While the EB-5 visa program was reauthorized on a limited basis prior to its September 30, 2015 expiration, that reauthorization is only temporary through December 11, 2015. Furthermore, longstanding questions regarding program reform were not answered or even addressed by the short-term measure. Thus, while intending immigrant investors and immigration practitioners were happy to see the program extended, it was abundantly clear that this extension merely marked the start of the work on EB-5 and not the conclusion of the reauthorization process. In light of the spirited debate over the merits and alleged drawbacks of the EB-5 program, it is no surprise that there are a number of competing reform and reauthorization proposals. For a number of weeks the American Job Creation and Investment Promotion Reform Act of 2015 sponsored by Senators Grassley and Leahy appeared to be the direction EB-5 reform would take. However on October 1st Senator Paul introduced the Invest in Our Communities Act as an alternative to the Grassley & Leahy reform bill. While it is still too early to determine what exactly will make it into the actual reform bill, let us analyze these competing reform measures so that we can anticipate some of the changes that may be in store for the EB-5 and regional center programs.
The Leahy & Grassley Proposed Reform Legislation
American Job Creation and Investment Promotion Reform Act of 2015 was introduced prior to the original expiration date of the EB-5 program on June 3, 2015. As such the bill would reauthorize the EB-5 and regional center program until September 30, 2020. Since the September 30th reauthorization date has since passed, it is at least feasible that the final bill would alter this date. Aside from reauthorizing the program, the reform bill would make a number of changes to the program to address concerns regarding waste, fraud, and exploitation of the program in a way that is inimical to national security. Changes to the program would include addressing concerns of waste due to creating targeted employment areas through gerrymandering. Critics of the program claim that creatively drawn borders can transform essentially any area into a targeted employment area or TEA where capital investment requirements are reduced from $1 million to $500,000.
As currently written, the law allows states to freely designate areas as TEAs due to high unemployment at least 150% of the national average as set by the BLS. People critical of the current high-unemployment TEA designation process point to the fact that the skyscraper at 1 Park Lane at 36 Central Park South in New York City on “Billionaire’s Row” is considered to be in a TEA low income, high unemployment area. However under the Grassley-Leahy reform bill control over TEAs would be shifted to the federal government and particularly the Department of Homeland Security (DHS). DHS would provide final approval for TEA designation. Furthermore, the bill would change the number of census tracts that may be utilized in an attempt to secure TEA designation. Since the bill states that “a census tract” it is probable that tracts will no longer be permitted to be combined and areas will be forced to qualify based on a single tract. While this measure is well-intentioned it is opposed to the purpose of the bill which is to bring investment to areas of high unemployment and rural areas. Since people don’t always live where they work, statistics residence alone fail to provide a full and accurate picture of the employment situation. In fact, these changes may prevent EB-5 capital from flowing into areas where it is needed. In light of statistics showing that many foreign investors have a strong preference for TEAs or are limited to TEAs due to capital controls, such a provision may significantly harm the EB-5 and regional center programs. Other changes in the Leahy-Grassley bill include:
- Fee changes to ensure that “fees for services [are] at a level sufficient to ensure the full recovery of the costs of providing those services.”
- Approved regional centers must provide advanced notice to DHS regarding significant changes to ownership or structure.
- Establishment of an EB-5 Integrity Trust Fund.
- Enactment of an annual $20,000 contribution from each regional center to the trust fund.
- An increase in the levels of investment required in both TEAs and non-TEA.
Paul Reform Bill Would Likely Expand EB-5 Program Senator Rand Paul’s reform bill would likely be much more friendly to the EB-5 program and would likely result in a significant expansion of the program. For Chinese investors and others who frequently utilize targeted employment areas due to capital controls there are a number of positive provisions in Paul’s bill.
The Invest in Our Communities Act would make the EB-5 and regional center programs permanent. No sunset or closing date of the program would be set. Furthermore, the reform would also expand the number of EB-5 green cards available allowing for much greater investment into the United States. Furthermore, the reform would also change how EB-5 visas are counted. Under the current system each family member who obtains a derivative green card based on an EB-5 investment is counted against the EB-5 visa cap of 10,000 visas. Under this reform bill, derivative visas obtained by a family member would no longer be included creating further expansion in the number of available visas. Finally, while the act would add some transparency provisions, it would also keep the current level of minimum investment into a TEA at $500,000.
Experienced Tampa EB-5 Visa Lawyers
The Grassley-Leahy bill is likely to decrease the size and scope of the EB-5 program. In contrast, passage the Paul reform bill is likely to portend a rapid expansion of the program and investment into the United States in light of the estimated more than 13,000 petitions pending with USCIS. To schedule a confidential legal consultation to discuss your potential pathways to a green card and citizenship and to see if EB-5 is a good fit for your goals call 800-659-7142 today or contact our Tampa immigration attorneys online.
