The Current State Of The EB-5 Immigrant Investor Visa Program – Work Visas


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The EB-5 Immigrant Investor Visa Program has been turbulent the
last few years. The first major change requires a look back in
November 2019 when USCIS increased the required investment amounts
from $500,000 in a TEA (Targeted Employment Area) and $1 million in
a non-TEA to $900,000 and $1.8 million, respectively. This increase
was almost immediately challenged with litigation in federal court.
In June 2021, a federal court found that the increase in investment
amounts was invalid, thereby reducing the minimum investment amount
for TEA projects back to $500,000. The court also found the change
in the definition of a TEA to be invalid. This ruling was made only
days prior to the expiration of the EB-5 Regional Center Program on
June 30, 2021, when Congress did not timely reauthorize the
program, resulting in the current lapse of the EB-5 Regional Center
Program.   

While the EB-5 Immigrant Investor Visa Program itself is a
permanent program created by legislation, the EB-5 Regional Center
Program is not; however, the Regional Center Program has been
reauthorized many times for different lengths of time since its
inception. To date, this almost 6-month lapse is the longest lapse
the program has ever experienced. The lapse is significant because
the majority of EB-5 investments are made through the EB-5 Regional
Center Program due to certain advantages it provides the investors
such as allowing investors to passively invest through a limited
partnership or limited liability company. In the Philadelphia
tristate area alone, the Regional Center Program has a significant
impact, these major projects included EB-5 investments: the
Pennsylvania Convention Center, Aker Philadelphia Shipyard, SEPTA
Key, Courtyard by Marriott Hotel at the Philadelphia Navy Yard, the
University City Science Center, Agusta Aerospace’s plant
expansions, and the Pennsylvania Turnpike’s reconstruction to
name a few.

With the EB-5 Regional Center Program in lapse, thousands of
investors have found themselves in limbo with the risk of losing
both their investment and immigration benefits, if the program is
not extended. The pandemic has further negatively impacted many
investment projects – either failing or at risk of failing
– due to the economy’s slow recovery.

Investors, regional centers, and project developers have been in
a state of suspension in these uncertain and unprecedented times,
deciding if they should act based on the assumption that the EB-5
Regional Center Program will be continued. Whether or not the
program will be extended, the consensus within the EB-5 industry
seems to be that the EB-5 Regional Center Program should be
extended and that investors who have invested and filed I-526
petitions should be grandfathered no matter what happens now or in
the future to the program.

There is also the question of whether the minimum investment
amount will remain at $500,000. It is not going out on a limb to
state that the investment amount will increase. The more difficult
question is when and by what means. Assuming the EB-5 Regional
Center Program is reauthorized before the investment amount is
increased, there may be a window of opportunity for $500,000
regional center investments. Investors would be taking the risk
that the court of appeals could reverse the district court’s
June 2021 decision and neither the court nor USCIS would grant
relief to investors who invested $500,000. However, such investors
would not be at risk of a legislative or regulatory increase in the
investment amount since those actions would be prospective only.
Only a court decision could have a retroactive impact.

Investors who wish to invest in a regional center EB-5 project
should have all their documentation prepared in advance and ready
to file as soon as the EB-5 Regional Center Program is
reauthorized, with the hope that the extension of the program
occurs before any legislative, regulatory or judicial action that
would increase the minimum investment amount.  

Currently, the only path forward for investors who wish to
pursue an EB-5 visa is through a direct investment scheme, where
the investment is made directly into the job-creating business. In
pursuing a direct investment, several options are available to the
investors. An investment of $900,000 or above in a targeted
employment area is the safest option. A second option is for an
investor to present a business plan anticipating a $900,000
investment of which $500,000 is invested at the time of filing the
I-526 petition and with documentation that the remaining $400,000
is immediately available, lawfully sourced and the investor has a
commitment to complete the investment. A third and riskier option
is for an investor to make a $500,000 investment in a TEA and with
the investor prepared to invest an additional $400,000 if that
becomes necessary. The riskiest option is for an investor to make a
$500,000 investment without the ability to invest any additional
amount.

Regional centers and developers are also facing challenging
issues. The recommended strategy is for developers to craft the
projects based on $500,000 TEA investments if the EB-5 Regional
Center Program is extended before the investment amount is
increased. However, the project documents must anticipate the
possibility that at some point during the offering process the
investment amount will increase. The project documents must also
address issues involving different investment amounts, whether the
investors who invested different amounts would receive the same
interests, and whether and how investors can increase their
investments to meet any increased minimum investment level.
Basically, project developers have to be willing to spend
substantial resources to develop a project knowing the uncertainty
of the EB-5 Regional Center Program and the minimum investment
amount.

As expected, many investors, project developers, and regional
centers have been taking a cautious “wait and see”
approach, while others view the present time as being on the cusp
of unprecedented investor demand and opportunity if the stars align
to have the EB-5 Regional Center Program reauthorized and the
minimum investment amount remains at $500,000.

Originally Published in the November 10, 2021 edition of The
Legal Intelligencer©

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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