Might This Be ‘Last Call’ for $500,000 EB-5?

Real talk: let me start this blog by admitting, “Yeah, I know you’ve heard this before.”

The EB-5 industry has been saying it for years. It usually goes something like “Congress is going to pass game-changing legislation when the program needs to be reauthorized in a few months, so you need to invest now.” Or "New regulations are coming imminently that will change everything we take for granted." Some people have given even you concrete timeframes for this. Yet so far we – as an industry -- been ‘wrong.’ The law today is not materially different from ​what it was in the early 1990s. But that could be changing very soon.

We’ve been highlighting potential changes on our Immigrant Investor Blog since its inception. I’m not going to apologize for putting the information out there so that my prospective / current clients can weigh the risks of a changing marketplace and make an informed decision. Yet as I reflect on the past few years, I do so with a keen awareness that some of my clients who panicked to file their cases before the “September 30, 2015 Deadline,” or face a feared imminent steep increase in minimum investment amounts, are now are filing their I-829s. As a lawyer, I have to be conservative to protect my clients’ interest. I have the benefit of 20/20 hindsight even though I (and practically all my contemporaries) could be credibly accused of being somewhat myopic over the past three and a half years.

So I get why some prospective investors take so-considered EB-5 “deadlines” with a grain of salt, especially as Congress faces gridlock and dysfunction perhaps not seen since the antebellum era. But one thing we do know for sure: DHS can change significant parts of the EB-5 program independently of political pressures that otherwise halt legislative progress.

Comprehensive change is virtually certain to happen, eventually. It’s late October 2018, and perhaps things are different now. In January 2017, we covered DHS’ EB-5 regulatory overhaul, proposed in the final days of the Obama Administration. Last week, DHS updated its regulatory agenda for this “RIN1615-AC07 EB-5 Immigrant Investor Program Modernization,” as being ready for a final rule in November. We’ve covered similar developments previously, specifically that the agency had done so with a February 2018and a later August 2018 publication date. Both were missed. But this one – estimating a final action just a month from now – feels different. USCIS has had 18 months to consider its proposed regulation. Now might be the time where the rubber meets the road.

What does this mean? Obviously we don’t know whether DHS will meet its forecast. I’m not fully convinced its most senior officials know that for certain either.

But what can we credibly predict?

With a reasonable degree of certainty, we know that USCIS is going to raise the minimum investment amount. We’re long overdue as the industry is operating operating under the same basic conditions as we were in 1991, yet inflation has weakened the dollar considerably over 27 years. We’ve taken issue with their justifications for so sharply raising the minimum investment amounts as being factually inaccurate. Perhaps the agency will listen to us and the raised minimums will be lower than anticipated. Or maybe not. Again, we don’t know the specifics and I’m not convinced that anyone in the private sector does.

Further, we are quite confident that USCIS will change both the qualifying criteria and the methodology as to whether a specific location qualifies as a TEA, meaning that the vast majority of projects currently on the market would require the higher minimum investment amounts. Currently, TEA designation is left largely to the states. We’ve expressed our concerns that federalizing this function will mire the process in needless bureaucracy. But it seems reasonable to assume that the days of assuming that one “can probably get that address designated as a TEA” are numbered and the federal government will take a much more active role. The era of obtaining TEA designations in wealthy downtown neighborhoods is probably coming to a close. Further, there are more overhauls to the program proposed by DHS, and we’ve suggested that some of these be made broader. Perhaps DHS will heed our advice. Perhaps not.

Lastly, we don’t know when the regulations, once published, will go into effect. Some have said 30-60 days. The last major EB- regulatory overhaul took approximately six months to go into effect. At best, timeframes are unclear at this point.

The only thing we know for certain is that our team will be here for you before the regulation is published, when it goes into effect, and afterwards. We will work tirelessly to help you obtain your U.S. immigration goals whether it’s EB-5 or otherwise.

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