The EB-5 Immigrant Investor Program Modernization regulation has reached the Office of Management and Budget’s final review stage. If accepted, the rule would be published.

There have not been any formal revisions to the EB-5 Program since it was created in the 1990’s. The new EB-5 regulation seeks to reform parts of the EB-5 Program as well as codify already established policies.

Here are the contents of the EB-5 regulation, how it would impact potential investors and the EB-5 Program, and when it would take effect.

3 major changes to what’s in it:

• A proposed increase in the minimum investment amount for both direct investments as well as TEA investments. Direct investments could increase from $1 million to $1,800,000. Targeted employment investments (TEA) could increase from $500,000 to $1,350,000. The regulation would also include a mechanism for adjustment of the minimum investment amount every 5 years to account for inflation.
• The Department of Homeland Security would designate TEAs not the states.
• An investor who has already received I-526 Petition approval would keep their original priority date even if they decided to file a new I-526 Petition.

Here’s how these changes could impact potential investors:

The increase in the minimum investment amount requirements may deter many potential investors from applying to the EB-5 Program. However, EB-5 filers would only have to invest the minimum investment amount that is designated at the time of filing, meaning that if an EB-5 investor files prior to the change, then they will not be affected by the increase. Investors can apply now to avoid the potential increased investment amount.

DHS would eliminate state designation of TEA which may affect investors heavily. Right now states do not have consistent standards and can designate TEA in areas that they would like to promote economic development, despite the area already being prosperous. Since a TEA is supposed to be a rural or high unemployment area, DHS will take over and determination which areas qualify as TEA using a set of consistent standards. What this may mean for investors is that they may not be able to invest in less risky areas using TEA any longer.

In order to help deal with the issue of EB-5 retrogression, DHS has proposed to allow investors who have had approved I-526 petitions that were later revoked for reasons outside of their control (such a s a regional center termination) to keep their original priority date and their place in line while they reinvest their funds.

When will this take effect?

After the rule is reviewed and changed, it will be published in the Federal Register and will not take effect for at least 30 days. It could take several months.

Conclusion

This regulation may be changed drastically before publication. This rule was first proposed under a different administration and the now Trump administration appears to be more EB-5 friendly and may not accept any of the above changes. Still, a potential EB-5 investor can invest now, lock in their spots with the EB-5 Program and ensure that they receive the lower minimum investment amount without the stress of wondering if and when the minimum investment amount and TEA designations will change.

For more information about the EB-5 regulation, send us a message.