The EB-5 Regional Center Program’s sunset date of June 30, 2021, continues to inch ever closer, increasing the EB-5 regional center program’s risk of termination. The regional center program was traditionally attached to a larger government funding bill, making reauthorization fairly simple: the program was reauthorized whenever the omnibus spending bill was passed. However, this changed in December 2020, significantly increasing the risk that the regional center program might be terminated. With little time to spare, many EB-5 industry representatives have latched out to the EB-5 Reform and Integrity Act. The bill, introduced by Senators Patrick Leahy and Chuck Grassley, would reform the EB-5 investment program while also reauthorizing it for the next five years.
The bill is focused on improving the EB5 investment program’s integrity. If passed, the bill would improve the program’s security measures and add protections for honest EB-5 investors. The bill would also carry stricter integrity measures for honest regional centers, making it easier for an EB-5 investor to safely and securely make their investment.
Below are major changes that the proposed bill would have on the EB-5 investment program:
Reauthorizing the EB-5 Regional Center Program for the Time Being
Most EB-5 industry representatives are greatly concerned with the possibility of the regional center program’s termination, which would put a halt to most EB-5 investments. However, if the EB-5 Reform and Integrity Act were passed, the program would be reauthorized until 2026. This would mean that EB-5 investors could invest without worrying that the program would be terminated for the time being.
Increased Regional Center Accountability
Most investors choose to invest through a regional center because this option typically offers a reduced managerial role for the investor in addition to an easier process of satisfying the program’s stringent job creation requirements. Regional center investors can include induced and indirect jobs in their job creation calculations, which makes it significantly easier for regional center investors to satisfy the program’s requirement that their investment create or maintain 10 full-time jobs for U.S. workers.
There is a risk, however slim, that a regional center might defraud investors. The proposed bill would mandate that regional centers provide annual statements to all participating EB-5 investors and the Department of Homeland Security (DHS) accounting for all EB5 investment capital that was used and demonstrating that the regional center is in compliance with the EB-5 program. The bill would also require that regional centers commission an independent annual audit or hire a fund administrator to ensure that all EB5 investment capital is being used as intended.
Increased Protections for EB-5 Investors
Occasionally, despite all the EB-5 investment program’s many protections, investors are defrauded by a regional center. In such a case, the EB-5 Reform and Integrity Act may maintain these investors’ immigration eligibility. The proposed act is specifically interested in offering victims of fraud another chance at a future in the United States. If this bill is passed, some investors who are the victims of fraud but not involved in the fraud themselves could still participate in the program. In these cases, the investor would have 180 days to find a new regional center and do whatever they can to create the remaining number of jobs to fulfill the EB-5 investment program’s requirements.
The bill would also offer protections to EB-5 investors with older children. As of April 2021, U.S. immigration law defines a child as younger than 21 and unmarried. The EB5 investment program’s long wait times increase the serious risk of children aging out of EB-5 visa eligibility for many investors, including those from a country with a backlog (China and Vietnam, as of April 2021). However, the proposed bill would maintain the immigration eligibility of the children of some EB-5 investors if their application to remove the conditions on their conditional permanent residency were denied or their petition were terminated.
Forcing USCIS to Increasing Processing Times
USCIS’s history of long processing times has hurt U.S. immigration in addition to the EB-5 investment program. As of April 2021, some EB-5 investors, such as those from China, have waited more than six years for their EB-5 investment visa. The backlogs for other visa programs are even worse in some cases. The EB-5 Reform and Integrity Act would provide much-needed reform to the EB-5 investment program’s slow processing times by forcing USCIS to conduct a fee study, adjusting program fees when needed to process EB-5 petitions in accordance with the efficiency guidelines.
What’s Next for the EB-5 Investment Program?
If Grassley and Leahy’s bill passes, the EB5 investment program as we know it would change significantly, with increased protections for EB-5 investors, more robust protections against fraud, and faster processing times. If the Biden administration’s U.S. Citizenship Act of 2021 also passes into law, the EB-5 investment program could be in the best situation it has been in close to a decade. Reforming the program would also encourage more investors to participate in the program, pumping more money into the U.S. economy and allowing many foreign nationals to start on their new life in the United States.