With the September 30th, 2016, EB-5 Program expiration date looming, an EB-5 immigration reform bill was introduced to Congress on September 12th, but quickly stalled.
The EB-5 immigration reform bill, called the "American Job Creation and Investment Promotion Reform Act of 2016" or H.R. 5992, was put forth to Congress with two major reforms proposed.
Members of the EB-5 industry quickly objected to many of the reforms introduced in the EB-5 immigration reform bill.
These reforms included a retroactive change to the minimum investment amount as well as a reform of the Targeted Employment Areas definition.
Here's what these two reforms would mean and why the EB-5 industry was concerned:
- A retroactive minimum investment amount change from $500,000 to $800,000
This means that thousands of foreign investors who already came up with the $500,000 capital would have to come up with an extra $300,000. And, if they cannot come up with the extra amount, they basically will have made an investment with a low rate of return and no possibility of gaining a green card.
- A tightening of the Targeted Employment Area definition
The bill would also tighten the definition of what it means to invest in a targeted employment area (TEA) to prevent EB-5 funding from being used to develop luxury projects in more urban cities. The bill would, theoretically, push EB-5 funding to instead be used to develop projects in areas with more distressed economies. However, many of these projects in more urban areas attract more investors and they attract more experienced developers. Additionally, there appears to be more EB-5 fraud occurring projects located in the more rural areas.
There is currently no date set for the new markup of the proposed bill.