EB-5 stakeholders have been waiting with baited breath for what lies ahead for the EB-5 Regional Center Visa Program after it was set to terminate on December 11, 2015. After actively discussing the EB5 visa program for the last six months, Congress, surprisingly, passed an Omnibus bill on December 15, 2015 to extend the program to September 30, 2016 without making any significant changes to the program.
This decision by Congress surprised EB-5 specialists because of the discussion surrounding a number of proposed changes to the program. These proposed changes included: increasing investment amounts and stricter determination of the Targeted Employment Area (“TEA”). The reason for not making any significant changes is because Congress could not come to a single agreement and, hence, decided to spare more time for evaluation.
There are positive and negative sides to adhering to the same program without making any significant changes. Investors and project developers, in particular, benefit from a consistent program. Investors are glad that they can continue to invest either $500K or $1M, contrary to the proposed increase to $800K or $1.2M. Project developers are glad that they can still implement their business activities based on old conditions, and continue to attract more foreign nationals to the Regional Center Projects.
On the negative side, the number of EB-5 applicants will increase significantly within the next 10 months as many investors will want to enroll in the EB5 program before any major changes are made after September 2016. This will most likely lead to the use of all 10,000 visas available for EB5 purposes and, as a result, some investors may not be able to enroll in the program. Additionally, with all these EB-5 petitions coming in before September 2016, USCIS will face a greater backlog and experience delays with processing times.
The fact that Congress asked for additional 10 months to work on the EB-5 program leads one to believe that the program will be heavily reevaluated in the second half of 2016. Below is a non-exhaustive list of changes that will likely be taken into future consideration:
- change of the minimum investment amount of $500K/$1M to $800K/$1.2M;
- stricter identification of TEA in order to restrict gerrymandering and combination of the census tracks;
- new guidelines regarding the creation of the direct and indirect jobs;
- introduction of the annual fee and improvement of the regulatory guidelines on the establishment of the regional centers; and
- adoption of regulations which will protect investors from fraud
At this point we can only wait to see how the situation will develop in the upcoming months.