The bipartisan proposed EB-5 reform draft aimed at addressing fraud and national security concerns has trade groups and investors alike concerned about the future of the invest-for-visa program against the December 11 2015 program expiration. Here are the Big 3 Concerns:
HEAVIER INVESTMENT LEVELS REQUIRED TO OBTAIN GREEN CARD
As shared in our earlier blog, MORE GREEN FOR GREENCARD IN EB-5 RENEWAL DRAFT, the draft bill proposed would increase the TEA investment requirement to $800,000 and non-TEA projects to $1.2 Million. Watch-group, IIUSA, recommends a new minimum investment levels of $800,000 in TEAs but keeping the non-TEA investment level at $1,000,000 explaining that “the smaller difference between the two amounts will create a competitive marketplace for both investment levels while providing sufficient opportunity to qualify for TEA designation by qualifying projects.”
Currently, projects in Target Employment Areas (TEAs), or areas with at least 150 percent of the national unemployment rate, require a $500,000 minimum investment, while mainstream EB-5 investments require a $1 million.
JUNE 1ST RETROACTIVE APPLICATION OF THE LAW
The draft language also attempts to make the proposed reforms. including those related to sources of funds, investment amounts and how many jobs need to be created per investment retroactive to June 1.
The IIUSA warns that “the consequences of these provisions would ripple throughout the economy as billions of dollars in project financing collapse, disrupting business timelines and causing tens of thousands of Americans to lose their jobs as loan defaults and litigation take hold while courts are flooded with unnecessary lawsuits.” The group recommends that the law should only be applied to I-526 petitions (EB-5 petitions) filed after the date of enactment.
RESTRICTIONS ON METHODS PROVING JOB-CREATION REQUIREMENT
The draft language also restricts the methods regional centers and businesses use to estimate how many and what kinds of jobs a project creates through EB-5 investment. According to news sources, “under the draft bill, there is a proposal to require W-2s and other documentary support to back up job-creation numbers.” In response the IIUSA calls for flexibility on this measure recommending “that there be no change to current policy related to job creation methodologies” but does not object to language “requiring that at least 10 percent of job creation used by investors to meet EB-5 requirement be direct jobs, so long as the rules on compliance are grounded in standard economic modeling practices”.
The General Requirements of EB-5 include:
· $1 million investment in the United States
· $500,000 minimum investment in a high-unemployment area or rural area in the United States
· The investment must create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years
· The EB-5 investor must invest in a new commercial enterprise.
The proposed changes, should they come to fruition, could have the effect of spreading more wealth to rural populations and to urban high unemployment areas across the US. If legislators, however, agree to increase TEA investment to $800,000 but leave the non-TEA investments unchanged at $1,000,000, investors may be incentivized to disperse wealth into more lucrative projects in wealthy areas and cities since the $200,000 disparity is not as enticing as today’s half-million-dollar savings.
To learn more about Invest-for-Visa programs contact an experienced LOIGICA immigration attorney.