Dear Subscriber,

We are pleased to announce that the EB-5 Immigrant Investor Program has been extended, albeit for just a short time, to December 22, 2017, with the minimum required investment amount remaining at $500,000. I anticipate that there will be another multiple-month extension of the program at the $500,000 minimum investment amount, but I believe that a substantial increase in the minimum required investment amount to around $1 million is just months away. The reasons for this prediction I will explain below.

In October 2017, Congressional meetings took place to resolve the differences between the two factions competing to shape the legislation that will govern the EB-5 program for years to come. On the one hand, you have the rural area faction headed by Senators Grassley and Leahy, as well as Representative Goodlatte, who is the Chairman of the Judiciary Committee in the House of Representatives, who are pushing to establish more favorable EB-5 investment requirements for investment in rural areas and to set more stringent criteria for urban areas to qualify for the lower investment amount as Target Employment Areas (“TEAs”, which are areas with a high unemployment rate, 50% above the national unemployment rate.). On the other hand, you have the urban area faction headed by Senator John Cornyn, supported by the EB-5 regional center industry, which is countering the moves to increase the investment amount for urban areas above that for rural areas and pressing to keep the criteria for designating TEAs as close as possible to what they are now.

In the October meetings, the rural faction presented what it called its “last best offer”. Under this offer,  rural areas and urban distressed areas (i.e., urban areas that meet the newer, more stringent unemployment requirements) would qualify based on a minimum investment amount of $925,000, and urban areas that are not distressed would have a minimum investment amount of $1.025 million. The job creation requirement would be changed to allow investments in rural areas and distressed urban areas to qualify based on the creation of only 5 new indirect jobs per investor, whereas 9 indirect jobs and 1 direct job per investor would be required in non-distressed urban areas. Also, the EB-5 investor would be required to pay a new program fee of $25,000 to USCIS. 

The timing of the changes would be that, during a 4-month phase-in period, the current requirements would remain in effect. After the phase-in period, for the next 8 months, the minimum required investment amount would be raised to $925,000 in all areas, and after the 8-month period would pass, the minimum required investment amount in non-distressed urban areas would increase to $1.025 million. These new requirements would not be applied retroactively to I-526 petitions filed before the new requirements take effect. 

The reason why the rural faction is calling this their “last best offer” is that they figure that they have got the upper hand over the urban faction. Here is why. On January 11, 2017, USCIS proposed new regulations that would increase the minimum required investment amount to $1.3 million in TEAs (high-unemployment areas) and to $1.8 million in non-TEAs. Upon entering office, President Trump placed a moratorium on all regulations proposed by the Obama Administration. The moratorium held the proposed regulations in check so far this year. However, Senator Grassley managed to get a former member of his staff, Lee Francis Cissna, nominated and confirmed by the Senate, on October 5, 2017, to be the new Director of USCIS. During the confirmation hearings, Mr. Cissna stated that he is committed to finalizing and placing into effect the EB-5 regulations proposed by USCIS just before President Trump took office. This means that if the urban faction does not accept rural faction’s terms, then even worse terms, i.e., a minimum required investment of $1.3 million in TEAs and of $1.8 million in non-TEAs, will come about as a result of the new USCIS regulations entering into effect. With USCIS now moving forward with finalizing the EB-5 regulations to implement them in the coming months, the urban faction has no real alternative but to accept them because they have now been outmaneuvered. 

The upshot for prospective EB-5 investors is that, if they want to qualify based on an investment of $500,000, then now is the time to proceed because it is becoming increasingly certain that the minimum required investment amount will increase in 2018. It is just not for certain in how many months from now the new higher investment amounts will go into effect. While we also do not know the exact amount, it is clear that the minimum required investment amount will nearly double or more than double.

Sincerely,

Anthony Olson
Attorney