Read on for the most impactful updates under the EB 5 Reform and Integrity Act of 2022.
What is the EB 5 Program?
Created in 1990, the EB 5 Immigrant Investor Program serves to encourage economic stimulation and job creation in the U.S. via foreign investment. Through the program, foreign nationals can obtain U.S. residency in exchange for making a qualifying investment into a new commercial enterprise (NCE), also known as an EB 5 project.
In recent months, the industry has seen major updates through the EB 5 Reform and Integrity Act of 2022. This bill introduced significant changes to much of the EB 5 program, particularly with investment minimums and targeted employment area (TEA) designation. It is important for industry participants to remain up-to-date on these new rules.
In this piece, we will touch upon two key EB 5 updates and what they entail for current and future foreign EB 5 investors. Visit this article for a more detailed analysis.
The Minimum Investment Amounts Have Increased
The EB 5 Reform and Integrity Act of 2022 was passed on March 15, 2022, and, it increased the minimum investment amount for EB 5 visa applicants. Currently, the investment minimums for TEA and non-TEA projects are $800,000 and $1,050,000, respectively.
The next increase in the minimum investment amount will be on January 1, 2027, and every five years thereafter. The non-TEA minimum will adjust according to inflation, while the TEA minimum will adjust to 60% of the non-TEA level.
TEA Designation Criteria
As either census tracts or strings of census tracts, TEAs are areas determined by Congress to be in need of economic stimulation and job creation. They come in two varieties; rural and high unemployment.
TEAs are an important aspect of the EB 5 industry. They require a much lower capital investment minimum, making EB 5 investments more accessible. Moreover, they can provide a quicker route to successful U.S. immigration through visa set-asides and rural TEA priority processing.
As foreign investors are incentivized to choose TEA projects due to their affordability, they inject investment capital into regions that need it the most. In turn, TEAs see economic growth and job creation from these projects. TEA projects benefit the EB 5 investor, the surrounding community, and the U.S. government.
Sole authority for TEA designation belongs to United States Citizenship and Immigration Services (USCIS), with state and local government agencies no longer playing a role in the process.
Individual EB 5 investors are responsible for proving that their projects qualify for TEA status via documentary evidence included with their I-526E petition. A region qualifies as a rural TEA if it is not located within a metropolitan statistical area (MSA) according to the U.S. Office of Management and Budget; and it does not directly border a municipality with a population greater than 20,000. The population statistics used to demonstrate rural TEA status must be derived from the most recent decennial census.
Alternatively, EB 5 investors hoping to receive high unemployment TEA status must obtain both the region’s unemployment rate and the unemployment rate of the United States. This data must come from the same sources and cover the same time period. High-unemployment TEAs exhibit an unemployment rate of at least 150% of the national average.
The Reauthorization of the EB 5 Regional Center Program
The Reform and Integrity Act reauthorized the EB 5 Regional Center Program and allowed pending applications from regional center EB 5 investors to resume processing by USCIS. Previously, the regional center program expired in June 2021.
Despite the Reform and Integrity Act’s intent to allow the regional center program to resume operations, USCIS initially took an overly strict interpretation of the new law and deauthorized all existing regional centers. Fortunately, a subsequent lawsuit found that this policy went against the clear intent of the EB 5 Reform and Integrity Act to reauthorize the regional center program.
Previously designated regional centers can now resume operations without having to go through a lengthy recertification process. At the same time, regional center operators will have to submit Form I-956 as an amendment to show their compliance with the many new regulations regarding regional center reporting and transparency. The requirements of the new regional center program are significantly more demanding than those of the previous regional center program.
The Latest EB5 Visa Updates
In recent years, the EB 5 program has seen a variety of impactful changes to the industry. However, certain key changes stand out among the rest. The minimum investment thresholds for EB 5 projects will now be raised periodically, and TEA designation criteria have seen some modifications, with sole authority now belonging to USCIS rather than individual states. It is also worth noting that EB 5 investors whose EB 5 applications had been frozen during the Regional Center Program’s suspension are protected from denial based on the lapse.
Regional centers are now operating normally and can accept new EB 5 investment and I-526E petition filings. EB 5 Affiliate Network (EB5AN) is pleased to offer three low-risk, institutional-quality projects sponsored by regional centers: Wohali Utah, Twin Lakes Georgia, and Saltaire St. Petersburg.
As a leader in the EB 5 investment industry, EB5AN has helped thousands of foreign investors secure U.S. residency. Foreign nationals interested in the program can take the next step by booking a call with EB5AN to learn more.