With the U.S. struggling to recover from the devastating COVID-19 pandemic and a new administration taking office, 2021 is bound to be a year of significant change. President Biden has consistently promised to bring considerable change to the U.S. immigration system, vowing to clear backlogs and improve efficiency throughout various immigration programs. Although Biden’s proposed U.S. Citizenship Act of 2021 does not specifically mention the EB-5 Immigrant Investor Program, much of the bill’s policies could benefit EB-5 investors. Additionally, the EB-5 program could experience reform from the EB-5 Reform and Integrity Act, which is cosponsored by Chuck Grassley (R-IA) and Patrick Leahy (D-VT).
Those involved with the EB-5 Regional Center Program have been anxiously waiting for significant reform to save the regional center program from termination. The program is set to expire on June 30, 2021, and this is the first time that it seems the program could be in real danger of not being reauthorized by Congress. If the EB-5 Regional Center Program expires, thousands of foreign nationals would lose their EB-5 investments along with any chance of immigrating to the United States. Aside from the regional center program, the EB-5 Reform and Integrity Act would bring much needed protection for EB-5 investors and a second chance to meet the job creation requirement.
Stability for the EB-5 Regional Center Program
If the EB-5 Reform and Integrity Act passes, it would finally bring a sense of security for those involved with EB-5 regional center investments. Historically, the regional center program has been reauthorized by Congressed in short periods of one year or less. This bill would change that, authorizing the EB-5 Regional Center Program for a five-year period. This extension of the program would allow EB-5 investors to continue to make regional center investments and confidently know that the regional center program will remain authorized during the duration of their investments.
New Protections for EB-5 Investors
Because of the many advantages it offers, the majority of EB-5 investors choose to invest through EB-5 regional centers rather than investing directly in a new commercial enterprise (NCE). Investors that make their EB5 investment through a regional center benefit from the help of an experienced regional center manager and easier job creation requirements, and do not need to be involved in the day-to-day managerial decisions of their EB-5 project. This is great for many EB-5 investors that do not have any business or managerial experience. However, some investors do not feel comfortable having such a hands-off approach with their investment. They fear that poor management or even fraud on the part of the regional center could jeopardize their EB5 investment—and their future.
The EB-5 Reform and Integrity Act could resolve a lot of the concerns that some investors have with EB-5 regional centers. Under the proposed legislation, all EB-5 regional centers will be required to write yearly statements that outline their compliance with all regulations. The statements must also address any pending or recently resolved legal cases or bankruptcy proceedings that the regional center or NCE is involved in. Regional centers will also be required to write an official account for every NCE that shows the total amount of EB-5 capital invested, proof that all funds are being used for the project, proof of how the capital is being used, and a report of all jobs created. These required statements must also be made available to EB-5 investors upon request.
This proposed legislation would help EB-5 investors who are deceived by fraudulent individuals in the EB-5 program. Cases of fraud in the EB-5 program are extremely rare, but there are still some cases where foreign nationals encounter a dishonest professional and suffer because of it. The new bill would give EB-5 investors a chance to keep their EB-5 eligibility in such a case. After receiving notice from the Department of Homeland Security (DHS), the investors would have 180 days to submit an amendment to keep their eligibility in the program. If granted, they would keep their I-526 petition priority date. The bill would also protect their children from aging out in this circumstance.
One Extra Year to Meet Job Creation Requirement
One of the biggest benefits the EB-5 Reform and Integrity Act could introduce for EB-5 investors is an extra year to meet the job creation requirement. As the EB-5 program functions currently, investors are issued conditional permanent resident status for a two-year period, and their investment must create at least 10 new full-time jobs for U.S. workers during that period. If this act passes, it will allow investors who failed to meet the requirement an extra year to create the 10 new jobs required.
How the EB-5 Reform and Integrity Bill Could Improve the Future of the EB-5 Program
Those in the EB-5 industry should work together to support this bill, as it could bring much-needed change to the EB-5 program. This bill could increase transparency in the program, reduce fraud, and help build investors’ confidence in the EB-5 regional center program. These changes, paired with the new protections it would offer EB-5 investors, are exactly what the program needs to increase popularity among foreign nationals, bringing even more foreign capital into the U.S. economy. Although there are still more issues the EB-5 program needs to resolve, this bill is a step in the right the direction.