Congress Reauthorizes the EB-5 Regional Center Program

 

The Program allows federally authorized “Regional Centers” to pool foreign EB-5 visa applicants’ investments to exponentially fuel U.S. local and regional economies with projects that create and save thousands of American jobs.

On March 10, 2022, as part of the FY 2022 Consolidated Appropriations Bill, the Senate approved a reauthorization of the EB-5 Regional Center Program – the EB-5 Reform and Integrity Act of 2022 (“Integrity Act”). The House passed the same bill the night before. The EB-5 Regional Center Pilot Program had lapsed last June 30, 2021. The measure was sent to President Biden, and he is expected to sign it on or before March 15, 2022. 

The Integrity Act reauthorizes the EB-5 Regional Center Program through September 2027. It is the first long-term reauthorization the EB-5 Regional Center Program has received since 2015. The Act makes various changes to the program, such as imposing various oversight requirements. 

Oversight-related provisions include requiring each center to (1) notify the Department of Homeland Security (DHS) of proposed changes to the center’s structure, (2) maintain certain records and make such records available to DHS for audits, (3) obtain approval for each particular investment offering, and (4) annually report to DHS. More importantly, the Act provides various enforcement authority to DHS and U.S. Citizenship and Immigration Services, including the ability to permanently bar an individual from participating in the regional center program. It also establishes the EB-5 Integrity Fund to fund program enforcement activities.

The EB-5 Regional Center Program allows federally authorized “Regional Centers” to pool EB-5 visa applicants’ investments to exponentially fuel U.S. local and regional economies with projects that create and save thousands of American jobs. EB-5 visas provide permanent resident status to qualified alien investors. Among other beneficial changes, the Integrity Act contains integrity measures to increase transparency and protect foreign investors.

The Integrity Act includes the following important reforms to the EB-5 program:

  • A five-year reauthorization of the EB-5 regional center program through September 30, 2027. 

  • A new section authorizing the grandfathering of any petitions on file in the event the program was to lapse again in the future. 

  • The new minimum investment amount will be $1,050,000, which is reduced to $800,000 if the EB-5 project is located in a Targeted Employment Area (TEA) or is an infrastructure project. A TEA includes an area of high unemployment or a rural area, and must qualify under the same requirements as the previous EB-5 regulations that were introduced in 2019. An infrastructure project is a public works project in which a governmental entity is the job-creating entity that receives the EB-5 capital from the new commercial enterprise.

  • Specific visa set-asides for rural, high-unemployment, and infrastructure projects. 

  • Language to prioritize the processing and adjudication of rural petitions. 

  • Language eliminating geographic limitations on investor capital redeployment. 

  • Language allowing investors to count both indirect and direct positions for job creation purposes. 

  • The Act includes numerous stringent new requirements for regional centers in relation to securities compliance, record keeping, ownership, and administration. 

  • All regional centers will undergo a USCIS audit at least once every 5 years. 

  • Additionally, a new integrity fund has been created in which regional centers must contribute $10,000-$20,000 annually (depending on the size of the regional center) to allow the USCIS to investigate and monitor the all of the parties within the EB-5 industry to ensure compliance.

Although the Integrity Act reauthorized the EB-5 Regional Center Program that had lapsed last year, the Act also puts the Direct EB-5 and Regional Center programs on the same footing, and therefore, both Regional Centers and Direct EB-5 companies will have to reorganize and rethink their business plans to deal with the new rigorous oversight and audit requirements of the new law. 

The Integrity Act included in the Consolidated Appropriations Act has major implications for existing and future foreign investors, Regional Centers, developers, and promoters of the EB-5 Program.


Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.
National Law Review, Volume XII, Number 73

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