On Jan. 13, 2017, the Department of Homeland Security (DHS) published proposed rules entitled, “EB-5 Immigrant Investor Program Modernization.” The proposed regulations include priority date retention for subsequently filed EB-5 petitions, increased minimum investment amounts to $1.8 million and $1.35 million in Targeted Employment Areas (TEAs), expansion of TEA designation requirements, and other technical changes. The period for public comment regarding the rules lasts 90 days and ends on April 11, 2017.
Priority Date Retention
The first major change DHS has proposed is to allow petitioners to retain the priority date of approved EB-5 petitions for any subsequently filed EB-5 petition. This change will benefit the many EB-5 investors whose initial petitions were approved but later revoked through no fault of their own, for instance if the Regional Center terminated or an investment project becomes no longer desirable.
The provision would not apply in two circumstances. First, priority date retention would not be available when revocation of the original petition’s approval was based on fraud, willful misrepresentation of a material fact, or a determination that DHS approved the petition based on a material error. Second, priority date retention would not be available when investor uses the priority date to obtain conditional LPR status based upon the approved petition.
DHS likens the change to the priority date retention available to workers in the other employment based categories. It also did so to redress the unavailability of EB-5 visas due to over-subscription.
Increasing the Minimum Investment Amount
DHS intends to raise the EB-5 minimum investment amounts. Relying on the Consumer Price Index unadjusted All Items (CPI-U) as a measure of inflation, DHS proposed to increase the standard minimum investment amount from $1 million to $1.8 million. DHS proposed to increase the minimum investment amount in TEAs from $500,000 to $1.35 million.
DHS also proposed that the minimum investment amount be adjusted every five years based on the CPI‑U. The calculation of five years would be start on the October 1 following the most recent increase. Under the rule, an increase would be expected on October 1, 2023.
DHS specially added a rule applying the new minimum investment amount to high unemployment areas. DHS also proposed that minimum investment amounts for high employment areas be adjusted every five years based on increases to the CPI-U.
Upfront Payment
Another major new requirement is that the investor be required to contribute the minimum investment amount at the time the initial petition is filed.
Increase in TEA Minimum Investment
DHS proposed that the minimum investment amount for TEAs be set at 75 percent of the standard amount. This would make the current TEA investment amount $1.35 million. The amount would be raised every 5 years with the standard investment amount.
No More State TEA Designation
DHS proposed to eliminate state designation of high unemployment areas. Instead, DHS would be responsible for making TEA determinations.
DHS also proposed new standards for defining TEAs. The changes more closely mirror statutory requirements and provide clarifications. Population for a proposed rural area will be based on the most recent decennial census of the United States. Cities and towns with a population of 20,000 or more can be considered geographic areas for purposes of determining TEA. TEAs may consist of a census tract or contiguous census tracts in which the new commercial enterprise is principally doing business if the weighted average of the unemployment rate for the tract or tracts is at least 150 percent above the national average. An project tract may also be designated a TEA if any or all tracts directly adjacent comprise an area in which the weighted average of the unemployment rate for all of the included tracts is at least 150 percent of the national average.
Technical Changes
A number of technical changes were reported. Some provided clarification and others updated regulations to reflect terminology used in statutory amendments. A few significant changes include:
Requiring dependents to file for removal of conditions when not included in the principal investor’s filing. Allowing USCIS to choose whether to hold removal of conditional residence interviews in the jurisdiction of the immigrant investor’s commercial enterprise, the immigrant investor’s residence in the United States, or the location where the Form I-829 petition is adjudicated. Ending the requirement that beneficiaries of approved removal of conditional residence applications report to local offices. All types of equity holders, regardless of the ownership entity structure, will be considered sufficiently engaged in the enterprise.