EB-5 Programs Update, New Legislation Introduced
On November 21, 2019, the new EB-5 Investor Visa Program rules went into effect. That was also the day that the government could have shut down if a spending bill or another continuing resolution had not been approved. It could also have been the day that the EB-5 Regional Center Program would end. But, Congress acted and passed a continuing resolution that would keep the government running and reauthorize the EB-5 Regional Center Program until December 20, 2019.
To avoid the continuing uncertainty of the sunsetting provision of the Regional Center Program, Senators Patrick Leahy (D-VT) and Charles Grassley (R-IA) have introduced the EB-5 Reform and Integrity Act of 2019 (S. 2540) that would extend the Regional Center Program until September 2024 and provide reforms to cure some of the weaknesses in the program including national security vulnerabilities.
The EB-5 Investor Visa Program allows foreign investors to apply for permanent residence if they make a substantial investment in a commercial enterprise in the United States and create or preserve at least 10 permanent full-time jobs for U.S. workers. Under the DHS’s new rule, the standard investment amount increased from $1 million to $1.8 million. For investments in a Targeted Employment Area, it increased from $500,000 to $900,000.
The Regional Center Program allows foreign nationals to pool investments and invest in regional centers that are in underserved areas to promote economic growth. Regional Centers are designated by the government and allow for pooled investment. There have been scams in the Regional Center Program and Centers have been closed due to fraud. While Grassley and Leahy acknowledge that some of the EB-5 programs’ problems have been addressed by the DHS’ new rules, more needs to be done legislatively regarding the Regional Center Program.
Beyond extending the Regional Program for a full five years, their new bill would:
Give DHS more authority to deny or terminate applications for fraud or threats to public safety or national security;
Establish an EB-5 Integrity Fund to conduct audits and site visits;
Require background checks for project principals;
Require more disclosures;
Require more oversight for securities compliance;
Improve calculations regarding job creation; and
Improve accountability and transparency.
In addition to scam and fraud issues, the EB-5 program overall has been plagued by delays in processing times and priority date issues. The Grassley-Leahy bill would help with this as well by providing for premium processing and adjusting fees to the point where efficient processing can be achieved.
With another government shutdown still looming before the end of the year, the future of the Regional Center Program is a “wait and see” game.