On July 29th, Representatives Zoe Lofgren and Luis Gutierrez introduced H.R. 3370 –The Entrepreneurial Business Creating Jobs Act of 2015 — to amend the Immigration and Nationality Act to promote innovation, investment, and research in the United States. H.R. 3370, like H.R. 616 proposed earlier this year, seeks to permanently reauthorize the EB-5 Regional Center Program (the “Program”) but proposes further changes intended to strengthen the integrity of the Program and accommodate demand before it is made permanent.
S. 1501, previously introduced in the Senate, has been widely discussed by EB-5 stakeholders since its release in June. While its mission to improve the Program and respond to recent media criticism has been applauded, the unintended consequences of implementing the bill as drafted would cripple the Regional Center Program as we know it today.
H.R. 3370 shares many suggested changes with the other recently introduced bills, including increased scrutiny of Regional Centers, associated commercial enterprises, and their principals and employees, enhanced annual reporting requirements, site visits by the Department of Homeland Security, and provisions for New Commercial Enterprise pre-approval.
What the bill doesn’t do is speak to the scope of the Director of USCIS’ authority or the due diligence process that the Secretary of Homeland Security will follow with regards to EB-5. Will their discretion be reviewable?
Notable differences from previously proposed bills include:
- The possibility of doubling the number of visas available to the EB-5 category each year the 10,000 visa cap is met.
- Minimum investment amount increased to $2 million.
- $5,000 “premium processing fee” for expedited processing of immigration petitions within 60 days.
- Minimum of 8,000 visas allocated amongst the different TEA categories; 5,000 visas for subscribers making their investments through Regional Centers.
Given that 98% of EB-5 visas issued in 2013 were to Regional Center subscribers in projects located within targeted employment areas (TEAs), the reservation of 5,000 EB-5 visas for applicants investing through Regional Centers is unlikely to dramatically alter the EB-5 industry.
However, by setting aside 2,000 visas for investments in high unemployment areas, 4,000 visas for rural areas and another 2,000 visas for investments in a brand new category which includes areas with a decline in population of 20% or more since 1970, State and Federally designated economic development areas including areas defined as Enterprise Zones Renewal Communities and Empowerment Zones, and military bases closed by operation of law, this Bill, if passed, could incentivize project development in regions that need a boost in job creation the most.
Additionally, H.R. 3370 provides TEA definitions that logically factor in the commuter patterns that impact actual geographic locations and locks in the TEA designation for a five-year period, offering some certainty and consistency to issuers and investors alike.
With the September 30th deadline for Regional Center Program renewal fast approaching and Congress’ number of days left in session dwindling, many aspects of the future of EB-5 and the Regional Center Program are still up for debate. However, legislators seem to be in agreement that reform is necessary; whether a consensus is reached before or after the sunset date, change is coming.
NES Financial welcomes your questions and opinions. Allow us to address your business needs by contacting us. We look forward to hearing from you!