SUMMARY of new EB-5 Reform Bill Destined for Omnibus by March 11, 2022
by Robert Divine, Shareholder, Baker Donelson
March 10, 2022
Last night (March 9, 2022), the House of Representatives passed an omnibus spending package that included an EB-5 bill that provides a 5-year reauthorization of the Regional Center Program and other substantial changes. The omnibus needs to be voted on by the Senate and signed by the President before midnight on Friday, March 11. All indications point to that this will happen, marking an achievement long-awaited by the Regional Center industry.
The EB-5 bill included on the omnibus has major implications for existing and future investors, regional centers, developers, and promoters. A summary of these changes is below:
“Grandfathering.” The bill 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 would “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 (the same definition as before, but now they receive priority in USCIS processing) or high unemployment (using narrower “bullseye” 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 for “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. The 20% for rural might matter. The other reserves probably won’t.
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 families 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), the forgiveness of up to 180 days of status violations when they apply for adjustment.