The EB-5 Regional Center Program was suspended on June 30, 2021. This event was undoubtedly a blow to the EB-5 investment industry; previously, the majority of foreign nationals participating in the EB-5 program chose to invest in projects sponsored by regional centers.
In the same month that the regional center program expired, a court ruling reduced the EB-5 investment threshold to only $500,000. This accessible minimum amount has enabled more foreign nationals to participate in the EB-5 program.
As regional center EB-5 investment is yet to be revalidated as of November 2021, direct investment in EB-5 projects is currently the only option for investors. Numerous foreign nationals have taken advantage of the lowered investment threshold and made direct investments since June 2021. The direct investment model does not rely on authorization from the government and thus presents a more stable channel for participation in the EB-5 investment industry. It is ideal for investors who want to be involved in the daily operations of their EB-5 projects.
However, if the regional center program were revalidated, it would still be the more popular option for many prospective investors. The EB-5 industry watches with interest to see whether Congress will take steps to reauthorize the regional center program. If it does, both investors and EB-5 projects will benefit.
Why Regional Center Investment Should be Reauthorized
The suspension of the regional center program is creating a large backlog of unprocessed visa petitions. Soon after the program’s expiration, United States Citizenship and Immigration Services (USCIS) announced that it would not process any EB-5 investment visa petitions related to regional center projects.
This announcement has led to serious inconveniences for parties associated with regional centers, including investors and EB-5 project developers. If reauthorizing the EB-5 Regional Center Program is delayed further, many investors whose I-526 petitions are pending may lose confidence and try to withdraw their capital. This would harm regional center EB-5 projects and, on a larger spectrum, have a negative impact on the U.S. economy.
In addition, the lapse in regional center investment means that some of the visas allocated to the EB-5 program may go unused. To limit the damage caused by these delays, the regional center program must be reauthorized soon.
How Congress Could Reauthorize the Program
Across the EB-5 industry, it is generally agreed that Congress is unlikely to pass a bill to reauthorize the regional center program unless it is a part of broader legislation. There are predictions that Congress will pass an omnibus bill that includes new rules for the EB-5 investment program, and this new bill may include the reauthorization of the regional center program. However, it may also raise the investment threshold or make other changes to the EB-5 industry.
There is no guarantee that Congress will reauthorize the EB-5 regional center program through the omnibus bill. Still, reauthorization of the program is certainly a viable option.