Proposed EB5 investment and TEA changes
December 15, 2016 2 Comments
The Regional Center program sunset date has been pushed back to April 28, 2017 by Public Law 114-254, but don’t count on the EB-5 status quo remaining unchanged through April. As I reported before, EB-5 filing fees are increasing from next week, there’s a new EB-5 Policy Manual, and Congress and USCIS might be about to unveil major EB-5 rule changes. USCIS signaled intention to post proposed new EB-5 regulations in the coming month, which could (at record speed) mean a final rule as early as March 2017. Congress reportedly came close to finalizing new EB-5 legislation behind the scenes last month and reportedly plans to introduce a new bill shortly. (USCIS has a history of dragging regulation revisions out over months or years or even decades, and Congress has a packed schedule for Trump’s first 100 days without mentioning EB-5. But still, there’s at least a chance of immanent EB-5 action.)
New regulations from USCIS promise to increase the minimum EB-5 investment amount, revise Targeted Employment Area requirements, clarify regional center designation requirements, and consider priority dates. We’ll have to wait for the proposed rule to learn more detail. (UPDATE: here is the detail.) New legislation promises to address those same issues while also adding new rules for job creation, project pre-approval, investor source of funds, investor vetting and protections, fund administration, and many aspects of regional center operations. My Bill Comparison Chart summarizes features from various iterations of proposed EB-5 legislation. I just added a column for a new “staff draft” bill dated 12/2/2016 that has been making unofficial rounds. This draft is a version of the H.R. 5992 released earlier this summer, with revisions that show the influence of good sense (clearer presentation, no more deadly retroactive effective dates, fewer practically impossible tasks for USCIS and regional centers) as well as good lobbying by large regional centers (lower fees and better incentives for the major players). This staff draft legislation is unofficial (I received the same document separately from three sources, but without much context, and it’s just a redline with many passages marked for further negotiation), but I’m analyzing it because I hear that a bill based on this document may be introduced early next year.
To begin, I’ve outlined proposals in the recent staff draft legislation that would change the EB-5 minimum investment amounts and targeted employment area criteria. (Click on the link to access the document, which has tidy summary tables and some analysis of implications.) Future posts will address other big proposed changes that I consider particularly significant for my clients: proposed new rules for job creation, amendments, fund administration, ownership/management, and regional center operations. (I’ll also link to useful articles from others. For example Bernard Wolfsdorf’s informative webinar “EB-5: 12/23/16 Fee Increase & Preparing for 2017” discusses the staff draft legislation and other developments.) We don’t know whether the proposals in the draft legislation will become reality, but it’s important to know what’s being discussed in Washington. Discussions in Congress may or may not affect the changes that USCIS proposes through regulation. Regulation rule changes from USCIS will be more limited than what Congress can enact, and might be more restrictive. (I hear that USCIS has been working closely with the hardliner Senator Grassley, which is not a good sign.) Let’s see who acts first.
1/12/2017 UPDATE: DHS has published its proposed changes to investment amounts and TEAs in a Notice of Proposed Rule-making: EB-5 Investor Program Modernization (DHS Docket No. USCIS 2016-0006).