The EB-5 Visa and the regional center visa program have experienced some turbulent times over the past several years. Despite attracting little attention for the first two decades of its existence, the EB-5 visa program exploded onto the scene following the Great Recession. The rapid growth of the program was made possible due to two converging trends. First, real estate developers doing business in the United States sought an alternate source of capital as traditional investment and funding sources dried up. Second, foreign nationals sought a relatively safe place they could store their money while also providing greater opportunities for their children.
These factors transformed the EB-5 program from an obscure one to one of the most sought after visas. The allotment of visas is routinely exhausted prior to the close of the fiscal year. However, this explosion in popularity also led to an explosion in scrutiny. Critics have raised a number of complaints about the allocation of benefits of the program. Other members of Congress have raised security and other concerns.
Despite these perceived problems and previous threats to end the program, onlookers still expect a temporary reauthorization before its expiration on April 28, 2017. However, these same onlookers also caution that this is likely the final temporary reauthorization.
What Issues Must be Resolved before Reform Can be Enacted?
Essentially, the biggest issue that has prevented a compromise from being reached is a schism between rural and urban representatives. That is, representatives from rural, underdeveloped areas believe that far too much of EB-5 investments are going to wealthy, urban areas. Senators from rural areas claim that developers engage in project gerrymandering. They say that this form of gerrymandering can involve connecting large tracts of underdeveloped areas with a small tract in a wealthy area where the project is built. Critics say that this type of project would be built regardless and therefore, is not a good use of EB-5 funding.
Interests of EB-5 Investors Will Be Impacted by Reform
Assuming that program critics allegations that gerrymandering is true, it is important to consider these remarks from the perspective of a potential EB-5 investor. For these individuals, the problem of gerrymandering is not a problem at all. This is because the EB-5 program requires the investor to place a minimum investment “at risk.” The investment must be made into a new or existing commercial venture and must satisfy certain job creation requirements.
Thus, an EB-5 investor would actually probably welcome a program gerrymandered in the manner critics describe. If the program is located closer to major population centers and wealthy communities, it is much more likely that the business will be successful. A successful commercial venture is much more likely to satisfy all of the conditions that must be satisfied to receive the immigration benefit. Thus, individuals considering an EB-5 investment may wish to consider filing sooner rather than later in the hopes that “grandfather status” is available in any reform bill that is introduced.
Additional Reasons Why a Protective EB-5 Filing may be Prudent
Most reform proposals seem to increase the minimum required investment into EB-5. The minimum investment has been pegged at $1 million for standard EB-5 programs or $500,000 for projects located in targeted employment areas (TEAs). Minimum investment levels have not been updated since the program was started 30 years ago.
Reform proposals have also focused on restricting flexibility in the project location. Proposals have ranged from restricting project apportionment based on whole, contiguous census blocks. Other proposals sought to ban EB-5 in urban areas through an array of approaches. Still, other proposals would tighten job creation and other criteria. The net effect of most of these proposals is that it will make it more difficult for investors to satisfy the numerous EB-5 requirements.
Work with EB-5 Lawyers in Orlando and Miami
EB-5 is likely to enter into a transitional phase when Congress takes up a full reform and re-authorization bill later this year. While Congress has yet to discuss the possibility of grandfathered status under the old program rules, a protective filing may nevertheless be prudent should this option be made available. Regardless, EB-5 investors will need careful guidance to help them navigate new rules under the reform bill likely to be passed by Congress later this year.
To discuss your EB-5 visa immigration goals and concerns, call the immigration lawyers of Colombo & Hurd. Dial 407-478-1111 today to speak with an immigration lawyer in Miami or Orlando.
