The EB-5 Regional Center Program was scheduled to “sunset” on September 30, 2015. In a rare demonstration of bipartisan support, Congress passed, in an eleventh hour majority vote, a temporary funding bill, which included an extension of the EB-5 Regional Center Program through December 11, 2015. The measure was finally signed into law by President Obama late Wednesday evening, successfully preventing another government shutdown as well as delaying the impacts of anticipated program reforms. In order for proposed legislation reforming the program to pass, both the House and the Senate must settle on identical language for the bill, meaning that the proposed legislation will most likely change before the new December 11th deadline.As such, it is impossible to know for certain what the future holds for the EB-5 Regional Center Program, but experts have made educational assumptions regarding the matter and those in the EB-5 community have been planning and preparing accordingly.
According to the National Law Review, “For months the EB-5 community has been concerned about what might or might not happen with the expiration the EB-5 Regional Center Program. As Congress has been working toward an EB-5 reform package, many in the community have been viewing the September 30th sunset date as a hard deadline for filing regional center-related petitions.” The short-term extension of the current legislation only prolongs this sense of urgency as most everyone in the EB-5 community will continue to file I-526 petitions and I-924 amendments prior to the December 11th deadline, in the hopes that their projects will be grandfathered into the existing program and exempt from at least some of the impending changes.
While admittedly at this point we can still only speculate about the upcoming modifications to the program, there is almost unanimous consent among experts on four critical proposals which will be included in the reform bill. Experts believe that the revised bill will: 1) increase the minimum investment amount from the current $500,000 amount for projects located in regions that qualify as of high areas of unemployment or Targeted Employment Area (TEA) and $1 million for projects located outside TEAs, to $800,000 and $1.2 million respectively; 2) make it more challenging to secure non-rural TEA approvals; 3) make it more difficult to obtain job credits (although, the increased minimum investments will most likely offset this); and most importantly will 4) include grandfathering language exempting projects that have I-526 petitions or I-924 amendments filed prior to the December 11th cutoff date from the aforementioned predictions.
Supporting the assumption that the revised bill will make it more difficult to get non-rural TEAs approved, Senator Jeff Flake (AZ-R) introduced the Targeted Employment Areas Improvement Act (S. 2115) on October 1, 2015. The legislation proposes to make the following amendments to the Immigration and Nationality Act:
Reserves 5,000 visas under the annual cap for investments made in TEAs;
Provides that an area designated as a TEA shall be valid for five years, with the possibility for renewal in five-year increments;
Provides that an investor who invests in a TEA shall not be required to increase the investment should the designation expire;
Deems as a TEA a “community adversely affected” a military base closure pursuant to a recommendation from the Defense Base Closure and Realignment Commission;
Defines “high unemployment area” as follows:
a “census tract or group of census tracts that are economically integrated” and which take into consideration commuter flow patterns, that meet the unemployment threshold of 150 percent of the national unemployment average; and
an area within the boundaries of a Federal or State development inventive program such as an enterprise zone, renewal community, promise zone, or empowerment zone, or any Federal or State program “designed to create jobs, start small businesses, or revitalize neighborhoods”
Defines “rural areas” as follows:
Any area outside of a metropolitan statistical area (MSA); and
Areas within a metropolitan statistical area that are 1) a city or a town with a population of 20,000 or fewer residents “on the outer boundary” of an MSA, 2) a city or a town with a population of 20,000 or fewer residents that is within a state with a population of fewer than 1.5 million residents, or 3) an area located in a census tract within an MSA that as a population density of fewer than 500 people per square mile.
In conclusion, as members of Congress have yet to reach a consensus in regards to the restructuring of the EB-5 Regional Center Program, this short-term extension will give House and Senate leaders the opportunity to negotiate a more comprehensive reform of the program . Shortly after the extension was enacted, the EB-5 Investment Coalition (EB-5IC) released a statement praising Congress for its decision. The Coalition, along with many other industry groups, have expressed confidence that Congress will establish legislation that will make “the program more effective, accountable and secure.”