USCIS Drops the Hammer on the EB-5 Program by Announcing a 170% Proposed Increase on the Minimum Investment Amount for Targeted Employment Areas
The U.S. Department of Homeland Security (“DHS”) has released a Notice of Proposed Rulemaking that will dramatically change the EB-5 Immigrant Investor Program. DHS has given stakeholders only three months until April 11, 2017 to comment on the proposals. We will provide a more in-depth analysis soon but here are five important observations regarding the proposal:
1. Huge Increases in Minimum Investment Amount. DHS proposes to increase the standard minimum investment amount from $1 million to $1.8 million. This is an 80% increase. For those investors seeking to invest in a targeted employment area (TEA), DHS proposes to increase the minimum investment amount from $500,000 to $1.35 million, a 170% increase! In addition, DHS is proposing to make regular consumer price index-based adjustments every 5 years, beginning 5 years from the effective date of the regulations.
2. TEA Designations. There could be major changes to TEA designations. DHS proposes to allow any city or town with a population of 20,000 and an average unemployment rate of at least 150 percent of the national average rate, to qualify as a TEA. DHS also proposes to eliminate the ability of a state to designate certain geographic and political subdivisions as high-unemployment areas; instead, DHS would make such designations directly, on standards that are yet to be determined.
3. Priority Date Retention. In a positive move, DHS proposes to authorize certain EB-5 petitioners to retain their priority date, or place in the waiting line if they have an approved EB-5 immigrant petition so it can be used in a subsequent EB-5 immigrant petition. This will only occur when the new petitions must be filed due to circumstances beyond the investor’s control such as termination of Regional Center or if there is a material change in the business plan. This is very important for investors from Mainland China who are subject to a waiting line.
4. Removal of Conditions. DHS is proposing that derivative family members that were not included in a Form I-829 petition to remove conditions filed by the principal investor must file their own Form I-829. DHS is also proposing greater flexibility to require interviews for Form I-829 approval in a location where the investor is residing.
5. Management of NCE. DHS is proposing to eliminate references to “management” and the term “as opposed to maintaining a purely passive role in regard to the investment” in the regulation at 8 C.F.R. § 204.6(j)(5). Presently, it is required than an EB-5 investor be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, as opposed to maintaining a purely passive role in regard to the investment. This point will be further clarified in the comments to follow.
These much-anticipated regulations will dramatically change the EB-5 Immigrant Investor Program. A huge increase in the minimum investment amount, without providing a solution for Mainland Chinese investors who make up over 80% of the program and who are waiting in a visa quota backlog, is flawed.
This post is designed to provide practical and useful information on the subject matter covered. However, it is provided with the understanding that no legal, tax, accounting, or other professional services are being rendered or provided. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
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