For the last five years, rumors swirled around the EB-5 about the program’s uncertain future. Rumors included a discontinuance of the program or an increase in the investment amount.
The program, which has generated billions of dollars in investment into the U.S. and hundreds of thousands of jobs for American citizens and green card holders, was a subject of controversy due to the abuse perpetrated by the bad apples in the program, a very small minority of regional centers and developers whose projects did not create the requisite 10 full-time jobs required for foreign investors to obtain their permanent green cards. This led to a highly-contested debate over what to do next.
The decision was finally made recently and the changes are coming very soon. Starting on November 21, 2019, the minimum investment will be $900,000, up from $500,000 and the default investment from $1 million to $1.8 million. There are also important changes regarding the designation of Targeted Employment Areas (TEAs), which are pivotal in deciding whether an investment will qualify at the lower threshold ($900k) or the default threshold ($1.8 mil) and this is obviously a huge difference-maker. All indications are that the percentage of investments that qualify at the lower level will greatly diminish, with the effect of making the program markedly less accessible to foreign investors.
For all those investors who have seriously considered utilizing the program NOW is the time. All petitions (which require that all the funds already be committed and be placed “at-risk”) submitted after November 21 will have at least a minimum amount of $900,000. Most of those submitted before that date can be based on the current $500,000 minimum. Please contact Steve Maggi for any questions at smaggi@smalawyers for any questions or consultations.