Just a few weeks stand between the EB-5 Regional Center and its sunset date of June 30, 2021, and with the severance of the program from its traditional omnibus government funding bill, program termination is only hurtling closer to becoming a reality. That said, Chuck Grassley and Patrick Leahy have proposed a bipartisan bill, the EB-5 Reform and Integrity Act, and the EB-5 industry continues to rally behind it. So, what are the proposed changes most likely to have the greatest beneficial impacts EB-5 investment participants? There are five of them:
- Longer-term extensions of the regional center program
- Greater accountability from regional centers to their investors
- Stronger fraud protection for EB-5 investors
- Eligibility provisions for investors’ children
- New mandate on speedier processing times
The improvements outlined in this bill will ultimately simplify the process of partnering with a trustworthy EB-5 regional center due to its efforts to tighten security and integrity measures, more effectively excavate potential fraud, and ensure EB5 investment funding is applied as Congress had originally intended.
Longer-term Extensions for EB-5 Regional Center Program Reauthorization
With a sunset date of June 30, 2021, looming for the EB-5 Regional Center Program, the most pressing issue in the industry right now is reauthorization. The anxiety caused by this program’s need for relatively frequent reauthorization stands to be quelled by the introduction of a measure for longer-term program reauthorization through the EB-5 Reform and Integrity Act. It proposes an automatic reauthorization through 2026, which would provide applicants making an EB-5 regional center investment peace of mind for the next five years.
Greater Accountability from EB-5 Regional Centers to Its Investors
Although EB5 investments through regional centers are by far the more popular choice over investing directly in a program-approved project, the risk of fraud, no matter how slim, poses a real concern among foreign nationals participating in this residency-by-investment program. Some investors also deal with concerns related to handing over the supervisory reigns on their EB-5 investment project. The EB-5 Reform and Integrity Act addresses these (and other) concerns head on.
The act proposes to compel regional centers to provide annual statements to both their participating EB-5 investors and the Department of Homeland Security. These statements would be required to account for all EB5 investment capital as well as to reflect compliance with all EB-5 program requirements, such as minimum job creation.
As another provision, regional centers would have to hire a fund administrator or commission independent annual audits ensuring proper use of EB5 investment funding.
Stronger Fraud Protection for EB-5 Investment Participants
While fraud is a rarity in EB-5 program history, when it does occur, it can destroy honest and unsuspecting EB-5 investors and their families. To better protect investors and their family members, the EB-5 Reform and Integrity Act also contains provisions that could salvage their immigration eligibility.
The provisions outline that EB-5 investors who become victims entangled in fraudulent activity but were not involved with the fraud themselves, continue to “associated with EB-5 entities in good standing,” and can meet all remaining EB-5 program requirements may be granted permission to continue participating in this residency-by-investment program. Specifically, this legislation grants investors 180 days to locate a new regional center and initiate any required investments necessary to fulfill program requirements.
Eligibility Provisions for Children of EB-5 Investors
An additional protection in this new legislation applies to EB-5 investors with children, who have traditionally been subject to “aging out of the program.” Under current U.S. immigration law, children may not be married or aged 21 or above for immigration purposes. Due to the extended wait times all too commonly associated with EB5 investments (particularly for Chinese investors), “aging out” of eligibility has become a major concern among EB-5 investors and their families.
In response, the act proposes to protect children of EB-5 investors who meet certain eligibility requirements from aging out should their petition be terminated or an application to remove conditions on their conditional permanent residency be denied.
USCIS Mandate for Speedier Processing Times
Speaking of the excessive processing times, this issue in and of itself has been a detriment to the EB-5 program and even to U.S. immigration as a whole. As of March 2021, a host of EB-5 investors (primarily Chinese nationals) have surpassed the six-year mark waiting for their EB-5 visas. Backlogs for other immigration programs runs even longer. The EB-5 Reform and Integrity Act aims to address this ongoing issue head on by establishing a universal definition of reasonable processing times and requiring a fee study by USCIS within the first year of enactment. Additionally, USCIS would have to adjust program fees as necessary to process EB-5 petitions according to the defined processing timelines.
The EB-5 Reform and Integrity Act Spells Better Days Ahead for the Program
The enactment of this piece of legislation will surely alter the landscape of the EB-5 industry significantly, and for the better. Added protections for EB-5 investors and their families once and for all addressing inordinate processing times and making specific efforts to deter any fraud that might occur no matter how infrequent—these legislative modifications stand to reinvigorate a program with a long history of helping both immigrants and the United States.
Furthermore, the passage of the Biden administration’s complementary legislation, the U.S. Citizenship Act of 2021, would go the extra mile in reducing backlogs. The EB-5 industry may wind up in a better position than it has seen in years. Combined, these legislative efforts for reform are likely to inspire greater trust among both investors and the U.S. public, allowing the program to continue stimulating the U.S. economy and offering a chance at a better life for countless foreign investors.