Reauthorizing Regional Center Investment Will Benefit the EB-5 Industry

On June 30, 2021, the EB-5 Regional Center Program expired, leaving many EB-5 investors and project developers in a difficult position. Regional center investment had been by far the most popular investment type offered by the EB-5 program: according to Department of State (DOS) data, regional center investors had accounted for over 93% of all EB-5 investment participants.

Despite the current uncertainty surrounding the program, there are several reasons why the reauthorization of the regional center program would be of value to the EB-5 industry and the U.S. economy.

Flexible Employment Calculation Criteria

Under United States Citizenship and Immigration Services (USCIS) regulations, an investment in the EB-5 program must create at least 10 full-time jobs for qualified U.S. workers. For direct EB-5 projects, the job creation is calculated based on the number of workers directly employed by the new commercial enterprise (NCE).

For regional center projects, however, there is more flexibility in job calculation. Indirect and induced employment created as a result of the EB-5 investment, which helps strengthen businesses that provide the EB-5 project with goods and services, can also be counted.

The flexibility to include these positions toward fulfilling the employment generation criteria is valuable to EB-5 investors. By making it easier to meet the job creation requirement, regional center projects offer investors a reduced immigration risk.

Minimal Managerial Duties

The direct EB5 investment route typically requires that investors have active roles in managing their projects. However, regional center project developers often make their investors limited partners, meaning that the latter are not required to participate in day-to-day management. Although regional center investors are still involved in making important decisions regarding the project, the regional center program’s lighter managerial duties made it an appealing and convenient option for investors.

Value to the U.S. Economy

The EB-5 investment industry has contributed significantly to the U.S. economy over the past decades. The EB-5 job creation requirement has led to the creation of tens of thousands of jobs for = U.S. workers and provided U.S. businesses with billions of dollars in funding.

There have also been continual incentives for EB-5 investors to choose projects in targeted employment areas (TEAs). Since a lower minimum investment threshold is offered for TEA projects, EB-5 investment funds are drawn to the locations most in need of development.

Calls for Reauthorization Continue

The suspension of the regional center program disrupted not only the plans of prospective EB-5 investors, but also those of foreign nationals who had already made an EB-5 investment in a regional center project. After the regional center program was suspended, USCIS announced that it would not be processing any existing I-526 petitions from regional center investors. This means that thousands of EB-5 investors who chose the regional center route may have to wait an unreasonable amount of time to get their visas. Surely, these investors deserve to go through the EB-5 process and would greatly benefit if Congress reauthorized the regional center program.

The EB-5 Regional Center Program has created many business opportunities for investors and project developers. Although it is still unclear when the program could be reauthorized, the benefits it would bring to the EB-5 investment industry and the U.S. economy at large are evident.