New EB-5 Changes
The new EB5 regulation is imminent, and it will be a game changer.
On Thursday June 27th OIRA, a division of Office of Management and Budget, OKed the final regulation for publication in Federal Register with the notation “Concluded Action: Consistent with Change”. What this means is that there are no more off ramps–this regulation will be published in the Federal Register as a Final Rule and will dramatically reshape the EB5 field.
When will it be published? We checked with two different people who were within the USCIS regulation making machinery at one time. They are no longer in USCIS any more, but they have considerable experience with the regulations within USCIS, and they both confirmed to us independently that we are looking at days not weeks–and this week being a short week with July 4th and July 5th both federal holidays, they expect the regulation to be published next week.
There is a misconception within the EB5 industry that Congress will step in to prevent the rule’s worst elements from hurting the industry. If you believe that we have a bridge in Brooklyn to sell you. Congress stepping in at this stage is not likely, since EB5 is not something that the Congress can take up in the current political climate. With even the basic work of the Congress (that of appropriations) completely in disarray at this time, there is no chance that anything can be done in Congress to remedy matters in EB5 by September 30th. We must be prepared that this new EB5 regulation will go into effect and that this new rule will be the state of the industry for many years until Congress can find time to legislate on EB5, probably not the current Congress, but a future Congress. There is also some speculation within the EB5 industry that one of the well-heeled Manhattan developers will sue to stop the regulation. However we do not think that is possible. While USCIS is not normally known to comply carefully with APA (Administrative Procedures Act), for this EB5 regulation USCIS appears to have followed the APA meticulously, and court challenges will be unavailing. The EB5 industry must prepare for the rule to go into effect.
This is NOT a drill, this is the real thing. Whether we like it or not, we are looking at a tumultuous July. We realize that people have family and vacation plans–but there will be plenty of time for these afterwards, since for several months following the end of grace period, the EB5 market will be dead as it adjusts to the higher investment amounts, and there will be plenty of time to catch up on vacations and family. Right now the sun is shining and its time to make hay.
EB-5 Immigrant Investor Program
The EB-5 Program was created to stimulate the U.S. economy through job creation and capital investment by foreign investors. The program is designed for individuals who invest in the US economy by creating jobs for a minimum number of employees, in order to receive a green card.
Under this program, entrepreneurs (and their spouses and unmarried children under 21) are eligible to apply for a Green Card (permanent residence) if they:
- Make the necessary investment in a commercial enterprise in the United States; and
- Plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers.
This program is known as EB-5 for the name of the employment-based fifth preference visa that participants receive.