The EB-5 Immigrant Investor Program has been subject to many reforms since its creation in 1990. Today, this employment-based visa is still a subject of debate. The current form of the program has been extended until September 30, 2017, but another extension is not guaranteed.

One potential change is the shuttering of Regional Centers (RCs) across the United States. These were added to the program in 1992 and today account for over 95% of EB-5 investments. However, some argue that the regional center model does not adequately promote the goals of the EB-5 program to create jobs and stimulate the U.S. economy. Increasing numbers of RCs have been in recent years. According to the advocacy group Invest In the USA (IIUSA), 95% of the 119 total RC terminations occurred since 2014. These terminations are enforced under current statutes for either failure to file the annual information form (I-924A) or for failure to continue to serve the purpose of promoting economic growth and can continue without change in the governing EB-5 law.

Another proposed reform is to provide additional oversight to the EB-5 program. Currently, the program is largely administered at the state level via the designation of Targeted Employment Areas (TEAs) and through the RCs. Some critics, most prominently U.S. Senators Patrick Leahy (D – Vermont) and Charles Grassley (R – Iowa), propose that federal oversight is needed to prevent abuse within the program. The Senators introduced The American Job Creation and Investment Promotion Reform Act outlining their reforms in 2015; that bill never made it out of committee, but Leahy plans to reintroduce the legislation and continues to push for EB-5 reform. The bill would have given the Department of Homeland Security (DHS) authority to deny or terminate EB-5 projects based on concerns regarding public safety or fraud.

TEAs are intended to provide a hefty incentive to EB-5 applicants in order to direct economic impact where it is most needed. The incentive was wildly successful and over 94% of the EB-5 visas issued in the fiscal year 2016 were for TEAs. This heavy usage of TEAs has led to increased scrutiny, and the designation of TEAs is another area that is frequently targeted for reform. Leahy’s bill would create stricter guidelines in order to prevent developers from using sophisticated techniques to create TEAs that include very wealthy areas.

Aside from potential Congressional action, the DHS has also proposed reforms to the EB-5 program. In the proposed rule EB-5 Immigrant Investor Program Modernization, posted for public review on January 13, 2017, the DHS similarly supports more stringent TEA requirements as well as an increase to the investment amounts. The $1 million standard investment and $500,000 were set as part of the initial 1990 legislation that created the EB-5 program. The proposed rule change would adjust the standard investment for inflation between 1990 and 2015, which would result in a $1.8 million standard minimum investment, and proposes raising the minimum investment to 75% of the standard investment, which would result in a $1.35 million minimum investment. These amounts would be adjusted for inflation every 5 years in the future. Senator Leahy also supported raising the minimum investment amounts. The DHS proposed rule change was open for public comment until April 11, 2017, and received 290 comments during that time, many in opposition to the proposed changes. The document is now with the White House for review and approval.

It is unclear what the future of the EB-5 program will look like. There is bipartisan desire to reform the program, but so far any attempts at reform have not made it to the floor. Competing interests between various Senators, Congress, the White House, and lobbyists may deadlock reform or may propel the program to a vastly new version. If you are interested in applying for an EB-5, Ellis Island Capital may be able to help you navigate the changing program.