Since Congress established the EB-5 visa program nearly 30 years ago, there hasn’t been much in the way of EB-5 visa changes. That will no longer hold true, as the United States Citizenship and Immigration Services (USCIS), which oversees the program, announced substantial changes effective November 21, 2019. These changes are so vast that many considering the EB-5 visa as the best way to obtain a Green Card for themselves, their spouse and unmarried children under age 21 may find this program is no longer an option due to financial and other concerns.
EB-5 Visa Changes
While there are several critical changes coming to the EB-5 visa program, the substantial rise in the investment amount potentially affects the greatest number of applicants. Currently, the minimum investment necessary for a Targeted Employment Area (TEA) commercial enterprise is $500,000, but the new minimum requirement nearly doubles the amount, to $900,000.
EB-5 visa applications filed prior to November 21, 2019, still qualify under the $500,000 minimum investment amount, but time is truly of the essence for investors wishing to avoid paying an additional $400,000. Under the new rules, the minimum investment amount adjusts for inflation automatically every five years. While the higher minimum comes as a shock to many investors, it might have been worse, as the Department of Homeland Security (DHS), which is in charge of the USCIS originally, wanted to raise the minimum investment amount for a TEA project to $1.35 million.
For those who prefer operating their own business via the EB-5 program rather than investing in a Regional Center, capital requirements are also rising significantly. Since the program’s inception, the minimum capital requirement for this type of investment was $1 million. The new minimum starting November 21, 2019, is $1.8 million.
TEA Designation Changes
TEA designation is another crucial component of EB-5 visa changes. TEA Regional Center projects are supposed to be located in rural, high unemployment areas. Job creation was always a primary component of the EB-5 visa program, and the investment must still create at least 10 full-time permanent jobs in order for the EB-5 investor to obtain permanent resident status.
However, in the past, some high unemployment areas were gerrymandered, meaning the boundaries were manipulated to obtain the desired result. According to the USCIS, such gerrymandering was usually accomplished by “combining a series of census tracts to link a prosperous project location to a distressed community to obtain the qualifying average unemployment rate.” States were also in charge of designating areas as high unemployment, and that task is now under the jurisdiction of the DHS. As of November 21, 2019, the DHS makes such designations based on the new requirements limiting how census tract-based TEAs are determined.
Formerly, cities or towns with a population of 20,000 or more might qualify as a TEA. Now, only those municipalities with a population of 20,000 or more outside of a Metropolitan Statistical Area (MSA) may qualify as a TEA. An MSA must have at least one urban area with a population of at least 50,000, so they consist of urban cores with surrounding communities linked by economic and social factors. The new rule makes the designation of an urban area as a TEA much harder, and these neighborhoods were generally the most sought-after for Regional Center investments. The new methodology should make TEA designations fairer and more consistent. It may also serve to take the focus off the development of Regional Centers in urban areas, such as New York City and Los Angeles, and encourage investment in less populated sections of the country. That could mean a change in the type and scale of projects offered by Regional Centers.
Priority Date Retention
One benefit for EB-5 investors under the new regulations is priority date retention. Previously, if an EB-5 investor had to change the qualifying investment for reasons over which they had no control, they lost their place in line in the application process and had to file a new EB-5 visa application. The updated regulations allow investors to retain their priority date if they must file a new EB-5 visa application under these circumstances.
Conditional Removal on Permanent Resident Clarification
Another rule clarifies that certain “derivative family members” – those receiving permanent residence status via a principal applicant – who are lawful permanent residents must file independently for removal of conditions on their permanent residence. While derivative family members for EB-5 visa purposes are the spouse and minor, unmarried children under age 21, the requirement does not apply to family members included in the principal investor’s petition to remove conditions. This new rule provides additional flexibility for the interview location and adopts the USCIS Green Card issuing process.
If you want to qualify for the EB-5 visa under the current regulations, you must get started immediately. Applications submitted after November 20, 2019, are subject to higher investment minimum. For the best and faster results, seek out an immigration attorney specializing in helping clients obtain EB-5 visas, along with real estate companies working with Regional Centers.