Minimum investment for EB-5 Visa Program increasing by $400K

Significant changes to the EB-5 Immigrant Investor category will be implemented this month, and even more adjustments to the program could be on the horizon.

Information about the changes follows below:

What is the EB-5 Immigrant Investor Program?

The EB-5 fifth preference (investor category) was created by Congress in 1990 to establish a path for lawful permanent residence (LPR) in the U.S. for foreign national investors who meet certain qualifying criteria. The program was originally designed for individuals who invested at least $1 million in a new commercial enterprise in the country, creating employment for 10 or more employees.

The investment could have been as low as $500,000 in designated areas of high unemployment or rural areas (called targeted employment areas). It also had to be active, not passive, and must have been ongoing for two years before unconditional LPR status was granted.

To obtain lawful permanent residence through investment, the applicant must have presented evidence that traces the legally obtained funds invested through bank transfer and other acceptable documentation from the investor directly to the investment enterprise. The money could have been the investor's own funds or those obtained in the form of a loan or gift.

Around 10,000 EB-5 visas are issued each year. Further details about the program can be found here.

Changes coming to the EB-5 Immigrant Investor Program

The Department of Homeland Security announced in July its intention to "modernize" the EB-5 Immigrant Investor program by "increasing the required minimum investment amounts to account for inflation," among a host of other modifications.

The changes, which took effect Nov. 21, include (via the DHS):

  • Raising the standard minimum investment from $1 million to $1.8 million
  • Raising the minimum investment in a targeted employment area (TEA) from $500,000 to $900,000
  • Indexing future adjustments to inflation (per the Consumer Price Index for All Urban Consumers, or CPI-U) at five-year intervals.

The DHS will also "directly review and determine the designation of high-unemployment TEAs," instead of deferring the decisions to state and local governments.

The agency also announced other modifications to the definition of targeted employment areas:

  • Specially designated high-unemployment TEAs will now consist of a combination of census tracts that include the tract or contiguous tracts in which the new commercial enterprise is principally doing business, including any or all directly adjacent tracts.
  • Provided they have experienced an average unemployment rate of at least 150% of the national average unemployment rate, TEAs may now include cities and towns with a population of 20,000 or more outside of metropolitan statistical areas.

The DHS claims "these changes will help direct investment to areas most in need and increase the consistency of how high-unemployment areas are defined in the program."

Most EB-5 investors with a previously approved petition will retain their priority date, "subject to certain exceptions," according to U.S. Citizenship and Immigration Services (USCIS), and all filings made prior to Nov. 21 will be adjudicated under the current regulations.

"Nearly 30 years ago, Congress created the EB-5 program to benefit U.S. workers, boost the economy, and aid distressed communities by providing an incentive for foreign capital investment in the United States," then-acting USCIS director Ken Cuccinelli said in a statement in July. "Since its inception, the EB-5 program has drifted away from Congress's intent.

"Our reforms ... substantially restrict the possibility of gerrymandering to ensure that the reduced investment amount is reserved for rural and high-unemployment areas most in need. This final rule strengthens the EB-5 program by returning it to its Congressional intent."

Reaction to changes

Although USCIS has not released any official data, experts told Law 360 that they saw a "rush" of investors looking to file their EB-5 petitions before the new requirements went into place Nov. 21. Others argue the changes were put into place to discourage future applicants.

Meanwhile, the National Law Review estimated in an analysis piece published in July that the increase of the minimum cost will "shrink the pool of prospective investors who have sufficient means to make such an investment," while the changes will likely "drive a measurable number of investors to projects located in rural areas."

Additionally, Mike Rounds (R-SD), Lindsey Graham (R-SC) and John Cornyn (R-TX) have introduced their own bill in the Senate relating to the EB-5 Immigrant Investor Program. Read more about their proposal here.

Garfinkel Immigration Law Firm continues to monitor the situation and will reach out and advise as it impacts our clients.

As always, please do not hesitate to call us at 704-442-8000 or contact us via email with any questions.

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