History of the EB-5 Program

The EB-5 Immigrant Investor Program was introduced by Congress in 1990 to boost the U.S. economy by attracting foreign investments and creating jobs for American workers. The program offers foreign nationals permanent residence in exchange for their investment in the U.S. economy.

Foreign investors can invest a minimum of $800,000 in a targeted employment area (TEA) project or $1,050,000 in a new commercial enterprise elsewhere. The investment entity must create at least ten full-time jobs for U.S. employees.

The program has undergone several changes in its 30+ years of existence to arrive at its current state. In this article, we look at the history of the EB-5 program and the significant changes it has gone through.

How the EB-5 Program Came to Be

The U.S. economy picked up in 1983 following the 1981-1982 recession. However, economic growth slowed by the late eighties due to high unemployment, inflation, and tight monetary policies. The U.S. Congress sought a way to boost the economy, cut inflation, and tackle unemployment. The EB-5 Immigrant Investor Program was part of the results of this search.

The EB-5 program is one of the provisions of the Immigration Act of 1990, signed into law on November 29, 1990. It aimed to attract foreign investments to stimulate the economy and create jobs for American workers. Foreign investors would receive lawful permanent resident status in exchange for their investment in a new commercial enterprise in the U.S.

However, the program did not immediately receive much interest from foreign investors due to the high investment amount required and processing complexities. Congress needed to find a way to make the program more attractive. This led to the creation of the Regional Center Program.

Introducing the Regional Center Program

In 1992, Congress created the Immigrant Investor Pilot Program (IIPP), or Regional Center Program, to increase investor interest. Regional centers are entities designated by the United States Citizenship and Immigration Services (USCIS) to pool investor funds into large projects and manage these investments.

Under this program, foreign nationals can invest in new or existing commercial enterprises sponsored by USCIS-approved regional centers. The regional center program became a huge success and attracted thousands of investors, particularly from South Asia, due to the reduced investment amount option for TEAs ($500,000 at the time) and ease of investing through a regional center.

Today, regional center TEA investments cost $800,000 and account for the vast majority of all EB-5 investments. However, the regional center program is not a permanent legislature and has to be reauthorized by Congress regularly.

Significant Changes in EB-5 Program and USCIS Policy Since Inception

The EB-5 program has undergone several changes since its inception. These changes have shaped the current outlook of the program. We’ll discuss some of these changes and how they’ve helped keep the EB-5 program viable in more than 30 years of operation.

EB-5 Reforms of the 1990s

Due to lax regulation enforcement, the EB-5 program became susceptible to fraud as it grew. The discovery of fraudulent investments and fake transactions in the U.S. District Court v. O’Connor case led USCIS and the Administrative Appeals Office (AAO) to tighten the EB-5 requirements.

Effective 1998, investors had to prove that their funds were sourced from lawful means and show active involvement in their EB-5 project. The new regulations also removed any guarantee of returns on investment. USCIS tried to enforce these rules on already filed petitions, but the Chang vs. U.S. ruling made it illegal. However, EB-5 visa applications dropped significantly following the new regulations.

Four other important precedent decisions were made in the 1990s by the AAO to establish the new rules: Matter of Ho, Matter of Izummi, Matter of Hsiung, and Matter of Soffici. These rulings clarified the eligibility of commercial enterprises for EB-5 investment, the guidelines for EB-5 investment administration, and the requirements for proving lawful source of funds.

EB-5 Visa Reforms of the 2000s

In 2003, Congress passed the Basic Pilot Extension and Expansion Act to help rejuvenate the EB-5 program. The Act mandated the Government Accounting Office (GAO) to review the EB-5 program thoroughly, which revealed that only a small fraction of the 10,000 EB-5 annual visa allocation was issued yearly.

This discovery led to the establishment of the Investor and Regional Center Unit (IRCU) in 2005. The IRCU is responsible for certain aspects of the EB-5 program, including case auditing, form design, policy formulation, and regulation development.

In 2009, USCIS revised its EB-5 policy guidelines. It centralized EB-5 processing operations at the California Service Center (CSC). The processing was previously done at two centers, California and Texas. The Obama Administration also reauthorized the Regional Center Program to run until 2012.

EB-5 Modernization in 2019

The EB-5 program underwent several regulatory changes between 2012 and 2019, leading to the EB-5 modernization in 2019.

In 2012, USCIS made it mandatory for regional centers to provide annual reports to investors and all stakeholders to create transparency in the EB-5 process. This decision was an attempt to prevent fraud and mismanagement as the demand for EB-5 visas increased.

In 2015, Congress began discussing measures to improve the EB-5 program and update the minimum investment amounts to account for inflation. The updates took effect on November 21, 2019. The significant changes included:

• Increase in minimum investment requirement to $1.8 million, and $900,000 for targeted employment areas (TEAs).
• Targeted employment areas would no longer be designated by state and local governments but by the Department of Homeland Security (DHS).

However, the modernization changes were vacated in June 2021.

EB-5 Reform and Integrity Act of 2022 (RIA)

The Regional Center Program became due for reauthorization once again in June 2021. Stakeholders wanted to modify the program before reauthorizing it but could not agree on the adjustments to include before the authorization expired on June 30, 2021.

Consequently, the reauthorization bill was not passed, and the program relapsed. It remained that way for nine months while legislators debated new reforms. New and ongoing petitions were suspended, causing a disruption in the immigration process for many investors.

Congress finally decided on a modified framework for the EB-5 program in 2022, namely the EB-5 Reform and Integrity Act of 2022 (RIA). It was signed into law on March 15, 2022.

The Act reauthorized the Regional Center Program for five years (until September 2027), adding several new provisions to the program. Some significant ones include:

• A new minimum investment threshold of $1,050,000, and $800,000 for targeted employment areas.
• 32% of EB-5 visa allocations are now reserved as set-aside visas for TEA investments: 20% for rural TEA investments, 10% for high-unemployment areas, and 2% for infrastructure development projects.
• EB-5 applicants in the U.S. can now concurrently file I-526E, I-485, advance parole, and employment authorization petitions.
• Priority processing for rural TEA EB-5 projects.

RIA 2022 has significantly improved the speed and efficiency of EB-5 processing and provides many other benefits to EB-5 investors. Since then, many investors have received I-526E approval in less than 12 months.

State of the EB-5 Investor Program Today

There have been other changes to the EB-5 program since the enactment of RIA 2022. USCIS changed the status of about 100 rural TEA and metropolitan statistical areas (MSA) in 2023. More recently, they increased the I-526E petition filing fee to $12,160 in April 2024, along with some other petitions.

Discussions are currently ongoing regarding changes to the EB-5 investment sustainment period. You should stay in regular contact with your EB-5 consultants to stay updated.

EB5AN Can Help You With Your EB-5 Process

The many changes to the EB-5 program have refined it into a reliable and quick way to get U.S. permanent residency. However, the EB-5 process can still be complex, requiring professional assistance.

EB5AN has helped more than 2,300 families from 60 countries relocate to the United States as lawful permanent residents. Our expert team has more than a decade of experience, and offers clients first-rate, low-risk EB-5 regional center projects with a 100% USCIS project approval rate to date.

For your questions about the EB-5 process and help with your application, please schedule a free consultation with our EB-5 team today.