On November 5, 2019 the Republican Senate leadership introduced an excellent new EB-5 modernization bill (S. 2778 Immigrant Investor Program Relief Act) that provides comprehensive solutions to many of the problematic issues this job creation program, including much needed integrity measures. In addition to extending the Regional Center program through September 30, 2025, the bill addresses the critical “age-out” problem for derivative beneficiary children who turn 21 years old while stuck in lengthy visa wait lines.
Here are five things to know about the new proposed EB-5 legislation:
1. Will It Pass? Legislation to reform the EB-5 Program has been introduced many times in the past, with no outcome, but this one feels different, and many think it will pass, if not before the November 21, 2019 sunset date, then very soon. Most key EB-5 stakeholders are united in their support of the bill, in part because of the disastrous regulations that go into effect on November 21, 2019. Most importantly, this bill was introduced by powerful Republican senators – Senate Judiciary Committee Chair Sen. Lindsey Graham (R.-S.C.); ranking Sen. John Cornyn (R.-T.X.); and Sen. Mike Rounds (R.-S.D.), the former governor of South Dakota. Added in are the bill’s integrity measures protecting investor’s interests that should garner support from Sen. Chuck Grassley (R.-I.A.) and Sen. Dianne Feinstein (D.-C.A.). There is good reason to be optimistic. Our prediction – there isn’t enough time for this to pass before the Continuing Resolution on the Regional Center program expires on November 21, 2019, and we will likely see another short-term extension to December 2019, and we expect to see a vote on S. 2778 during that time.
2. Age-Out Protection. The bill wisely includes some protection for children who would otherwise “age-out” because of long visa backlogs, and it appears to adopt the idea discussed in our White Paper – Solutions to the Chinese EB-5 Backlog. The bill states that the child of an EB-5 investor on the date the Form I-526 is filed, shall continue until the removal of the conditional basis on the child’s lawful permanent resident status. This provision effectively freezes the child’s age for EB-5 purposes as of the date of filing the Form I-526 EB-5 petition.
3. Advance Parole and Work Authorization (The “Red Combo Card” Solution). The bill allows petitioners and derivative beneficiaries with an approved Form I-526 in the visa backlog for at least three years, to apply for advance parole travel permission and simultaneous employment authorization. Together with the age-out protection mentioned above, this relief is a huge win for the many pending applicants and for the EB-5 industry as a whole. It will likely re-open the door to EB-5 investment from China, Vietnam and India, countries that are all backlogged for many years. By obtaining a Red Combo Card, investors, spouses, and their children may obtain an unlimited ability to travel to the United States and an unrestricted ability to work or study in the United States. Moreover, there may even be tax benefits to investor families who are in the U.S. on advanced parole as opposed to green cards. This is because green card holders are automatically subject to worldwide taxation.
4. Visa Set Asides. The legislation “sets aside” thirty percent (30%) of all EB-5 visas for immigrant investors who invest in commercial enterprises in a (newly defined) “targeted employment areas” or a rural area. Any unused visas would roll-over at the end of each fiscal year to a general pool for access by all immigrant investors in the immediately following year.
5. Other Key Changes. The legislation offers changes to the EB-5 Program, as follows:
- Minimum investment amount for Targeted Employment Areas (TEAs) – $1,000,000
- Minimum investment amount for non-TEA – $1,100,000
- Investment levels indexed to CPI-U for increases every 3 years, starting October 1, 2022
- “Targeted employment area” means a “rural area,” or a single census-tract which meets designation by U.S. Treasury Department as a “Qualified Opportunity Zone,” or an area within a closed military installation.
- Premium processing for adjudication within 120 days, for a fee of $50,000, which is waived if commercial enterprise is located in TEA
- Opportunity for concurrent Form I-526 and Form I-485 filings
This is an excellent bill that we hope all in the industry will support as it helps sustain a program that provides billions of dollars of new capital and creates thousands of jobs annually, at no cost to the U.S. taxpayer.