Starting on Nov. 21, the minimum investment required of foreign investors for an EB-5 green card will nearly double. The increase is one of the major changes in the long anticipated new rule to modernize the EB-5 immigrant investor program.
The EB-5 green card program offers two investment options: One requires investors to actively manage the company they fund. The other, called the Regional Center program, allows investors to assume a passive role by investing in a USCIS-approved business or project.
Most often, these regional centers consist of commercial real-estate projects. Investors and their families are eligible for an EB-5 green card by investing a minimum amount in a business or regional center that creates at least 10 full-time jobs. The Regional Center program will sunset on Sept. 30, unless Congress reauthorizes the program, which is expected.
U.S. Citizenship and Immigration Services (USCIS) published the new EB-5 modernization rule, which will go into effect on Nov. 21, this week in the Federal Register. Here are the major changes to the EB-5 program.
Minimum Investments for EB-5 Green Cards
Under the new rule, the minimum investment required for an EB-5 green card increases to $900,000 from $500,000 for projects or businesses in rural or high-unemployment areas. In non-disadvantaged areas, the minimum investment for projects or businesses will increase to $1.8 million from $1 million.
The EB-5 investment requirements have remained unchanged since Congress established the program in 1990. The new rule, which goes into effect on Nov. 21, marks the first significant revision to the program since 1993, when Congress created the regional center portion of the EB-5 investment program.
Under the initial the EB-5 modernization proposal, USCIS planned to raise the minimum investment required in rural or high-employment areas to $1.35 million. However, USCIS opted for the lower $900,000 amount based on public comments. The Department of Homeland Security, which oversees USCIS, will now adjust the minimum investment amounts every five years. They will probably increase again in the future.
It remains unclear how much of an impact the higher minimums will have on foreign investment through the EB-5 program. However, it’s clear that to invest at the $500,000 threshold, you must do so before the new rules take effect in November.
Priority Date Retention for EB-5 Green Cards
In addition to the higher investment thresholds, the new rule will allow EB-5 investors to retain their priority dates of previously approved petitions for any subsequent petitions. Currently, EB-5 investors cannot retain their priority dates. If the EB-5 investor must file a new EB-5 petition because USCIS terminates the investor’s initial regional center or the investor decides to reallocate funds to a more promising project, the investor’s priority date corresponds to the latest petition.
Retaining an earlier priority date is a major benefit, particularly for investors from China and more recently India. Investors from those countries face long EB-5 green-card backlogs. USCIS states that by allowing priority date retention, investors have greater flexibility. Investors can now move their funds out of potentially risky projects, which potentially reduces fraud and improves the potential for job creation.
Designating Needy Areas
The new rule also creates new procedures for designating high unemployment areas. This change aims to address concerns that foreign investment funds intended to create jobs and economic growth in disadvantaged areas were instead doing to businesses or projects in affluent neighborhoods.
Many high unemployment areas that qualify for the lower minimum investment were created by gerrymandering regions that include affluent areas. The new rule attempts to prevent this by:
- Giving DHS the authority to designate high unemployment areas instead of the states, which currently holds that authority.
- Only allowing cities and towns located outside of a major metro area with a population of 20,000 or more to qualify as high unemployment areas.
- Requiring investors to provide sufficient evidence to qualify for the reduced investment amount in economically disadvantaged areas.
USCIS estimates about half of the EB-5 investments that previously qualified for the lower investment level would not qualify under the new rule.
Each year, 9,940 EB-5 green cards are available to foreign investors. Of those, at least 3,000 of those are reserved for foreign nationals investing in rural or high unemployment areas.
The new rule also reduces the potential traveling burden on EB-5 investors. Currently, USCIS schedules interviews of EB-5 investors at the USCIS office near the investor’s commercial enterprise. Under the new rule, interviews can be scheduled near the investor’s enterprise, residence, or where the petition is being adjudicated.
In addition, the rule clarifies when family members must file their own Form I-829 (Petition by Entrepreneur to Remove Conditions on Permanent Resident Status). Except when an EB-5 investor dies, family members must now submit their own I-829 if they were not included in the investor’s petition. USCIS estimates family petitioners will spend $3,780 in filing and opportunity costs to file a separate Form I-829.
The Alcorn Immigration Law team urges you to act before Nov. 21 to apply for an EB-5 green card while the minimum investment amounts remain at their current levels. Reach out to us for a consultation on EB-5 or other visa or green card matters. Through our creativity and diligence, we have maintained a 95+ percent success rate even while denial rates continue to rise.