After years of tumult in the EB-5 Immigrant Investor Program, the program is now settling into new normalcy nine months after the reauthorization of the EB-5 Regional Center Program and six months after logistically reopening. Created in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors, the EB-5 Immigrant Investor Program provides a path to U.S. permanent residence based on a qualifying investment in a new commercial enterprise, including investing through regional centers designated by USCIS under the EB-5 Regional Center Program, a subcategory of the EB-5 Immigrant Investor Program.
The EB-5 Regional Center Program had been suspended since June 30, 2021, when its congressional authorization expired. Enacted on March 15, 2022, the EB-5 Reform and Integrity Act of 2022 (“RIA”) reauthorized the expired Regional Center Program through September 30, 2027 providing a 5-year reauthorization of the program with substantial changes, marking an achievement long-waited by the regional center industry.
So, what has been happening since the reauthorization of the program? As the various stakeholders in the EB-5 industry settle into the new normal, some themes are emerging.
Investors need to be aware that there is a new form – and two versions of it. Form I-526 is for a standalone, direct EB-5 investor and Form I-526E is for a regional center investor. The changes to Form I-526E reflect the new regional center program requirements, which include confirmation of Form I-956F filing by regional centers. This is important because the I-526E cannot be filed until the regional center has filed its corresponding Form I-956F and has received a receipt notice from USCIS. So not only is there a new form, but there are also specific timing requirements to be considered for regional center EB-5 investors, who make up the vast majority of investors in the EB-5 program. In addition, regional center investors are now required to pay a new $1,000 fee that will be allocated to the Integrity Fund along with an $85 biometrics fee.
Another issue, which is an ongoing issue, but one exacerbated by the higher investment amounts, is transferring investment funds out of their home country to the United States due to currency exchange and transfer restrictions of those countries.
Prior to the RIA, adjustment of status applications for EB-5 investors could not be concurrently filed with the initial EB-5 petition; Instead, investors had to wait until the I-526 petition was approved before applying for their green cards in the United States With an average processing time of up to five years, EB-5 investors had a long wait before continuing to the next step of the permanent residence process. The RIA permits EB-5 investors to file adjustment of status applications concurrently with the EB-5 petition if an immigrant visa is available in the EB-5 quota. This allows EB-5 investors to remain lawfully present in the United States, obtain employment authorization, and travel permission while waiting for the adjudication of their I-526 petition. Being able to lawfully remain in the United States and avoid consular processing is a significant benefit for investors whose lives are established in the United States. They have no wish to disrupt their lives to return to their birth country for their immigrant visa interview. There are risks involved in filing a concurrent green card application if the EB-5 petition is denied, so it is important for any investor to confer with an immigration attorney to determine if this is the right option for them.
Another significant change under the RIA is the reserved visas, which sets aside a percentage of the annual EB-5 immigrant visa quota for specific types of EB-5 projects. For each fiscal year, 20% for foreign nationals who invest in a rural area of the United States, 10% for foreign nationals investing in high unemployment, and 2% for qualifying infrastructure projects administered by a federal, state, or local government entity. If there are unused reserved visas in any of the three subcategories, those visas will carry over to add to the reserves for the following year. This provides an incentive for nationals from countries like China, Vietnam, and India, who are now potentially able to immigrate to the United States in a much shorter period instead of the predicated 10 to 15 years under the previous system.
The RIA also enhanced protections for EB-5 investors, particularly for regional center investors by requiring greater transparency for the EB-5 process. There is now even more oversight on the program, including increased reporting requirements and substantial penalties for noncompliance. For example, promoters, including migration agents abroad, must register with USCIS before beginning promotional activities. While there is always a risk with any investment, immigrant investors have more at stake than just losing their money. Under the RIA, investors will also have protections against issues that are outside of their control such as the termination or debarment of regional centers.
With some real stability and protections for investors built into the program, what might the future look like? How might an impending recession and rising inflation affect the inflow of investments? That depends on many different factors. For instance, an EB-5 investment might be the only immigration option for some H-1B visa holders who have been recently laid off from many large technology companies in the last few months. This may be a good option for them since now after the RIA passed, filing a concurrent adjustment of status is available to EB-5 investors already residing in the United States.
Overall, the passing of the RIA is a big leap in the right direction for the EB-5 Immigrant Investor Program. It has created stability and protections for investors. Regional Centers can rest assured that the program will not be in danger of lapsing for years. Because of extenuating circumstances outside of the program, the demand may not be an opening of the floodgates just yet, but instead starting with a slow trickle.
The material contained in this article does not constitute direct legal advice and is for informational purposes only. An attorney-client relationship is not presumed or intended by receipt or review of this presentation. The information provided should never replace informed counsel when specific immigration-related guidance is needed.
Reprinted with permission from the December 14, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. ALMReprints.com – 877-257-3382 – reprints@alm.com.
