By: Bernard Wolfsdorf, Esq. and Joseph Barnett, Esq.
The U.S. Department of Homeland Security (“DHS”) has released a Notice of Proposed Rulemaking that will dramatically change the EB-5 Immigrant Investor Program. DHS has given stakeholders only three months until April 11, 2017 to comment on the proposals. We will provide a more in-depth analysis soon but here are five important observations regarding the proposal:
1. Huge Increases in Minimum Investment Amount. DHS proposes to increase the standard minimum investment amount from $1 million to $1.8 million. This is an 80% increase. For those investors seeking to invest in a targeted employment area (TEA), DHS proposes to increase the minimum investment amount from $500,000 to $1.35 million, a 170% increase! In addition, DHS is proposing to make regular consumer price index-based adjustments every 5 years, beginning 5 years from the effective date of the regulations.
2. TEA Designations. There could be major changes to TEA designations. DHS proposes to allow any city or town with a population of 20,000 and an average unemployment rate of at least 150 percent of the national average rate, to qualify as a TEA. DHS also proposes to eliminate the ability of a state to designate certain geographic and political subdivisions as high-unemployment areas; instead, DHS would make such designations directly, on standards that are yet to be determined.
3. Priority Date Retention. In a positive move, DHS proposes to authorize certain EB-5 petitioners to retain their priority date, or place in the waiting line if they have an approved EB-5 immigrant petition so it can be used in a subsequent EB-5 immigrant petition. This will only occur when the new petitions must be filed due to circumstances beyond the investor’s control such as termination of Regional Center or if there is a material change in the business plan. This is very important for investors from Mainland China who are subject to a waiting line.
4. Removal of Conditions. DHS is proposing that derivative family members that were not included in a Form I-829 petition to remove conditions filed by the principal investor must file their own Form I-829. DHS is also proposing greater flexibility to require interviews for Form I-829 approval in a location where the investor is residing.
5. Management of NCE. DHS is proposing to eliminate references to “management” and the term “as opposed to maintaining a purely passive role in regard to the investment” in the regulation at 8 C.F.R. § 204.6(j)(5). Presently, it is required than an EB-5 investor be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, as opposed to maintaining a purely passive role in regard to the investment. This point will be further clarified in the comments to follow.
These much-anticipated regulations will dramatically change the EB-5 Immigrant Investor Program. A huge increase in the minimum investment amount, without providing a solution for Mainland Chinese investors who make up over 80% of the program and who are waiting in a visa quota backlog, is flawed.