EB-5 Program: Reform and Integrity Act 2022 — Simplified for Indian Investors
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Written by Dheer Ved (dheer.ved@xumitcapital.com)
Reform and Integrity Act 2022
The EB-5 Investor Immigration Program has gone through crucial changes in 2022 due to the sanction of EB-5 Reform and Integrity Act (RIA) 2022.
EB-5 Reform and Integrity Act 2022 (RIA) signed by President Joe Biden on March 15th, 2022, encapsulates a law that amended the EB-5 program by establishing new requirements for EB-5 immigrant investors and the Regional Centre. The EB-5 Reforms and Integrity Act has been in-force since May 14th, 2022.
The act gives a guaranteed processing of application in case the Regional Centre program relapses. It is more important because when the EB-5 program expired on June 30th, 2021, USCIS stopped the processing of EB-5 applications. Reform and Integrity Act 2022 reauthorized both the components of EB-5 program and will provide the investors protection against such lapses in the near future. All the Regional Centre investors who will file the petition on or before September 30th, 2026 are guaranteed that their applications will be processed even if the EB-5 Regional Centre Program lapses.
Some of the important changes are listed below:
- Investment Amount Requirements:
The term “capital” refers to cash and all real, personal, and mixed tangible assets owned by the investor. Capital should be legally obtained which means it should not be, directly or indirectly, obtained by unlawful means.
In terms of minimum investment capital required, following changes we enforced:
Targeted Employment Area (TEA) at the time of investment can be:
a) A rural area
b) A high unemployment area (unemployment rate of 150% more than the national average)
2. “Grandfathering”
In simple words, Grandfathering means if you have filed petition I-526 or I-829 before the Reform and Integrity Act 2022, you are eligible for the old law itself. The new law would be applicable for the new investors filing the petition. The law does not stop the decision and visa allocation process for the old EB-5 investors.
3. New Forms Released by USCIS:
USCIS has published various new forms such as form I-956 application for Regional Centre Designation, form I-956F application for an approval of investment in a New Commercial Enterprise (NCE), form I-956G Regional Centre Annual Statement, form I-526 Immigration Petition by standalone investor and form I-956E Immigration Petition by Regional Centre Investor.
On April 11th 2022, USCIS pulled out an update with respect to Reform and Integrity Act (RIA) that old Regional Centre are no longer designated and they have to maintain their status again by filing form I-956 to gain their designation without that they can’t file for form I-526E — Immigration Petition by Alien Entrepreneur. Once it gets approved by USCIS, they can file for I-526E.
Form I-956F application for an approval of investment in a New Commercial Enterprise (NCE), is a new form which can be filed only by a designated regional centre. Form I-924 under the previous program is similar in some respects to form I-956F. Form I-956G takes on form I-924A from the previous program but incorporates the increased statutory reporting documents. From June 2nd 2022, forms I-956F and I-956G need to be submitted in compliance with the new program requirements. The filing fee is $17,795 and $3,035.
Form I-526 is used by standalone investors who are not willing to pool their investments with other additional investors who are seeking EB-5 classifications. Form I-526E is used by immigration investors who are willing to pool their investments with one or more additional investors seeking EB-5 classifications under the new Regional Centre Program.
The law says that until the Regional Centre (RC)has filled form I-956F which seeks approval for particular investment in NCE that the potential investor is investing in, the immigrant investor cannot file form I-526E. Once the RC receives a receipt of the form I-956F conforming for its filing, the investors are ready to file their form I-526E 10 days after on the basis of that receipt issued.
The filing fee for form I-526 is $3675. The filing fee for form I-526E is $3675 and $85 biometric fee as a total of $3760 where applicable. From October 1, an additional fee of $1000 per petition will be applicable under the EB-5 Reform and Integrity Act of 2022.
4. Visa set asides under the EB-5 Reform and Integrity Act:
There are three new categories of EB-5 set-asides under the new law: 20% for rural areas, 10% for high unemployment areas and 2% for infrastructure projects. So those of who have filed form I-526E after March 15, 2022 will be assigned a code that will mark him/her within any of three reserved categories. The Department of State has declared that the reserve visas are only available to immigration investors who file after March 15, 2022.
> A rural area is any area outside of Metropolitan Statistical Area (MSA) or within the outer boundary of any city or town having a population of 20,000 or more. Investment made in Rural Area Projects will have priority and faster processing.
> A high unemployment area is an area experiencing an unemployment rate of 150% of the national average unemployment rate. When calculating the weighted unemployment rate, the area may include any census tracts directly adjacent to those where the New Commercial Enterprise (NCE) is principally doing business.
> An infrastructure project is a capital investment project in an approved business plan which is managed by a government entity and serves as a national interest which is job creating entity contracting with New Commercial Enterprise and Regional Centre’s to receive investment from the potential investors as financing for constructing or maintaining or improving the project. USCIS will look into if the investment made is in a qualified infrastructure project while allocating the Regional Center’s project application.
5. Indirect Job Limit:
According to the RIA, only 75% of jobs can be created from construction jobs for less than 2 years and Regional Centre Investors can count for no more than 90% of indirect jobs.
6. Project Requests:
A Regional Centre has to file I-956F for the approval of the project but EB-5 investors don’t have to wait for their approval. Once the petition is filed investors can file I-526 petition 10 Days after the filing.
7. Sustainment period and Redeployment:
The new act states that the investors who filed the I-526 petition after 15th March 2022 requires the capital to be invested for at least 2 years from the beginning. This means that the investors can receive their return on capital once it has been invested for 2 years even if the investor has not yet become a conditional resident or received I-526 approval.
The substantial change in the shortening of period eliminates the need of New Commercial Enterprise to redeploy its capital. However, the 2022 Act clearly recognizes redeployment of capital to a new commercial enterprise (NCE) before the end of the investor’s sustainment period. If any of the NCEs violates the redeployment rules and regulations, USCIS is required to terminate the Regional Centre according to the Reform and Integrity Act 2022.
8. Adjustment of Status:
Existing EB-5 immigrant investors in the United States can concurrently apply to have their status changed. When form I-526 is approved or while waiting for the approval of I-526 petition, the applicant and each dependent can file Form I-485 to become conditional permanent residents in the United States.
This applies to new investors as well who are there they can file I526E and I 485 together.
9. Investors Protection:
Reform and Integrity Act 2022 allows investors to freely proceed with alternative investments if the RC, company or job creation facilities closes. As long as their investment arrangements were qualified, within 180 days of action and notice they are allowed to associate with alternative entities who will meet their investment and job creation requirements.
10. RC Visa Expiration:
RC visas are available till September 30, 2027 as it provides a long-term reauthorization of 5 years to the EB-5 investors.
PARTING NOTES:
The investment amount is an at risk but you have to understand that this is the investment on your green card. Because of the RIA 2022 now the potential immigrant investors can make EB-5 investments far more safely and with confidence. These reforms will protect EB-5 investors from various risks and fraud associated with the investment.
Since there are risks involved, a few things to be kept in mind such as what is the past success rate of the Regional Centre, what is the guarantee of getting a green card and the investment amount back, services of an immigration attorney etc. Due diligence must be conducted on all prospective EB-5 projects, whether investing through direct or regional centers, in order to make an informed investment decision that takes into account all financial and immigration risk aspects of the investment.
