Current Administration Proposes Significant Changes to EB-5 Program

by Shumaker, Loop & Kendrick, LLP

Yesterday, the Obama administration announced potential changes that could significant impact the EB-5 investor visa program.  The EB-5 investor visa was originally established by Congress in 1990 to attract foreign investment and stimulate the economy in hopes of spurring job creation in the United States.

Under the EB-5 program, foreign investors are eligible for lawful permanent residence if they invest in a new (or expanded) commercial enterprise that creates at least 10 jobs. The minimum investment for an EB-5 visa under the current rules is $1 million (if the investment is in a commercial enterprise located in a “targeted employment area,” the minimum investment is only $500,000). Perhaps the most significant change to the EB-5 program is a proposed increase in the minimum investment required for an EB-5 visa, although there are other significant proposed changes that potential EB-5 investors need to be aware of:

Minimum Investment

Under the proposed rules changes, the minimum investment for an EB-5 visa increases significantly. For commercial enterprises outside targeted employment areas, the minimum investment will increase from $1 million to $1.8 million. It is a similar $800,000 increase—from $500,000 to $1.35 million—for commercial enterprises in targeted employment areas. These amounts will automatically adjust every five years based on the Consumer Price Index for All Urban Consumers.

While DHS says the increases are necessary to keep pace with inflation, there are costs associated with the proposed changes. Most notably, the proposed increases may result in fewer investments, in turn resulting in few jobs being created. Also, current EB-5 projects may be stalled from moving forward because of a lack of capital. The increased investment amounts may also make similar programs offered by other countries look more attractive.

Priority Date Retention

Over the past decade, the EB-5 program has seen exponential growth. Each year, only 9,940 EB-5 visas are allocated to foreign investors. Since 2008, however, the number of EB-5 petitions has grown from 600 to 25,000 annually. As a result, foreign investors are frequently forced to wait more than a year before the can obtain conditional permanent residence, and because much of the increased demand is attributable to investors from China, the U.S. Department of State had to limit the number of visas available to Chinese investors. Given this backlog, an investor’s priority date—i.e., the date their EB-5 petition was filed—has become even more important.

To put it plainly, an investor’s priority date is his or her place in line. Under the current rules, EB-5 petitioners lose their priority date—their place in line—if they refile their petition. For instance, if a foreign investor invests through a regional center that later is terminated through no fault of the investor, the investor will be forced to refile his or her petition—and as a consequence, lose his or her priority date. Or if a foreign investor invests in a project that later stalls and is unlikely to succeed, the investor will have to refile his or her EB-5 petition to reinvest in another project. Again, the investor will lose his or her priority date. This is generally not the case for EB-1, EB-2, and EB-3 visas. In order to harmonize the EB-5 visa with the other investor visas, DHS is proposing to allow foreign investors to retain their priority date to (1) address situations where the petitioner becomes ineligible due to circumstances beyond their control; and (2) to provide investors greater flexibility to deal with changing business conditions.

Designation of TEAs

The designation of targeted employment area (“TEA”) under the EB-5 program is crucial because, as discussed above, the minimum invest in a TEA to qualify for an EB-5 visa is only $500,000—rather than $1 million—under the current rules. Generally, a TEA is a rural area or an area with unemployment rate that is more than 150% of the national average. To demonstrate a commercial enterprise is in a high-unemployment TEA, investors must provide either (1) evidence that commercial enterprise is principally doing business in metropolitan statistical area, specific county within a metropolitan statistical area, or a county in which a city or town with a population of 20,000 has experienced an average unemployment rate of 150 percent of the national average rate; or (2) certification from the state that the geographic or political subdivision of the metropolitan statistical area or of the city or town with a population of 20,000 or more in which the enterprise is principally doing business has been designated a high unemployment area.

Under the proposed rules, DHS is making two significant changes to TEA designations. First, states will no longer be able to designate high-unemployment TEAs. Instead, those designations would be made by DHS. Second, any city or town with a population of more than 20,000 will qualify as a TEA if its unemployment is more than 150% of the national average. DHS believes these changes are necessary to ensure that the reduced minimum investment for TEAs is applied consistently and limited to true areas of high unemployment.

Separate Filings for Derivatives

The proposed rules changes clarify the process for derivatives when they are not included on the original I-829 petition to remove conditions on permanent resident status. Ordinarily, an investor’s derivative should be included on his or her Form I-829. But sometimes that doesn’t happen—e.g., when the investor dies during the conditional residence period. The current regulations do not address this situation. The proposed regulations provide that where dependent family members cannot be included on the principal investor’s Form I-829 because the principal investor has died, all of the dependents may file a single Form I-829 (in all other cases, any dependent not included on the investor’s Form I-829 must file a separate Form I-289.

Continue to check back with us for updates on these significant proposed changes to the EB-5 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.

© Shumaker, Loop & Kendrick, LLP | Attorney Advertising

Written by:

Shumaker, Loop & Kendrick, LLP

Shumaker, Loop & Kendrick, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.