The Final Rule scheduled to be published on Wednesday, July 24, 2019, in the Federal Register is set to raise investment amounts for the EB-5 program. Other major program changes include the centralization of TEA's in the Department of Homeland Security (DHS) and a clarification of procedures for removing conditions on permanent residence. This is the first significant revision to the EB-5 program's regulations since 1993.
The new EB-5 program changes under the final rule include:
For investments in TEA's the minimum investment amount per investor has increased from $500,000 to $900,000 and for non-TEA investments the amount per investor has increased from $1 million to $1.8 million. The increased lower than the initial proposed regulation. The investment amounts, however, will be raised or adjusted every five years to account for inflation, providing "predictability and consistency to stakeholders so they can tailor business plans accordingly, without having to wait for DHS' determination" ([CIS No. 2555-14; DHS Docket No. USCIS-2016-0006], Pg. 67).
"The regulatory process for the new EB-5 rules has taken two years, and, finally, the Department of Homeland Security appears to have relented and recognized that the TEA investment threshold originally proposed in 2017 – which was $1.35 million – was unreasonable. The new threshold of $900,000 is still nearly double the $500,000 presently required for TEA investments. Many potential investors face either moving forward now or else they may not be able gather funds for the higher investment amount," said Ignacio Donoso, Founder and Managing Partner of Donoso & Associates, LLC, a law firm specializing in advising EB-5 investors.
As previously predicted, the designation of TEA's will be centralized to the DHS and will become the responsibility of USCIS to designate certain geographic areas to be eligible for the lower investment threshold. Currently, and until the Final Rule goes into effect on November 21, individual states determine these targeted employment areas.
"It is important for investors to understand that the projects they are used to seeing qualify for TEA investments and the lower investment threshold will most likely not qualify under these new regulations," said Nicholas A. Mastroianni, President of U.S. Immigration Fund (USIF), a leading EB-5 Regional Center. "Because TEA's will ultimately be redefined by USCIS it is very possible that EB-5 project offerings requiring a $500,000 investment under the current regulations will require a $1.8 million investment under the new regulations in the final rule."
The Final Rule will be effective on November 21, 2019, 120 days from the date of publication in the Federal Register giving investors an opportunity to file under current EB-5 regulations and investment amounts. Investors filing for I-526 petitions on or before the effective date will be grandfathered under the current rules and lower investment amounts of $500,000 for TEA projects.
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The Final Rule clarifies the process for removing conditions on permanent residence for family members. Any family members that apply on the same petition as the primary investor must file individual petitions to remove conditions on permanent residency. The exception is family members who were included on the primary investor's petition to remove conditions.
Lastly, the Final Rule will allow EB-5 petitioners to use the priority date of a previously approved EB-5 petition. If and when an investor needs to file a new EB-5 petition they can now retain the priority date of the previously approved petition, subject to certain exceptions.
The sunset date for the EB-5 program is still set for September 30 despite the Final Rule going into effect on November 21. In reality, the program could cease to exist after September 30 if Congress does not renew or substantially change the program. There is still an opportunity for legislation to get passed through Congress to override the Final Rule, however, based on past trends the industry does not have a lot of confidence in legislation being passed.
U.S. Immigration Fund is hosting free in-person EB-5 consultations throughout India, Dubai, South Africa and the United Kingdom over the next 30 days. USIF EB-5 experts and partner immigration attorneys will be able to answer questions and provide resources to file for the EB-5 program under the current rates before these changes go into effect November 21.
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