New EB-5 regulations came into force on November 21, 2019, which means all I-526 petitions filed on or after this date must comply with the new rules.
Analysis of the changes reveals that the new rules related to designation and adjudication of Targeted Employment Areas are likely to have a bigger impact on EB-5 investors as compared to the decision to increase the minimum investment limit.
1) Minimum Investment
Minimum investment for non-TEA projects increased from $1.8 million. TEA project investments increased from $900,000.
Positive for: The US economy as a quantum for foreign investment increases.
Negative for: All EB-5 applicants as investment outlay has risen by 80 percent.
2) TEA Designating Authority
States no longer have a say in determining Targeted Employment Areas under the EB-5 program. This authority now rests with the Department of Homeland Security only.
TEA designation is important because an applicant investing in a TEA project can qualify for the reduced investment limit of $900,000.
Positive for: Investors seeking uniformity and greater predictability in designation of TEAs.
Negative for: The States as they lose the ability to setup TEAs within their jurisdictions to attract more EB-5 investments.
3) High Unemployment TEAs
Cities and towns with a population in excess of 20,000 can qualify for TEA designation only if located outside Metropolitan Statistical Areas (MSAs).
Cities and towns inside MSAs can be designated TEAs only upon submission of adequate evidence by the states to the designating authority i.e. the DHS.
Further, only adjacent census tracts can be combined with the tract in which the New Commercial Enterprise (NCE) is principally doing business when determining high unemployment. Earlier, contiguous tracts could be considered, which led to gerrymandering.
Also, the weighted average of unemployment in all the tracts combined must be considered when determining high unemployment.
Finally, whether the project is located within a TEA or not will be assessed as a part of the I-526 adjudication process. Official designation of projects as TEA projects will no longer happen.
Positive for: Rural areas as achieving TEA status in high unemployment urban areas is significantly tougher under the new rules. Projects located in rural areas will offer a simpler route to the EB-5 visa.
Negative for: EB-5 investors as urban projects qualifying for the $900,000 investment may lose TEA status and fall in the $1.8 million investment bracket. Further, rural investments will carry higher business risks, which may make it tougher for investors to ultimately qualify for the green card.
4) Retention of I-526 Priority Date
Material change in the EB-5 business plan, termination of a Regional Centre, or fraud committed by the Regional Centre or NCE will not automatically result in loss of I-526 priority date.
The EB-5 investor can retain their original filing date when filing a new I-526 petition provided:
- The investor has not committed any fraud or willful misrepresentation in relation to the previous I-526, and
- There is no material error in the earlier petition.
Positive for: Applicants from retrogression-hit countries like China, Vietnam, and India. Retention of priority date means the applicant does not have to start at the back of the processing line when forced to file a new I-526 petition.
Negative for: Those who have entered the US as conditional permanent residents and are now forced to file a new petition for reasons beyond their control. This new retention rule does not apply to those already admitted to the US as a conditional permanent resident.