Bipartisan Legislation Seeks to Make the EB-5 Program Permanent

Maria del Carmen Ramos
Maria del Carmen Ramos

Bipartisan legislation? Does such a thing exist anymore? Well, on January 28, 2015, Congressmen Jared Polis (D-CO) and Mark Amodei (R-NV) introduced The American Entrepreneurship & Investment Act of 2015 in an effort to permanently authorize the EB-5 Immigrant Investor visa program, which is now set to expire on September 30, 2015. The American Entrepreneurship & Investment Act of 2015 (2015 Legislation) also seeks to improve and address concerns raised by various entrepreneur groups and stakeholders. Among other things, the 2015 Legislation seeks to fine tune the definition of Targeted Employment Area (TEA); codify TEA designation authority; offer options to expedite processing; increase efficiency in project pre-approvals; deter fraud and abuse in the area of securities compliance; and address the issue of family beneficiaries counting against annual quota.

By way of background, Congress passed the Immigrant Investor Program (known as the EB-5 visa) as part of the Immigration Act of 1990 to attract foreign investment and stimulate the economy. Under the Immigrant Investor Program, the United States Citizenship and Immigration Service (USCIS) allocates 10,000 visas annually for foreign investors who make significant investment in a new, reorganized, or restructured business that will create jobs for qualified workers.

To qualify for an EB-5 visa under the Immigrant Investor Program, a foreign investor must contribute $1 million to a new commercial enterprise (one created after November 29, 1990) or one that has been expanded (which is defined as a business that will expand to 140% of its pre-investment or net worth) that will create at least 10 jobs. If the commercial enterprise is in a targeted employment area (defined as a rural area or an area where the unemployment rate is 150% of the national average), then required initial investment is only $500,000. If the EB-5 visa petition is approved, the foreign investor is granted conditional permanent residence for two years. After two years, the foreign investor can seek to have the conditions removed—and, therefore, become a legal permanent resident—if the investor has made the required capital investment and that investment has created or preserved at least ten jobs for qualified workers in the United States.

Two years later, Congress created the EB-5 Regional Center Program (also known as the Investor Pilot Program). The requirements for the Investor Pilot Program are the same as under the original Immigrant Investor Program, except that the investment under the Investor Pilot Program can be with a “regional center.” A “regional center” is a business entity that coordinates foreign investment under the Immigrant Investor Program within a specified geographic area.

Despite the similarities between the Investor Program and Pilot Program, the Pilot Program offers three distinct advantages over the Investor Program. First, the required investment is significantly less under the Pilot Program. A foreign investor need only put $500,000 at risk in a regional center in a targeted employment area to qualify for an EB-5 visa. Under the Investor Program, the foreign investor must put $1 million at risk. Second, the ten jobs that must be created before the investor can become a legal permanent resident under the Pilot Program can be “direct” or “indirect” jobs—a lower standard than under the Investor Program. The Investor Program only counts “direct” jobs. Third, investors are permitted to make a passive investment and are not required to show that they are actively involved in the management of the enterprise. For these reasons, most foreign investors prefer investing in a regional center under the Pilot Program.

Over the last nine years, the EB-5 Program is credited with having created almost 100,000 American jobs and raised over $4.7 billion in investment capital.

For more information, please contact Maria del Carmen Ramos at 813.227.2252 or mramos@slk-law.com.

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