In 2022, the RIA, the Reform and Integrity Act, introduced regulatory changes to the EB 5 Program designed to improve transparency and protect investors. They also protect developers and administrators. A key brought by the bill is the reauthorization of the EB 5 Regional Center Program, which lapsed for the entirety of 2021. Prospective investors pursuing an EB 5 visa can benefit from anticipating the effects of the updates to the Regional Center Program and the changes introduced by the RIA.
Reauthorization of the Regional Center Program may bring an increase in demand for EB 5 visa opportunities. High-demand countries, such as China, may find that backlogs begin to accumulate. Program administrators should prepare for this possibility. To mitigate the build-up, Forms I-526/I-526E (the first immigrant petition) and I-485 can now be filed concurrently. This filing change could speed up processing, and reduce wait times for investors residing in the U.S. already.
A portion of visas granted by the EB 5 program will be reserved for “Target Employment Areas” or TEAs. These are areas the USCIS has determined would be of the most benefit for economic development. EB 5 investors are encouraged to take on TEAS as a project so that immigration efforts also boost local economies. TEAs under the updated program offer investors priority processing, and a lower investment threshold, which may help ease backlog pressure.
TEA Reserved EB 5 Visas
The EB 5 program is authorized to release approximately 10,000 visas per fiscal year. Of these, 30% are reserved for projects conducted in Target Employment Areas, which are divided into two categories. 20% go to the first category, rural TEAS. Qualifying areas must be beyond the borders of a municipality with a population of 20,000 or more or located outside any metropolitan statistical area (MSA).
The other 10% go to the second category, high-unemployment TEAs. To qualify as a high-unemployment TEA, an area must have an unemployment rate that is at least 150% greater than the U.S. national average. The authority to designate high-unemployment TEAs now rests with the Department of Homeland Security instead of state or local governments.
Minimum Investment Threshold Updates
The visas reserved for TEA investments make them appealing choices for applicants. TEAs enjoy another benefit, which is reduced minimum investment thresholds. Qualifying for any EB 5 visa requires making a minimum job-creating investment, with TEAs offering a lower minimum investment. Both TEA and non-TEA investment minimums have been updated under the RIA.
Non-TEA investments previously required a $1,000,000 investment, but now require an investment of $1,050,000. The reduced TEA threshold was $500,000 but has now been updated to a minimum of $800,000. To manage these amounts, they will be adjusted for inflation beginning in 2027, and every five years thereafter.
The Regional Center Program
The Regional Center Program has undergone relatively little change under the updates outlined by the RIA. Previous regional centers were required to submit new applications to renew their status, with a possible deadline at the end of 2022. If a center you have worked with previously is unavailable, it is likely that it missed this deadline.
With the reauthorization, a new center is likely within reach. New and old regional centers will need to demonstrate compliance with the updates at regular intervals. Provisions have been made by RIA to protect applications suspended during the year that the Regional Center Program lapsed.
Regardless of whether the center you applied with pursues reauthorization, your application will be processed. It also cannot be denied due to the previous program expiring. The provision allows general “grandfathering” of petitions so that if the current program expires, existing applications will likewise be protected and processed.
Adapting to EB 5 Program Updates
The changes to the EB 5 program have been made with longevity in mind. The updates protect the future of regional centers, protect petitions against program expiry, and institute audits that provide transparency for all parties. If you anticipate applying to the EB 5 program, anticipate the minimum investment changes, and consider whether you wish to invest in a TEA or non-TEA project. Expect to see regular audits; the oversight absent from the pre-RIA program is a thing of the past.
New and reauthorized regional centers will be better equipped under RIA to facilitate your EB 5 visa petitions thanks to 3rd party fund administration. Annual fees paid into program funds from both regional centers and investors also helps increase the sense of ownership and buy-in by all involved.
Allow Houston EB5, a Regional Center owned by immigrants and operated for immigrants, to help you begin your journey toward citizenship. Contact us to learn more about the EB 5 Immigrant Investor Program and how to get started. With our help, your permanent residency may be just 24 months away. We’re up-to-date on all the developments with the EB 5 program and can answer any questions you have.
Our goal is not to profit off EB-5 fundraising as a regional center, but rather aim to profit as a developer of real estate. However, in order for us to do that, we must fully pay dividends owed to EB-5 investors before we can receive a dime of profits. Further, we can only exit the project after the EB-5 investments have safely returned to our investors. This is why we’ve had a 100% success rate in repayment of EB-5 funds, an accomplishment that only the gold-standard of regional centers can say.