An Executive Summary and Overview of the EB-5 Program

by Jeffer Mangels Butler & Mitchell LLP
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U.S. Citizenship and Immigration Services (USCIS) administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, Congress has allocated 10,000 EB-5 visas for investors designated by USCIS based on proposals for promoting economic growth. Of the 10,000 visas available annually for immigrant investors, 3,000 are reserved for investments in Targeted Employment Areas and another 3,000 are set aside for investment through the Regional Center Program.

Up until very recently, the EB-5 Program has been both controversial and underutilized. However, as a result of some positive developments by the USCIS, the Program has been revised to make EB-5 investments more readily available and easier to obtain. In addition, due to the difficult financing market that developers have faced, the number of petitions has increased from 332 in 2005 to 4,156 in 2012, and the approval rates for the Program have risen from 53 percent to 79 percent.

What is the investment requirement?

Required minimum investments are:

  • General. The minimum qualifying investment in the United States is $1 million.
  • Targeted Employment Area. The minimum qualifying investment in the United States is $500,000.

If the foreign national investor’s petition is approved, the investor and their dependents (spouse and unmarried children under the age of 21) will be granted conditional permanent residence valid for two years. Within the 90-day period before the conditional permanent residence expires, the investor must submit evidence documenting that the full required investment has been made and that 10 jobs have been maintained, or 10 jobs have been created or will be created within a reasonable time period.

What is a “Regional Center” and how is the designation obtained?

A Regional Center is defined as any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment. The organizers of a regional center seeking the “Regional Center” designation from USCIS must submit a proposal.

A list of current Regional Centers can be found at www.uscis.gov/eb-5centers. There were approximately 532 Regional Centers on June 20, 2014.

What is a “Targeted Employment Area” and what does it mean for an investor?

A Targeted Employment Area (TEA) is defined as a rural area or an area that has experienced high unemployment of at least 150 percent of the national average. The EB-5 investment threshold in a TEA is $500,000, rather than the generally required $1 million.

If the investment is into a commercial enterprise located within a Regional Center and a TEA, the investment amount is reduced to $500,000, and the developer does not have to prove direct job creation. USCIS appears to show preference for these types of projects, and there have been several reports confirming the higher rate of approval for investments made under the program.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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