The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.
I. Basics of EB-5 program
A. 8 USC § 203(b)(5); 8 CFR § 204.6
B. Amount of Investment
– $1,000,000 or
– $500,000 if targeted employment area (8 CFR § 204.6 (e))
• either rural area or
• high unemployment area
C. Job creation
– 10 new jobs for U.S. workers per investor
– direct employees or
– indirect or induced employees if regional center
– saving 10 jobs meets job creation requirement if “troubled business” (8 CFR § 204.6(e))
– in existence at least two years
– 20% loss of net worth in last one or two years
D. Investment must be in “new commercial enterprise” (8 CFR § 204.6(h))
– established after November 29, 1990, or
– restructuring or reorganizing existing business, or
– expanding net worth or number of employees by 40%
E. Requirements of investor
– proof of lawful source of funds
– proof of path of funds from investor to investment
– engaged in business
– limited partner sufficient
II. Individual vs. Regional Center EB-5
A. Individual EB-5
– only direct jobs count
– must prove U.S. citizenship or permanent residence of employees
– prove employees already employed, or “comprehensive business plan”
B. Regional Center EB-5
1. Pilot program
– latest extension until September 30, 2012
2. Definition: “any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.” 8 CFR § 204.6(e)
3. Can count indirect or induced employment
4. Accounts for approximately 95% of all EB-5 petitions
III. Procedure
A. I-526 petition
1. Filed by investor
2. Documentation of investment, job creation, source of funds, path of funds
3. Upon approval, file application for adjustment of status (if in U.S.) or application for immigrant visa (if outside of U.S.)
4. Upon approval, investor and family (spouse and unmarried, under 21 children) become conditional permanent residents (2 year green cards)
B. I-829 petition
1. File 21 to 24 months after obtain conditional permanent residence
2. Application for removal of conditions – permanent green card
3. Must prove (8 CFR § 216.6 (c))
a) Investment sustained
b) Jobs created or will be created within a reasonable time
c) No material change in business plan – If material change, must file new I-526 petition, abandon conditional permanent residence and file new application for conditional permanent residence. Memorandum from Donald Neufeld, Acting Associate Director, Domestic Operations entitled “Adjudication of EB-5 Regional Center Proposals and Affiliated Form I-526 and Form I-829 Petitions; Adjudicator’s Field Manual (AFM) Update to Chapters 22.4 and 25.2 (AD09-38)” (December 11, 2009).
IV. Creating a new regional center
A. Procedure
– file Form I-924
B. Documentation
1. Must focus on a contiguous geographical area which must be clearly identified by providing a detailed map.
2. Explanation of job creation.
3. Economic analysis.
4. Business plan, which must identify equity, debt or other financial arrangement, and must identify all fees, profits, surcharges or other remittances that will be paid to the regional center or any of it principals or agents through EB-5 capital investment activities.
5. NAICS code for each industrial category.
6. Statement from the principal of the regional center that explains the methodologies that the regional center will use to track the infusion of each investor’s capital into the job creating enterprise and to allocate the jobs created.
7. Whether the minimum investment will be $500,000 or $1,000,000.
8. Description of past, current and future promotional activities for the regional center including a description of the budget and evidence of the funds committed.
9. Plan of operation for the regional center which addresses how investors will be recruited and how the regional center will conduct its due diligence to ensure that all capital comes from lawful sources.
10. General projection which addresses the prospective impact of the capital investment projects, regionally or nationally, with respect to increases in household earnings; greater demand for business services, utilities, maintenance and repair; and construction within and without the regional center.
11. Fully describe and document the organizational structure of the regional center.
12. Show how the capital investment offering instructions, business structure and operating agreements of the proposed commercial enterprises are compliant with all statutory and regulatory requirements.
13. Description and documentation of the business structure of the regional center entity and the commercial enterprises.
