Wednesday, November 4, 2015

Summary of Industry-Supported Reforms to the EB-5 Program

The EB-5 immigrant investor program administered by the USCIS is – for the second time this year – in need of congressional reauthorization in order to continue to operate. Over the past 5 years, CiF has used the EB-5 program to raise $220 million for job creating, catalytic investment projects in the Greater Cleveland area. However, if Congress does not renew the program on or before December 11, 2015, the EB-5 program will lapse and CiF will no longer be able to attract foreign investment capital to the area using EB-5.

In light of the rapidly approaching reauthorization deadline, the EB-5 industry trade group Invest in the USA (or IIUSA, of which CiF is a member) has crafted a series of proposed compromises for the EB-5 program. These compromises address the major areas of disagreement between various EB-5 stakeholders, in regards to the kinds of reforms that should be included along with congressional reauthorization of the EB-5 program.

These recommendations were supported unanimously by IIUSA’s governing board and are supported by a super majority of IIUSA members that responded to a member survey. CiF also stands in support of the IIUSA compromise and hopes that members of Congress will also realize the benefits of reauthorizing the EB-5 program.

Here is a brief summary of what the IIUSA compromise covers:

  1. Targeted Employment Areas – a TEA would be defined as no more than 12 contiguous census tracts and zero-population subdivisions cannot be used to establish contiguous connections
  2. Minimum Investment Amount – The minimum investment amount for EB-5 projects within a TEA would be raised from $500,000 up to $800,000. The Non-TEA investment minimum would remain at $1,000,000
  3. Job Creation Methodologies – No change would be made to existing job creation methodologies, so that EB-5 can continue to be used to fill critical gaps in project financing
  4. Effective Dates / “Grandfathering”  - for the sake of simplicity and fairness there would be no “grandfathering” of EB-5 investors. So, if the compromise is accepted and becomes law then the new investment minimums and TEA definitions would go into effect immediately. This further means that any EB-5 investors who have not yet filed their I-526 petitions prior to the law’s passage would be subject to the new law’s provisions,  including the increased investment minimums.