Masami Hibino

Could you please elaborate on the current status of the Regional Center version of the EB-5 program?

Could you please elaborate on the current status of the Regional Center version of the EB-5 program?


Marko Issever
August 26, 2021 09:34 PM  Marko Issever

The Regional Center EB-5 program lapsed on June 30, 2021. Before that on, June 22, 2021, the U.S. District Court for the Northern District of California, in Behring Regional Center LLC v. Wolf, 20-cv-09263-JSC, vacated the EB-5 Immigrant Investor Program Modernization Final Rule (PDF). While USCIS considers this decision, they indicated that they would apply the EB-5 regulations that were in effect before the rule got finalized on November 21, 2019. This week, on August 23, the Office of Homeland Security filed a notice of intent to appeal this decision.
Once Congress reauthorizes the program, we are envisioning one of three scenarios to take place:
1) Congress reauthorizes the program with new legislation stating a definite set of investment amounts and redefinition of targeted employment areas. This scenario would necessitate a consensus in Congress within and across parties. We believe this scenario is the least likely one.
2) Congress reauthorizes the program in its current form without passing new legislation. In this case, the government has two options:
a) Continue with the appeal process and fight it out in the courts. This scenario would take a long time before a reached resolution. Besides, the outcome could very well be that the courts deny the appeal. As a result, should the government choose this option, they could be stuck with the status quo and lose considerable time.
b) The government could use its power to set the new investment amounts using its authority. This method of adjusting the investment amounts would yield the quickest result, and therefore, it is the most likely one. The current law, 8 USC 1153 b (5) (C) states:
(C) Amount of capital required
(i) In general
Except as otherwise provided in this subparagraph, the amount of capital required under subparagraph (A) shall be $1,000,000. The Attorney General, in consultation with the Secretary of Labor and the Secretary of State, may from time to time prescribe regulations increasing the dollar amount specified under the previous sentence.
(ii) Adjustment for targeted employment areas
The Attorney General may, in the case of investment made in a targeted employment area, specify an amount of capital required under subparagraph (A) that is less than (but not less than ½ of) the amount specified in clause (i).
(iii) Adjustment for high employment areas
In the case of an investment made in a part of a metropolitan statistical area that at the time of the investment-
(I) is not a targeted employment area, and
(II) is an area with an unemployment rate significantly below the national average unemployment rate, the Attorney General may specify an amount of capital required under subparagraph (A) that is greater than (but not greater than 3 times) the amount specified in clause (i).

Therefore, we believe that the government will choose this option 2 (b) to affect the changes. Based on this uncertainty and potential increase of the required minimum investment amount and the redefinition of targeted employment areas, we advise potential clients to immediately work on their source of funds, project selection, and due diligence while the program is in a lapsed stage. This way, they will have the opportunity to lock in the reduced $500,000 investment amount before the government raises it.


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