Senators Propose Changes to EB-5 Program

July 20, 2015 -- On June 3, 2015, Senators Patrick Leahy (D-Vt.) and Chuck Grassley (R-Iowa) introduced a bill to extend and reform the EB-5 regional center program. Currently, the EB-5 regional center program will expire on September 30, 2015. The bill, called The American Job Creation and Investment Promotion Reform Act, or Senate Bill (SB) 1501, would extend the program for five more years, but would also bring significant changes to program.

The major changes proposed in the bill are as follows:

• The minimum investment amount would be increased from $1 million to $1.2 million, and from $500,000 to $800,000 for investments in a Targeted Employment Area (TEA). Also, the minimum investment amount would automatically adjust in proportion to the Consumer Price Index every five years.
• Gifted funds would only be allowed if they came from a spouse, parent, child, sibling, or grandparent.
• The processing time for I-924 exemplars, I-526 petitions and I-829 petitions would be shortened. The bill would require I-924 exemplars to be processed in 120 days; I-526 petitions to be processed in 150 days; and I-829 petitions to be processed in 180 days.
• The method for calculating a TEA would change drastically, potentially disqualifying projects in some areas. A TEA would have to consist of a single census tract in a rural area or with unemployment at 150% of the national average. Currently, many regional centers in urban areas combine several census tracts to meet the TEA requirements.
• Indirect jobs could only be used to meet 90% of the job creation requirement for regional centers. Also, a maximum of 30% of the total jobs that are counted can be created as a result of non-EB-5 investment.
• Regional centers would pay an annual fee of $20,000, which would go into an "EB-5 Integrity Fund" used by DHS to conduct audits and anti-fraud investigations.
• If a regional center is denied or revoked, then the investors would have 180 days to affiliate with a new regional center to avoid losing their immigration status.
• Regional center and project developer principals would have to be U.S. citizens or lawful U.S. permanent residents, and would have to undergo background checks.
• Regional centers would be responsible for overseeing compliance with securities laws, and would be required to disclose business risks and conflicts of interest to investors.
• DHS would have increased authority to deny or terminate applications for fraud, criminal misuse, or threats to public safety or national security.

Immigration attorneys and regional center professionals have raised concerns about some of the changes proposed in SB 1501. In particular, the single census tract requirement for TEAs has spurred opposition from those who believe the bill overly favors rural areas and would harm numerous regional centers in urban areas. In addition, other requirements such as job creation and securities compliance have been criticized as too vague.

The EB-5 program as a whole has broad support in Congress as an efficient way to bring in investment and create jobs in the U.S., but how exactly to run the program over the next few years is still undecided. It is hoped a compromise will be reached before the expiration of the program at the end of September.