An overview of the major developments in the EB-5 investment industry in 2021 shows that these twelve months were a period of remarkable change. Perhaps the most important event for the EB-5 industry was the expiration of the regional center program in June 2021. To the surprise of many analysts, Congress has allowed the regional center model, the most popular EB-5 investment vehicle, to remain defunct for more than six months. Some investors and project developers expected a much faster renewal.
As a result, investors can currently file Form I-526, Immigrant Petition by Alien Investor, only if they choose a direct EB-5 project. As regional center projects offered more relaxed job creation requirements and minimal managerial duties, most investors gravitated toward this investment model.
Still, direct investors are enjoying two major advantages. First, in June 2021, the minimum investment thresholds were lowered, so EB-5 investments can now be made at only $500,000. Second, direct investors of all nationalities are free from processing backlogs as of December 2021, so they can go about the EB-5 process without untimely delays.
These developments set the stage for 2022, which will likely be another exciting year for the EB-5 industry.
The Future of Regional Center Investment
Historically, it has been difficult for the various members of the EB-5 industry and the U.S. government to agree on how the EB-5 program should be reformed. For this reason, it can be complicated for EB-5 legislation, including reauthorization for the regional center program, to be passed in Congress. Some industry analysts expect Congress to include a provision to reauthorize regional center investment in a February 2022 appropriations bill, which was originally due in December 2021. Of course, these predictions are conjectural, and regional center investors may have to wait many more months before being able to continue with the EB-5 process.
In fact, many regional center investors are stuck in processing limbo because United States Citizenship and Immigration Services (USCIS) is no longer adjudicating I-526 petitions associated with regional centers. This lapse in the most popular EB-5 investment model has not only inconvenienced investors—it has also kept businesses from receiving valuable funding.
Direct EB-5 Projects Will Remain Popular
The situation is quite different for the direct EB-5 investment industry. Direct EB-5 investors do not depend on government renewal. In fact, many investors have come to appreciate the numerous advantages offered by direct EB-5 projects, including the potential for higher returns and increased control over business operations. Even though USCIS filed an appeal against the court ruling that lowered the EB-5 investment threshold, direct investors can still participate in the EB-5 program for as little as $500,000. Direct EB-5 projects will likely maintain their popularity in 2022.
It will be interesting to see how the EB-5 industry adapts to upcoming changes. Despite the above challenges, the EB-5 program continues to fulfill its goal of strengthening the U.S. economy and creating jobs through foreign investment capital.