Senators Charles Grassley and Patrick Leahy have introduced a bi-partisan Bill that extends the length of time that the EB-5 investor program is effective and adds some considerable changes. It is not yet clear when the Bill will be signed into law by the President. Although we expect many changes to the Bill before it is signed into law, here is a summary of the amendments pertaining to investors:
Under the original program, for the purpose of helping each investor meet the job creation requirements, Regional Centers were allowed to count indirect jobs created. Indirect jobs are those that are not directly created by the enterprise but are ancillary to the project. These could include jobs created by vendors, suppliers, and other businesses that are created as a result of the main project/enterprise. As per the new rules, Regional Centers will only be able to count 90% of indirect jobs to meet USCIS’s job requirement.
Jobs from Non-EB-5 Investment
In cases where non-EB-5 funds are pooled with EB-5 funds, a maximum of 30% of the total jobs that are created can be created as a result of non-EB-5 investment, even if the non-EB-5 investment represents more than 30% of the project’s funding. Under the old rules, investors could get credit for all jobs created by the non-EB-5 funds regardless of the percentage of the non-EB-5 investment.
Jobs in a TEA (Targeted Employment Area)
For TEAs in a Metropolitan Statistical Area or Combined Statistical Area, at least 50% of a project’s job creation must be within that Metropolitan Statistical Area or Combined Statistical Area to be counted. If the TEA is outside of a Metropolitan Statistical Area or Combined Statistical Area, then at least 50% of the jobs must be created within the county in which the TEA is located. If not, the total number of jobs will be reduced until the 50% threshold is met.
Source of Funds
Previously, USCIS only required proof of the lawful source of funds for the $500,000 capital investment. In theory, the investor did not have to prove the legality of the source of funds used to pay administrative costs and fees. However, most USCIS officers did in fact require it and it was our office’s practice to show the lawful source of the entire amount wired to the U.S. It has now been clarified that the investor needs to prove the legal source of his entire investment amount. This will come out to approximately $550,000. Administrative fees for regional centers vary between $35,000 and $70,000.
To prove source of funds, tax returns or other tax records for the last 7 years will now need to be provided.
Investment funds can now only be gifted by a spouse, parent, child, sibling, or grandparent. Under the old rules anyone could gift the money to the investor.
Loans for the capital investment can now only be obtained from reputable banking or lending institutions. Whether these institutions are reputable will be determined by looking at relevant commercial or government databases such as those of the Department of Treasury’s Office of Foreign Assets Control, Office of Terrorist Financing and Financial Crimes, and Financial Crimes Enforcement Network. It seems that loans from investors’ companies and other private individuals will no longer be allowed.
The minimum investment amounts will be increased from $1,000,000 to $1,200,000 for regular investments and from $500,000 to $800,000 for investments in Targeted Employment Areas (TEAs). The minimum investment amount can be amended by regulation, and will automatically adjust in proportion to the Consumer Price Index every five years.
In cases where an investor is already legally in the U.S. and approval of an I-526 petition would make a visa immediately available to him or her, then such an investor can file an I-485 Adjustment of Status application together with the I-526 petition. In other words, the investor will not need to wait until after the I-526 is approved in order to file an I-485.
Average processing times for I-526 Immigrant Petition by Alien Entrepreneur will be limited to 150 days and for I-829 Petition by Entrepreneur to Remove Conditions will be limited to 180 days. This will be a huge improvement from current processing times.
The amendments made to the EB-5 program will take effect on the date the new bill is enacted. It is not clear when this will happen, but it is safe to assume that it will be prior to September 30, 2015, the date that the old program sunsets. If you have questions about upcoming changes to EB-5, don’t hesitate contact us to ask. The Law Offices of Vaughan de Kirby wants to help you make the most informed decisions possible.