EB-5 Update – New Regulations to Take Effect and Regional Center Program to be Extended Through Dec. 20, 2019
The EB-5 Regional Center Program was set to expire on Nov. 21, 2019. On Nov. 18, Congress introduced a Continuing Resolution (CR) to fund the government and extend vital programs such as EB-5 through Dec. 20, 2019. Leaders hope to use the additional time to extend current operations and complete fiscal matters and other priorities before the holidays. There is an ongoing effort to include new EB-5 legislation in a legislative vehicle in December.
New EB-5 regulations published on July 24, 2019, as final will take effect Nov. 21, 2019. There is no additional phase-in for these regulatory changes. Some of the key changes listed below will immediately impact the EB-5 program:
Increased Investment Amounts: The rule increases the minimum investment amount from $1 million to $1.8 million. For those investors who are investing in a new commercial enterprise principally doing business in a Targeted Employment Area (TEA), the minimum investment amount will be $900,000, an increase from the original $500,000. The final rule also sets for adjustments to occur every five years based on inflation.
TEA Designations: 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. These tracts must 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. DHS will now make these designations, eliminating the current practice of a state being able to designate certain areas as high unemployment areas, through the adjudication of an I-526 Petition or I-924 Petition.
Derivative beneficiaries: Derivative beneficiaries of the primary applicant will be allowed to file an I-829 Petition where the investor has failed to file or refuses to file an I-829 Petition on their behalf.
Management participation by investors: DHS has removed references to “management” of the new commercial enterprise and clarified that, generally, investors who have normal rights under a standard limited partnership agreement or limited liability company agreement will meet the EB-5 Program requirement of active involvement in the new commercial enterprise.
Regional Centers using the program on or after the Nov. 21, 2019, effective date will need to adjust their offering materials to comply with the new regulations. Each offering that seeks to continue will also need to ensure the operating agreement of the new commercial enterprise reflects the ability to receive commitments for $900,000, and each of those operating agreements must also determine how to treat future investors who invest more than those investors who have previously invested less. Visit the USCIS informational page here.