Below is an updated version to the previously published blog on March 11, 2022.
Analysis of new EB-5 Reform and Integrity Act of 2022
by Robert Divine, Shareholder, Baker Donelson
On March 15, 2022, the United States enacted the EB-5 Reform and Integrity Act of 2022 (the 2022 Act) as part of a large omnibus budget package of legislation. It provides a 5-year reauthorization of the Regional Center Program with substantial changes, marking an achievement long-awaited by the Regional Center industry.
The 2022 Act has major implications for existing and future investors, regional centers, developers, and promoters. A summary of these changes is below:
“Grandfathering.” The 2022 Act preserves the eligibility of all pre-enactment investors as of the time they filed their I-526, for both I-526 and I-829 adjudication. The immediate repeal of the prior regional center (RC) law does not prevent adjudication and visa allocation for pre-investment RC investors. This should “moot” pending litigation about the “lapse” of prior law.
Investment Amounts. For all new filings, the minimum investment is $800,000 in a Targeted Employment Area (TEA), either rural (same definition as before, but now they receive priority in USCIS processing) or high unemployment (using narrower “bulls eye” definition from the 2019 regulations). High unemployment TEAs are determined only by USCIS and are valid for two years from project request filing, renewable in two-year increments. The $800,000 amount can also be used in “infrastructure projects” in which a government entity contracts for EB-5 financing to develop public works (something like a private municipal bond deal) even if not located in a TEA. Otherwise, the minimum is $1,050,000 (a $250K spread). Amounts increase with inflation every 5 years.
Reserved Visas. As a separate issue from investment amounts, visas are “reserved” each fiscal year: 20% for rural, 10% for high unemployment, and 2% for infrastructure; unused reserves carry over to add to reserves for the next year, but in the third unused year go without reservations. It is expected that the reserves will be allocated only to post-enactment investors, potentially allowing Chinese investors who use it to immigrate within one or two years instead of 10 to 15 years. Investors born in India and Vietnam might also use reserves to avoid visa number waits after I-526 approval. The rural and infrastructure reserves are most likely to attract such investors who might otherwise invest differently. Most other investments are likely to be in high unemployment areas anyway, and how the reserves are allocated depends on how the government will interpret and implement this tricky provision.
Investment Arrangements. Numerous USCIS interpretations under prior law are locked in by statute, including prohibited redemption and debt arrangements, and gifted and loaned investment funds. Purchase of publicly available bonds (municipal or for profit) no longer can qualify.
Adjustment of Status. Investors and family already legally in the U.S. and eligible for a visa number may concurrently file applications for adjustment of status (avoiding consular visa processing) along with or while awaiting adjudication of the investor’s I-526 petition. EB-5 investors now join other employment-based immigrants in enjoying, under INA section 245(k), forgiveness of up to 180 days of status violations when they apply for adjustment.
