Regional Center Program Expired – Only Direct EB-5 Investment Now

The EB-5 Regional Center program lapsed on June 30, 2021 because U.S. Congress did not approve an extension of the program before that date and is on recess until July 9. It is unknown how long this will last but the next best chance for it to be reinstated is either September or October when the Continuing Budget Resolutions is expected to be passed by U.S. Congress and signed by the U.S. President.

What does this mean for EB-5?

• The EB-5 Visa program is NOT dead
• Interested investors can still obtain an EB-5 Visa through a direct EB-5 investment
• September 30th, 2021 is the next big deadline to reinstate the EB-5 Regional Center Pilot Program
• There are currently two Regional Center reauthorization bills circulating in the U.S. Senate, both contemplating a higher investment amount
  • This could happen within the next 2-3 months
• If you are interested in the EB-5 Visa, right now is likely your last opportunity to invest at the current minimum investment amount, $500,000

EB-5 is Not Dead

The first thing to understand is that EB-5 is not dead. When it was started in 1990, the direct EB-5 program enabled an international investor to invest directly into a business that in turn was responsible for creating 10 new jobs. It is a permanent program just like other U.S. immigration laws.

A few years later, the EB-5 Regional Center pilot program was started. This was a test program that initiated the regional center concept where a business receives credit for indirect jobs, such as contractors. Since the regional center pilot program was created, U.S. Congress has had to renew the program again and again. Starting in 2015, the Regional Center EB-5 program was renewed along with the government spending bill meaning it was being attached in writing with the government spending bill every year or every six to nine months.

Direct EB-5 investment has remained permanent, and it does not rely upon if the EB-5 Regional Center program is attached to the government spending bill or not.

Grassley-Leahy Bill S.831

U.S. Senate did vote on a stand-alone EB-5 bill (S.831 sponsored by Senators Grassley and Leahy) to extend the EB-5 program before the June 25, 2021, recess and it did not pass.

The version of S.831 that was voted-on by the Senate proposed a 2.5-year extension of the EB-5 regional center program. It was not supported by the Majority Leader of the U.S. Senate, Senator Schumer. Therefore, it was proposed through a measure that required unanimous approval of all 100 senators for it to pass. It failed, with Senator Graham issuing the first vote against S.831, which doomed its fate.

“The concept of this reauthorization bill is to help with transparency and basically making it a more legitimate program in the eyes of the U.S. government in terms of reducing fraud and removing the bad actors from the program,” says Houston-based immigration attorney Christian Triantaphyllis, a partner with Jackson Walker, LLP. “This current legislation is supposed to reduce that fraud dramatically with all of the reporting that is involved with it increasing the SEC’s involvement with the USCIS and EB-5 programs.”

Therefore, there is no clear path forward for Bill S.831 as presently written. Senator Chuck Grassley (R-Iowa) and Senator Patrick Leahy (D-Vt.) will likely continue to insist on something similar to S.831 in the future.

“Under the Senate leadership of Senator Chuck Schumer (D-N.Y.), it is likely that they will be told clearly to ‘make a deal’ with senators who do not agree with their vision if they want to succeed in their reforms,” states Ignacio Donoso, managing partner of the law firm, Donoso & Partners, LLC, in Bethesda, Md. “I suspect, in fact, that they were already told to ‘make a deal’ back in January 2021, (when Senator Schumer took over the Senate Majority) and refused to make significant concessions to opposing views.”

Senator Schumer has previously proposed his own bill, that came with less oversight, looser Targeted Employment Areas, and a higher investment amount. EB-5 has support on Capitol Hill. Senators Schumer, Cornyn, Graham, Leahy, and Grassley are all on record as supporting the EB-5 program. The issue is that they have not agreed on how best to reform the program. Thus, the likelihood of the EB-5 program going away or not being renewed is low.

September 30

September 30 is an important date because that is the date for the government spending bill to be discussed by Congress. It will have EB-5 Regional Center language attached to it and September 30 is the next big deadline in terms of getting the program authorized.

What Now? Direct EB-5 Investment

Direct EB-5 investments are more suitable for investors that desire to have greater control over their investments and operate independently. For direct EB-5, you as an investor, are investing into the entity and taking equity into the entity that develops and runs the project and has employees. And those employees must be on payroll of that entity work at least 35 hours per week and are classified as W-2 employees and not as contract workers.

“If you want to invest, the only EB-5 investment you can make is through a direct EB-5 project,” says Roberto Contreras IV, managing director of Houston EB5. “This means that the company you’re investing in is directly creating those jobs. And those jobs directly work for the company, such as Moderno Porcelain Works.”

Act Fast

If you are interested in the EB-5 Visa, right now is likely the last opportunity to invest at the minimum investment level.

Mr. Triantaphyllis has advised his clients to move forward within the next few months. “If you can afford either the 900k or the 500k then I would look at the direct EB-5 program and move forward with that process sometime this summer because it has more solid footing. We know that it is going to be there. And as long you are working with a U.S. business that has the ability to use $500k or $900k in investments that’s a strong path towards getting your green card.”

Direct EB-5 is the best investment option because:

1. It is impervious to fluctuations in governmental policy
2. It is more transparent. You are directly investing in the business and there’s no middleman involved.
3. Now is the best time to invest, because this the last chance to invest at $500,000 before September 30, when the legislative proposal to return the investment amount increases to $900,000.

Houston EB5 is proactive and is well positioned to handle the lapse of the EB-5 Regional Center Program. Investors can use Houston EB5 for direct investing through Moderno Porcelain Works as it creates W-2 employees, not contract workers. We will continue to monitor the situation and conservatively advise clients based on the most recent developments in the program.