Congress Close to Raising the EB-5 Program from the Dead: 8 Recent EB-5 Reforms that Real Estate Developers and Project Sponsors Should Know

In the evening hours of March 9, the U.S. House of Representatives passed a $1.5 trillion spending bill that would fund the U.S. government through the rest of the fiscal year and provide $13.6 billion to respond to Russia’s invasion of Ukraine. Buried in the 2,700-page bipartisan legislation is a 39-page EB-5 immigrant investment reform bill that will restart the EB-5 Regional Center Program.

The EB-5 program was established in 1990 to attract foreign money into U.S. projects while creating U.S. jobs and stimulating the economy. In return, foreign investors receive immigrant visas for themselves and their families. The program has been successfully utilized by real estate developers and other project sponsors as an alternative financing vehicle. However, the Regional Center portion of the EB-5 program (which made up over 95% of EB-5 investments) lapsed in June 2021 when Congress failed to renew it. Assuming the Senate passes the spending bill and is subsequently signed into law by President Biden, the EB-5 Regional Center will once again be open for business through 2027.

The EB-5 Reform and Integrity Act includes the following meaningful changes to the program:

Investment Amounts 

• $800,000 in Targeted Employment Areas (TEAs) – rural and high unemployment areas
• $1,050,000 in non-TEAs
• On Jan. 1, 2027, and every five years thereafter, investment amounts adjust for inflation.

High unemployment TEAs are to be determined only by USCIS (and not state or local authority) and are valid for two years from project exemplar filing, renewable in two-year increments.

Reserved EB-5 Visas

• Set-asides are a percentage of the 10,000 EB-5 visas available every year.
• 20% for rural projects
• 10% for distressed urban area projects
• 2% for infrastructure projects
• Unused visas “carry over” in the same category in the immediately following year
• Unused visas in any category made generally available for any project, in the year immediately following the “carry-over” year

Indirect Job Limits

• Can count for no more than 90% of the jobs
• Only 75% of jobs can be from impacts from construction lasting less than two years (and those count only to the extent of the fraction of a two-year period).

Project Requests

• A Regional Center must file an application for project approval with USCIS, but investors can file I-526 petitions once the required project request is filed.
• USCIS to perform a site visit prior to each project, giving at least 24 hours' notice.

Increased Regional Center Oversight and Regulations

• Endure a USCIS audit every five years
• Demanding applications and annual reports must include broad certifications of securities and other compliance and conditions, including all marketing fees paid.
• Sanctions for misstatements or noncompliance including suspension, fines up to 10%of capital raised, debarment of individuals, or termination

Integrity Fund

• To support a new "integrity fund," in addition to all filing fees for application, each Regional Center must pay an annual fee of $20,000, or $10,000 for those with 20 or fewer investors per year, and each Regional Center investor must pay $1,000 with a I-526 petition.

I-829 Changes

• Investors filing I-829 petitions still may be "actively in the process of creating the employment required," but the investor must make an additional filing a year later showing that the jobs have been created.

Filing Fees

• The legislation directs USCIS to charge what it takes to process various filings between 90 and 240 days, with the shortest times for investors filing I-526 petitions after project requests by RCs.

The reauthorization of the EB-5 Regional Center Program will attract billions of foreign investment dollars each year for U.S. projects while providing a low-cost financing vehicle for U.S. sponsors.

Bradley’s Governmental Affairs team partners with the firm’s Real Estate attorneys and clients to implement results-oriented government relations strategies. We understand the complexities, opportunities, and risks associated with working with governments and governmental officials, and we have real-world experience, knowledge of governmental processes, and key relationships to assist clients in achieving their business objectives.