Zachary Doniger – On September 29, 2016, Congress voted for a short-term extension through December 9, 2016 for the EB-5 Regional Center Program. Congress established the EB-5 Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors seeking U.S. resident visas, better known as green cards. Congress later enhanced the EB-5 Program with the introduction of the EB-5 Regional Center Program, which sets aside EB-5 visas for participants who invest in commercial enterprises associated with federally approved regional centers organized to promote economic growth.
As the program currently stands, the minimum investment required to qualify for EB-5 status is $1,000,000 per immigrant investor for standard qualifying areas, and $500,000 for targeted employment areas, which are rural locations with populations less than 20,000. Additionally, the projects in which the money is to be invested must create or preserve at least ten full-time jobs for qualifying U.S. workers within two years of the immigrant investor’s admission to the United States as a Conditional Permanent Resident.
The EB-5 Program has seen a surge in popularity in recent years, due in large part to the effects of the global credit crisis. The EB-5 Program serves as an affordable way for developers to finance their projects, and a fast-track for foreign investors to earn their green cards. However, there has been significant pushback against the EB-5 Program as the foreign investments are 100% at risk and the investor is not protected against projects going belly-up. Even successful projects pay out minimal interest, sometimes lower than 1%. Because this money is essentially free for developers, there has been an increase in fraudulent projects and EB-5 scams. As a result,, there has been significant debate among legislators, industry associations and other stakeholders regarding the future of the Regional Center Program. Questions include: should the program be renewed or allowed to expire? should renewal be permanent? what, if any, reforms should be made? how to increase oversight and protection for foreign investors? and how will pending EB-5 projects be affected?
Congress is expected to re-visit the EB-5 Program following the November elections but some of the proposed changes include increasing the minimum investment to at least $800,000. Additionally, of the 10,000 EB-5s currently available, these visas may be limited to “2,000 for rural projects, 2,000 for urban development… and so on.”
However, it is important to note that the EB-5 Program generated over $5.2 billion in private investment from 2005-2013. This is tax-free money that has led to the creation of tens of thousands of jobs for American workers. With increased oversight and safeguards devoted to screening potential EB-5 candidates and the projects available for investment, Congress can successfully help the EB-5 program evolve and adapt.
