AzmanJaka/E+/Getty Images

Overview

Created in 1990, the EB-5 Immigrant Investor Program was designed to stimulate the U.S. economy through job creation and capital investment by foreign investors. There are two main types of EB-5 visas:

• The Individual EB-5 requires direct investment in any for-profit of business that creates at least 10 full-time jobs for U.S. workers.
• The Regional Center EB-5 visa requires investment in USCIS-approved regional centers creating at least 10 direct, indirect or induced jobs per investor.

In exchange for making a minimum investment of $1 million (or $500,000 if the funds were invested in certain high-unemployment or rural areas) into a new U.S. business, foreign investors are placed on a glide path to U.S. citizenship for themselves and their immediate families.

As a pilot program, authority for the EB-5 regional centers has to be extended periodically.  NAR works with organizations that support permanent reauthorization for the regional center program to push for needed reforms to make it more accountable and transparent.

History

Over the past several years, NAR, in coalition with other stakeholder groups, has successfully lobbied to reauthorize the EB-5 regional center pilot program. Most recently, the regional center program was extended by Congress through September 30, 2019.

Where Are We Now?

Several bills have been introduced in 2019 to reform and reauthorize the regional center program either on a short term or permanent basis - NAR supports the reauthorization bills and is working in coalition with other organizations to educate congressional members about the importance of reforming and reauthorizing this program.

On July 24, 2019, a Final Rule to reform and modernize the EB-5 program was published in the Federal Register(link is external).

The Department of Homeland Security (DHS) is issuing this rule to codify existing policies and reform parts of the EB-5 program. This rule provides priority date retention to certain EB-5 investors, increases the required minimum investment amounts and reforms targeted employment area (TEA) designations.

NAR signed onto to a broader Coalition comment letter on May 17, 2019, expressing concern that some of these changes, especially the higher required minimum investment amounts, would make the program more difficult to use, thereby making less capital available for real estate development projects. We anticipate another opportunity will be available to sign onto a stakeholder letter to urge comprehensive Congressional reform of the program, in lieu of piecemeal regulatory changes, by EB-5’s September 30, 2019 expiration date.

Detailed Summary of the Final Rule:

New investment amounts:

• $900K at the low level
• $1.8 million at the top level
• Changes every 5 years and tied to inflation
• Reported rationale: These are the levels you get if you index to inflation from 1992, when the current levels were $500K and $1 million when the program was created

New Targeted Employment Area definitions:

• “Rural”: As proposed.
• "Urban”: Not exactly the “donut” approach as was initially proposed.

Effective Date: Rule takes effect 120 days after publication in the Federal Register, i.e. November 21, 2019.