For the past few months one of the hot topics of the EB-5 industry has been the EB-5 Reform and Integrity Act proposed by Senators Chuck Grassley and Patrick Leahy. The bill was first introduced in 2019, and was to be included in last year’s year-end federal spending bill, but it’s language was finalized too late to be included. With the EB-5 program set to expire this June, industry leaders have rallied around the Grassley/Leahy bill as an attractive option to guarantee the future of the EB-5 program.
However, regardless of the looming June deadline, passing the EB-5 Reform and Integrity Act would absolutely be in the best interests, not just of Regional Centers, but of current EB-5 investors and potential EB-5 investors throughout the world. Reforms implemented by the bill would protect investors from bad faith actors, make regional centers more transparent and accountable to their investors, and make it easy for EB-5 investors to feel confident and secure in their investment.
REAUTHORIZE THE EB-5 PROGRAM
First and foremost, the EB-5 Reform and Integrity Act would address the looming expiration date for the EB-5 program. As it currently stands the program will expire on June 30 this year unless congress chooses to act. The EB-5 Reform and Integrity Act would immediately resolve this issue by reauthorizing the EB-5 program for the next five years.
INCREASED ACCOUNTABILITY TO INVESTORS.
Despite the benefits that come with investing through a regional center, some potential EB-5 investors may be concerned about investing in a project they don’t directly supervise. The EB-5 Reform and Integrity Act includes provisions that could help ease future investors’ worries. The Bill would require Regional Centers to perform due diligence investigations and produce annual statements certifying that the center is compliant with all regulations. Additionally these annual statements are required to include:
- “[A] description of any pending litigation or bankruptcy proceedings, or litigation or bankruptcy proceedings resolved during the previous fiscal year, involving the regional center, the new commercial enterprise, or any affiliated job-creating entity”
- “An accounting of foreign capital invested in the regional center, new commercial enterprise, or job-creating entity”
- For each new commercial enterprise associated with the regional center, statements must include; an accounting of the aggregate capital invested by EB-5 investors; a description of how said capital is being used on each capital investment project; “evidence that 100 percent of the capital [committed by EB-5 investors] has been committed to each capital investment project”; “detailed evidence of the progress made toward the completion of each capital investment project”; and an accounting of the “aggregate direct jobs created or preserved”.
These annual statements are to be submitted to the director of USCIS and must be made available to investors who request them after no more than 30 days. Regional centers who fail to comply with these requirements will result in punitive action, and the penalty could be as severe as terminating the violating center.
PROTECTIONS FOR INVESTORS
While the vast majority of regional centers across the country act in good faith and have their investors best interest in mind, fraud is still a possibility. Although its provisions regulating regional centers should curb potential fraud, the EB-5 Reform and Integrity Act also includes provisions to preserve immigration benefits for victims. Under the legislation, the I-526 petitions and conditional green card status of investors who were invested in a regional center, new commercial enterprise, or job-creating entity that was terminated or debarred will remain valid. In the event this occurred, investors would be notified by the Department of Homeland Security (DHS), they would then have 180 days to file an amendment or notice with DHS to confirm or establish continued eligibility. Investors would retain their priority dates, and their children would be protected from age-out.
ADDITIONAL TIME TO MEET JOB CREATION REQUIREMENTS.
As it currently stands, EB-5 investors who receive a conditional green card have two years to demonstrate creation of jobs before they can file an I-829 application for permanent residence. The EB-5 Reform and Integrity Act would amend these requirements and give investors additional time to meet them. Under the bill, investors who had not created all the required jobs when they filed their I-829 application will have an additional year to create the remaining required jobs.
Another issue that has plagued the EB-5 program, as well as US immigration as a whole, is the lengthy wait time applicants face. The EB-5 Reform and Integrity Act would also seek to address this issue. Were it passed, the bill would require the Director of USCIS to conduct a study of the fees charged in the administration of the EB-5 program, within a year. Based on the results of this study USCIS would then be required to set fees at a level to process petitions according to a schedule outlined in the bill.
- 90 days for regional center designations and exemplar applications in targeted employment areas (TEAs)
- 120 days for investor petitions in TEAs
- 180 days for regional center designations and exemplar applications
- 240 days for investor petitions
SO WHAT DOES THIS MEAN FOR THE FUTURE OF EB-5?
While it’s true that there is still work to be done to ensure the EB-5 program is renewed the EB-5 Reform and Integrity Act has the potential to do much more than simply approving the program for another five years. The reforms the bill would implement have the potential to take the EB-5 program to greater heights than it’s ever reached. The EB-5 program has been a demonstrably successful engine of economic development, bringing in billions of dollars to the US economy, the majority of which has gone through regional centers. However, that growth would be impossible without the investors who choose the EB-5 program. The EB-5 Reform and Integrity Act ensures that investors can feel confident entrusting their money to a regional center and will make the EB-5 program more appealing to investors everywhere.
The full text of the EB-5 Reform and Integrity Act can be found here.
A section by section summary of the bill published by IIUSA can be found here.
Investors looking for a trusted regional center can reach out to us, EB-5 Florida Real Estate Regional Center here.