This week, Congress extended the EB-5 investor visa program in its current form through September 30, 2017, as part of the new government budget deal. After about two years of re-enacting the program as-is, sources say there are now genuine efforts afoot to reform it sooner than later. Minimum investment amounts, stricter oversight and reclassification of targeted employment areas (TEAs) are on the debate agenda. Longstanding visa-processing inefficiencies within the EB-5 program also need attention.
As the reform is being discussed, the industry is also looking at the capability of the EB-5 program to fund infrastructure development.
There is a “genuine desire to get reform done,” says Michael Halloran, CEO of NES Financial, a Silicon Valley-based fintech company that has transacted in the EB-5 space since 2010. “Most likely, there will be an increase to the minimum [investment amount].”
Should legislators not agree on changes to the program, it’s possible that U.S. Citizen & Immigration Services (USCIS) itself will raise minimum investment limits to $1.35 million and $1.8 million for TEAs and non-TEAs, respectively. The agency recently issued a proposed rule change and request for comment. “This would freeze up money,” Halloran says.
“I think we will [see] amount of investment go up. The proposal for $800,000 dollars is being circulated. The risk of regulation by USCIS to increase minimums to $1.35 million and $1.8 million will become a catalyst to promote Congress to move on actual legislation. Going above $1 million makes this type of program less competitive globally,” says Roy Carrasquillo, a partner with the EB-5 immigration investor program team at law firm Cozen O’Connor.
A USCIS regulation would pose challenges to the program, since it would significantly increase required investment amounts, notes Lynn Cadwalader, partner at global law firm DLA Piper. “To take $500,000 out of China takes two to three months because of controls on taking money out of the country. As you raise limits, that would take longer.”
There’s currently a seven-year wait for EB-5 visas in the U.S., according to Cadwalader. Because of the backlog, “other countries with EB-5 type programs are looking a lot more attractive because most other countries [offer] pay-to-play. There’s no need to create jobs.”