The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.
Let us start with the answer: Probably not.
Here’s why.
First, I’ll focus on whether December 11 matters for investors. It will only matter if (a) Congress passes a new law that increases the minimum investment amount, changes TEA definition, changes job creation methodology or otherwise affects the approvability of an investor’s petition; and (b) Congress sets an effective date of the new law at December 11, 2015.
The chances that Congress will pass a new law that will, at the very least, increase the investment amount and change what qualifies as a TEA are very good. The chances that it will do so before December 11, 2015 are increasingly remote. Rather, it is much more likely that Congress will extend the regional center EB-5 program for a temporary period of time (probably not in excess of one year) with some of the integrity measures in Senate Bill 1501 included, but without an increase in investment amount or change in targeted employment area definition or job creation methodology.
When Congress does change the law, there are many possibilities for the effective date. Hopefully, Congress will set an effective date of the date of enactment of the new law at the earliest. This will be the only fair result to investors. If that happens, an investment before the date of enactment of the new law would be important to an investor, but an investment before December 11 will not.
In the last draft of the EB-5 bill made available to the public, the effective date was retroactive to June 1, 2015. This has been widely criticized and with good reason; and hopefully any new law will not revert to that date or any other retroactive date. If the new law did, in fact, state a June 1, 2015 effective date, an EB-5 petition filing before December 11, 2015 would be irrelevant.
If Congress backs off of the June 1, 2015 date but inserts some retroactive date, presumably it could use as the effective date either September 30, 2015 or December 11, 2015. If it arbitrarily chooses December 11, 2015, then a filing before that date could be important.
In summary, it is not impossible that December 11, 2015 could be the cutoff date for $500,000 investments, but it is very unlikely.
With that said, the advice I give to investors is that it is better to invest and file the EB-5 petition now rather than waiting for a new law. If the investor waits for the passage of a new law, then the investor can be fairly certain that he will have to invest at a higher amount. If he invests now, it is possible – maybe even probable – that the $500,000 investment may be grandfathered. Furthermore, it should not be forgotten that the sooner an investor from China invests, the sooner he establishes a priority date for purposes of the EB-5 quota. It is highly likely that a Chinese national who invests and files an EB-5 petition 6 or 9 months from now will ultimately be delayed in obtaining conditional permanent residence by far more than 6 to 9 months because of the likely geometric increase in waiting period under the China EB-5 quota.
The next question is whether a regional center or project developer should rush to file a template petition before December 11 or should rush to make certain that at least one investor files an I‑526 petition before December 11. Let’s look at both issues.
As with investor grandfathering, it is possible but unlikely that an exemplar filing before December 11 will determine whether a project is grandfathered. The original Senate Bill 1501 would have grandfathered projects that filed exemplar petitions before September 30, 2015. The latest draft of the bill would grandfather a project that filed an exemplar petition before June 1, 2015. When Congress finally does get around to passing a bill, it is possible that the effective date could be June 1, 2015, September 30, 2015, December 11, 2015, the date of enactment of the new law or some other date.
Whatever date is chosen, the next question is what must be done by that date? Senate Bill 1501 stated that it was an exemplar filing. The latest draft bill stated that it was either an exemplar filing or an I-526 filing by at least one investor.
If a developer wants to bet on the possibility that (a) projects will be grandfathered under some circumstances; (b) the grandfathering date will be December 11; and (c) an investor filing an I‑526 petition by December 11 will be a precondition for grandfathering, then by all means the project should rush to make certain that at least one investor files by that date. Again, the chances of all of that happening in such a way as to make a December 11 I-526 filing important appear to be rather low. However, as with the discussion of investors above, if there is a possibility of an advantage (no matter how small) and no downside, a project developer might make a rational decision to do everything possible to have an investor file a petition by December 11.
It is obviously highly problematic attempting to advise investors and developers (as we do every day) at a time when the law is in a state of flux and no one knows what the rules will be and when they will be effective. However, hopefully the above analysis will provide a helpful context to decisions that need to be made in the coming days.
