.
WHY E-2 VISA FOR INDIANS ?
With the waiting period for the EB-5 visa to the United States of America stretching to nearly seven years, Indians are now eyeing the E-2 visa route as their ticket to the American shores.
The E-2 visa is a non-immigration programme under which an individual can set up a business and work in the US at an investment of $100,000.
The process of getting an E-2 visa is simpler by CBI programs of the other countries. An individual has to apply for a Grenada or Turkish or Montenegro passport having E-2 Visa Treaty with the US
which would take 3-6 months, and then apply for an E-2 visa. Montenegro is espected to join the European Union in 2025, so Montenegro citizenship program by investment is advantageous to grant European citizenship. However the application deadline is at the end of 2021.
The E-2 visa is all about setting up a business in the US. If the business is big enough in the future, your E-2 visa can be converted into a green card. Apart from Grenada, Turkey, Montenegro, an individual can apply for and use a similar route to apply for an E-2 visa. This visa is issued for five years but can be renewed for a lifetime.
Once you get the requisite passport, getting an E-2 visa would take another two to three months. Another reason why Indians are preferring the route of Grenada, Turkey, Montenegro is because once you have a the requisite passport there is visa-free travel to Europe.
(The Grenadian route enjoys visa-free travel to China and pre and post Brexit UK, Russia, Singapore and UAE. Furthermore, individuals can also legally avoid the indian capital gains tax by going through the Grenada passport route)
The USCIS allocates 10,000 visas every year under the EB-5 programme or Immigrant Investor Program to immigrants and their families, whose qualifying investments result in the creation or preservation of at least ten full-time jobs for US workers. On the other hand, there is no limit on the number of E-2 visas that are issued every year. There are more benefits of visa-free travels to Europe mainly.
Though the biggest drawback is that you don’t become a US citizen through an E-2 visa, individuals get the right to live and work in the United States for almost their entire life. Family members can also be eligible to be dependents under the E-2 visa. But when the child of the applicant reaches the age of 21 years, he/she will be required to apply for a separate visa and cannot work under the parent’s visa. (by citinavi team)