We are happy to report that on Wednesday September 30, 2015, the United States Congress avoided a Federal Government shutdown by passing what is referred to as a Continuing Resolution. Attached to this Resolution was a provision that allows the current EB-5 law to continue until December 11, 2015.
This action by U.S. Congress raises two important questions for anyone contemplating filing an EB-5 for themselves and their family. First, does this guarantee that the law will remain the same until December 11, 2015? The answer is a firm no—although the resolution does give us some assurance that the EB-5 program will be with us until December, it does not guarantee that Congress will not take some further action on EB-5 sooner. Second, even if we don’t know precisely when Congress will act on EB-5, do we have a clear view of what Congress will eventually do with EB-5 in proposed legislation? Unfortunately, the answer is again no—it's impossible to predict exactly what actions Congress will take with any certainty.
The good news is that, even though we cannot predict exactly when the final result will be revealed and what it will be, we do have some good indications of what we can expect based on legislation that has already been made public. From an EB-5 investor’s standpoint, the most impactful change will be the probable increase in the investment amount. It seems likely that the investment amount will be increased from $500,000 to $800,000.
Initially, it was predicted that some Regional Center projects—those with an Exemplar Approval—would also be allowed to continue to offer qualifying EB-5 investments of $500,000, even after the investment amount officially increases. However, in all probability, Congress will put additional restrictions on which projects can continue to offer $500,000 investments, in part because so many Regional Centers have recently applied for Exemplar Approval in anticipation of the new law, frequently in skeletal form only. Specifically, we anticipate that Congress will require both Exemplar Approval and a track record of previously filed I-526 applications for projects to continue offering $500,000 investments. Of course, additional requirements are possible.
We also anticipate that Congress will make it more challenging for investors to satisfy the source and path of funds requirements. How much more challenging this will be for investors is uncertain. We hope that certain changes to these requirement that Congress is considering—changes we believe are unrealistic and overly burdensome—will be dropped once industry leaders are able to educate Congressional leadership.
Leaving aside all the technical details, what is the takeaway for the individual that sees EB-5 as an important opportunity for themselves and their family? It's this: it makes very good sense to apply now, before Congress changes the law. We know what EB-5 is today, but no one knows what it will look like tomorrow.