The federal EB-5 program is back in business.
Two major lawsuits brought by industry groups reached a settlement with the United States Citizenship and Immigration Services, which will allow existing regional centers — a key piece of the EB-5 program — to operate again permanently.
The rise from the ashes storyline is a familiar one for a program once referred to as the “crack cocaine” of real estate financing.
Last Summer, Congress failed to reach an agreement to reauthorize the regional center program. The stalemate all but killed EB-5 since regional centers act as the middleman between foreign investors and American businesses, including real estate projects. Under the program rules, foreign investors are able to obtain a green card by investing in American enterprises and creating jobs.
In March, Congressional legislators were finally able to strike a deal to reauthorize the regional center initiative. The agreement resolved long-held concerns by Sen. Chuck Grassley and Sen. Patrick Leahy over fraud and abuse. Under the deal, the minimum investment amount increased to $800,000 from $500,000 in high unemployment regions. Other areas require a minimum investment of $1.05 million.
The bipartisan legislation was a relief to the EB-5 industry since it inked permanent legislation after the program was consistently being approved on a short-term basis.
But that relief was short-lived.
The USCIS, the federal arm overseeing the program, said that the act deauthorized previously approved regional centers. This resulted in the deauthorization of about 600 existing EB-5 centers and required them to submit a new application, Form I-956, to be authorized. It also left EB-5 investors in limbo.
EB-5 groups sued and a federal judge in California allowed existing regional centers to continue to operate while the litigation continued.