Since 1990, the EB-5 Immigrant Investor Program has been offering a win-win scenario for U.S. citizens and foreign investors alike: through the infusion of EB-5 investment capital, a foreign investor fosters the U.S. economy and creates new jobs for U.S. workers, receiving the right to live permanently in the United States in exchange for their bolstering of the U.S. job market. Investors have two pathways to make an EB5 investment: either directly in an EB-5 project, which generally entails significant managerial responsibilities, or indirectly through an EB-5 regional center, which offers investors the freedom to simply get involved as a limited partner. Another key advantage of regional center investment is the ability to count indirect and induced jobs toward the required 10 full-time jobs all EB-5 investors must create to be eligible for a U.S. green card. It’s no wonder, then, that the regional center EB-5 investment approach is the preferred path of most immigrant investors.
What is a wonder is that the EB-5 Regional Center Program is not a permanent government program, even though it has supplied the U.S. economy with billions in foreign EB5 investment capital and spurred the creation of hundreds of thousands of new jobs. Without the Regional Center Program, the EB-5 program could lose much of its appeal to investors, stifling the much-needed EB-5 investment capital they provide. Fortunately, the EB-5 Regional Center Program is likely here to stay, albeit in short spurts as reauthorized by Congress. This belief is reinforced by President Trump’s partiality to the program, seeing as he gave EB-5 investors the go-ahead even as he halted most forms of employment-based immigration to the United States throughout 2020. Nonetheless, the future of the program cannot be certain until it is made permanent, and the possibility, however scarce, that the program will be discontinued is present at every impending sunset date.
Three EB-5 Regional Center Program Reauthorizations in Three Months
Upon each reauthorization, the EB-5 Regional Center Program may be extended for any period of time, whether years or days. In many cases, Congress reauthorizes the EB-5 Regional Center Program alongside other government programs and bills, which can result in shorter validity periods than might be granted if the Regional Center Program were considered solitarily. In 2020, the EB-5 Regional Center Program enjoyed a validity period of more than nine months until September 30, 2020, but subsequent extensions were considerably shorter.
The extension of the program on September 30, 2020, was not surprising, but the short reauthorization period was disappointing. Extended a mere two and a half months until December 11, 2020, the EB-5 Regional Center Program was likely a victim of Congress’s failure to finalize deliberations on its government spending plans for 2021. The short extension won the government more time to discuss its bills and programs, which are particularly important decisions as the world heads into 2021, still reeling from the debilitating effects of the COVID-19 pandemic.
Unfortunately, the two and a half months weren’t enough, because when it came time for a new reauthorization, Congress set the EB-5 Regional Center Program deadline ahead by a single week. Then, when the new extension deadline of December 18, 2020, arrived, the EB-5 world was delighted at the news of a longer reauthorization: now, the EB-5 Regional Center Program is set to expire on June 30, 2021.
2021 Could See the Beginnings of EB-5 Reform
What Congress extended on December 18, 2020, was the Consolidated Appropriations Act 2021, of which the EB-5 Regional Center Program was simply one part. With the reauthorization decision having been contemplated alongside numerous other government programs, little consideration could be given solely to the EB-5 Regional Center Program, so naturally, the only change to the Regional Center Program was the postponement of its sunset date. No surprises there—that’s how EB-5 Regional Center Program reauthorizations are usually carried out. But that doesn’t mean highly anticipated changes won’t be coming to the EB-5 program in 2021. All eyes are on the bill proposing the end of country caps in visa allocations at United States Citizenship and Immigration Services (USCIS), which has already passed through the Senate with significant support from both parties. Chinese EB5 investment participants in particular stand to benefit if the bill is passed, as the overwhelming EB-5 demand from China has resulted in massive backlogs, and the July 2020 addition of Hong Kong investors to the mainland backlogs has only exacerbated the problem. If country caps are abolished, the EB-5 program could see dramatic changes in I-526 processing.
The abolition of country caps would apply to all USCIS immigration programs, but EB-5-specific reform could be coming, too. Another bill is circulating through the U.S. government, and this one aims to bring about major EB-5 reform by tightening security regulations, which would elevate the program’s ability to create jobs for U.S. workers and keep EB5 investment participants safer from fraud or malicious actors. In addition, the bill looks to extend the EB-5 Regional Center Program for longer periods at a time, such as five years.
While these much-needed changes have not graced the EB-5 landscape just yet, they could be coming sooner rather than later. Congress’s decision to reauthorize the EB-5 Regional Center Program until June 30, 2021, comes as a surprise because that isn’t the end of the fiscal year. This unusual sunset date separates the EB-5 Regional Center Program from the other government programs considered in the Consolidated Appropriations Act 2021, which could imply that Congress is planning to afford the EB-5 Regional Center Program more individual attention in 2021. The EB-5 industry can but await with bated breath the possibility of reform in 2021.