14. Draft Subscription Agreement.
15. Draft Escrow Agreement and instructions.
16. Proposed financial institution that will serve as escrow agent.
17. Draft of offering letter, memorandum, private placement memorandum, or similar offering to be made in writing to an immigrant investor offering capital investments through the regional center.
18. Draft memorandum of understanding, interagency agreement, contract, letter of intent or similar agreement to be entered into with another party to engage in activities on behalf of or in the name of the regional center.
19. Hard copy of website and promotional materials.
20. Plans to remain in compliance with ongoing USCIS monitoring requirements.
21. Proof that the governmental body of the state that is providing a TEA letter has been authorized.
22. Proof that the direct or indirect jobs will be created within 2 ½ years.
23. Approximate start date, construction time lines and completion date.
24. Proof that the projects are economically feasible.
25. Detailed statement regarding the amount and source of capital (non EB-5) which has been committed to the regional center.
26. Proof that the jobs will last for 2 years.
27. Proof of the investor’s active involvement in the business.
28. Letter from or negotiations with construction company, if applicable.
29. Explanation of how assumption of existing financing will improve regional productivity, if applicable.
30. Evidence of how workers will be recruited.
31. Detailed budget.
32. Ongoing business.
V. Regional Center EB-5 entities
A. Regional Center entity
1. applies to USCIS for designation approval
2. ongoing administration and compliance responsibilities
3. markets for investors
4. due diligence regarding investors’ source of funds
5. prepares I-526 packages
6. oversight of I-526 filings
7. obtains signed Subscription Agreements and Escrow Agreements
8. monitors direct employment
9. tracks infusion of capital into job-creating enterprise
10. monitors compliance with business plan and foundation facts in economic report
11. allocates jobs between investors
12. prepares annual reporting (Form I-924A) for filing with USCIS
13. prepares I-829 packages
14. decides on new projects
B. New commercial enterprise
1. limited partnership (or LLC)
2. investors make equity investments
3. invest (equity or debt) in job-creating enterprise
C. Job-creating enterprise
1. development project
VI. Project pre-approval process
A. Optional – investors can file I-526 petition without project pre-approval
B. File all documents needed for I-526 petition, except documents relating to investor
C. Upon approval of exemplar I-526, all investors in the project can attach approval to their I-526 petition.
VII. Legal Issues in Regional Center Applications
A. Targeted employment area
1. Can prove high unemployment by providing state unemployment data
2. Can prove high unemployment by providing “state TEA designation letter” (8 CFR § 204.6(i))
a. State bound by 150% of national average unemployment standard
b. State can aggregate census tracks to create a combined TEA
(1) USCIS must accept state designation letter pursuant to its Adjudicator’s Field Manual
(2) In practice, some recent examples of USCIS challenging state designation letters based on “gerrymandered” census tracks.
B. Investment must be “at risk” (Matter of Izummi, 22 I & N Dec. 169 (Comm. 1998)
1. Guaranteed redemption disallowed
2. Redemption at fair market value allowed
3. Third party guarantees allowed
4. Third party insurance is an open question
C. Job creation
1. Regulations require that new commercial enterprise – not investor – must create jobs (8 CFR § 204.6(j)(4)(i))
2. USCIS requires proof that investor’s capital creates jobs
3. Open issue whether use of EB-5 capital to replace bridge financing qualifies
D. Timelines for job creation
1. USCIS position that requisite jobs must be created within 2 ½ years of I-526 petition approval (Neufeld Memo, supra at III B, 3, C)
2. Condition removal regulations allow for proof that jobs will be created “within a reasonable time” from date of filing I-829 condition removal petition (8 CFR § 216.6(c )(1)(iv))
E. Material Change
1. Material change after date of filing I-526 petition to make the petition approvable disallowed. (Matter of Izummi, supra at VII B
2. Material change after approval of I-526 petition prevents condition removal and requires filing new I-526 petition (Neufeld Memo, supra at III B, 3, C)
3. “Material change” undefined by USCIS
