【ARCFE News】 POSITIVE NEWS AND CHANGES COMING FOR EB-5 RC PROGRAM
02/02/2022 by ARCFE U.S.
The EB-5 Regional Center (EB-5 RC) program that was created in 1992 to allow investors to pool funds together under the management of a regional center has remained the most popular option for the EB-5 industry. One of the many reasons as to why this program is more favored over the direct investment program is due to its advantage of counting indirect jobs through an economic model.
Unlike direct investment, EB-5 RC is a pilot program, meaning that it requires the reauthorization from the U.S. Congress after a specific period of time. Although the program lapsed on June 30th, 2021 and has not yet been reauthorized at this time, many EB-5 professionals are optimistic about it coming back in early 2022. According to the senior staff at Senator Grassley’s office, Congress is looking to address the suspension of the EB-5 RC program in the first half of 2022. Many are encouraging investors who are considering the EB-5 RC program to start preparing their documents to take advantage of the $500,000 minimum investment amount in the limited time right after the reauthorization.
The reauthorization of the EB-5 RC program is typically attached to the Federal Spending Bill. The program could have been reauthorized in 2021, however, Congress failed to reach consensus which led to them passing two Continuing Resolutions (CR), one in October and the other in December. The second CR will expire in February 2022, which is also the next date we can expect the EB-5 RC program to come back. While it is very important for Congress to reach an agreement and pass the Federal Spending Bill, the delay of this is not to be alarmed about. There is an average of 5 CRs passed each year between FY 1998 to FY 2019. This is a common practice as a way for Congress to push the deadline and get more time to agree on the terms of the final federal budget. With this being said, industry experts are confident that the current CR that was passed in December 2021 will be the last one for this fiscal year, considering the congressional elections that are coming up this year. Furthermore, lobbyists in Washington DC reported that the EB-5 RC program is included in the legislation and will be authorized together with the federal budget in early 2022.
This year’s reauthorization is expected to bring many positive changes to the program that will give investors some additional protection.
The most prominent change is the Foreign Investor Fairness Protection Act (FIFPA) that was put together by the American Immigrant Investor Alliance (AIIA). AIIA is an immigration advocacy organization that is based in the United States. AIIA along with other EB-5 industry experts believe that the expiration of the EB-5 RC program should not affect the existing investors. Not only will this act benefit existing investors, but it will also increase the attractiveness of the program. This would eventually mean that a larger flow of foreign cash will be injected into the U.S. economy.
We are expecting the minimum investment amount to increase from $500,000 USD to $700,000 to $750,000 USD for TEA projects. The investment amount for non-TEA projects is still uncertain.
There might be new guidelines as to how Targeted Employment Area (TEA) is defined.
This will allow investors and their families to land in the U.S. on a temporary visa prior to getting their green cards. This will help investors from countries with retrogression issues. The temporary visas will let investors and their families live, work and study in the U.S. just as if they are green card holders.
Investors considering investing in the EB-5 program should start preparing today to take advantage of the $500,000 investment window when the program is reauthorized.
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