The EB-5 Reform and Integrity Act of 2022 (“RIA”) was passed by Congress and signed by President Joseph Biden on March 15, 2022. It was a welcome Congressional update to the Employment Based Fifth Preference (“EB-5”) immigrant visa category and reauthorization of the Regional Center Program (“Program”) provisions of the original EB-5 legislation. The RIA included many changes to the EB-5 immigrant visa category.
Most importantly for past investors is that the RIA reauthorized the Regional Center Program and allowed all those investors who had previously filed an I-526 Petition before the Program lapsed at the end of June 2021 to continue with their journey to obtain Lawful Permanent Residence and green cards.
The RIA was very comprehensive and covered a wide range of changes to the Program. The primary features of the RIA include:
In this series of articles, we will explain every aspect of the RIA and how it may impact foreign nationals that are considering making an investment into the U.S. to obtain Lawful Permanent Residence for themselves and their qualifying family members via the EB-5 visa category.
The Increased Investment Amounts section of the EB-5 Reform and Integrity Act of 2022 (“RIA”) raises the minimum investment thresholds to adjust for inflation and ensure the continued effectiveness of the program in promoting economic growth and job creation in the United States.
Under the updated rules, the standard investment amount required for the EB-5 program has increased from $1 million to $1.05 million. For investments in Targeted Employment Areas (TEAs), which include rural areas or those with high unemployment, the minimum investment rises from $500,000 to $800,000. The original investment amounts had not been increased since the EB-5 program was created in 1990.
These changes are intended to maintain the program’s ability to generate substantial capital for U.S. businesses and encourage investment in areas that need economic development. The increase in the minimum investment ensures that the program continues to meet its goal of creating jobs and stimulating growth in underdeveloped regions. By raising the investment levels, the RIA aims to make the program more effective and relevant to today’s economic conditions while continuing to attract foreign investment to the United States.
The Reauthorization and Stability section of the EB-5 Reform and Integrity Act of 2022 (“RIA”) focuses on the continuation and enhancement of the EB-5 Regional Center Program, which had previously lapsed in 2021. The Regional Center Program is a part of the EB-5 Immigrant Investor Program passed by the U.S. Congress in 1990. It allows foreign investors to qualify for U.S. permanent residency by making qualifying investments in designated regional centers sponsored businesses and projects that create jobs for U.S. workers.
The Regional Center Program had always been a “pilot” or temporary program. The reauthorization extended the Regional Center Program for five years, providing stability and predictability for both investors and businesses participating in the program. In addition, the Act introduces new safeguards to enhance oversight and ensure compliance with federal regulations. This includes stricter requirements for Regional Centers, such as increased transparency through regular reporting, regular audits, and improved tracking of investments and job creation. The RIA also mandates the creation of a database to monitor Regional Center compliance and the performance of EB-5 projects.
These measures are designed to restore confidence in the program, prevent fraud, and maintain the program integrity, which is essential for attracting future foreign investment to support U.S. job growth and economic development.
In the EB-5 Reform and Integrity Act of 2022 (“RIA”), the definition of “Capital” as an investment for EB-5 has been updated. Capital includes cash, as well as any real, personal, or mixed tangible assets that are owned and controlled by the investor and which are invested in, or contributed into, the business. Capital can also be assets held in trust for the investor, provided the investor has unrestricted access to them. This guarantees that the funds are accessible for investment purposes and job creation.
Capital must be evaluated using Generally Accepted Accounting Principles (GAAP) or other SEC-adopted standard accounting procedures at the time of investment, at fair market value in U.S. dollars. This guarantees uniformity and openness in the investment’s appraisal.
The definition of capital excludes several types of assets:
However, Capital invested in a business with a buyback option may still qualify if the option can only be exercised at the discretion of the New Commercial Enterprise, and without guaranteeing the return of a fixed amount of investment Capital. If made before an investor completes his EB-5 process, this provision must result in the investor withdrawing their petition unless they meet all other EB-5 process requirements, such meeting the investment Sustainment Period.
In the EB-5 Reform and Integrity Act of 2022 (“RIA”), the term “rural area” is used to identify locations that are eligible for the lower investment threshold of US$800,000 rather than the base investment amount of US$1,050,000. It is designed to promote investment in infrastructure, development, and economic growth in less populated areas
According to the RIA, a “rural area” is any place that is:
This concept is important to encourage investment in rural communities that face challenges like lower population densities, restricted access to services, and fewer economic prospects in attracting the economic assistance they need. In adding rural areas to the EB-5 program, Congress hopes to drive investment to these areas which can benefit from this and other programs designed to address their particular needs.
In the EB-5 Reform and Integrity Act of 2022 (“RIA”), three important terms are Infrastructure Project, Rural Area, and Targeted Employment Area (“TEA”). Here’s a clear explanation of each:
Infrastructure Project
An infrastructure project refers to a capital investment project administered by a governmental entity, such as a federal, state, or local agency. It typically involves a job-creating entity that works with a new commercial enterprise to receive capital investments from EB-5 investors. These projects are characteristically for improving public infrastructure with the added benefit of creating jobs and helping to stimulate local economic growth.
Rural Area
According to EB-5 regulation, areas that are within the geographic boundaries of a metropolitan statistical area are not eligible for the rural area designation, ensuring that the rural area classification is applied to regions that outside metropolitan zones and truly rural. A Rural Area excludes areas within the boundaries of cities or towns that have a population of 20,000 or more, based on the most recent decennial census. Rural areas are significant in the EB-5 program because they encourage investment into rural areas that often face economic challenges and benefit from investments that create jobs.
Targeted Employment Area
Any Rural or High-unemployment area identified by the Secretary of Homeland Security is considered a Targeted Employment Area. EB-5 Projects located in TEAs are eligible for the lower minimum investment amount of US$800,000 instead of the base investment amount of US$1,050,000. Since TEAs frequently experience greater unemployment rates or other economic difficulties, they are given preference for EB-5 investments. EB-5 investors can qualify for lower investment requirements by investing in a TEA, which makes it a desirable choice for people who want to have a significant influence on areas that are experiencing economic hardship.
The term “affiliated job-creating entity” is an important term of the EB-5 Reform and Integrity Act of 2022 (“RIA”). Under the EB-5 Immigrant Investor Program, foreign investors who participate make an investment in a new business that employs U.S. workers and can obtain lawful permanent residence in the United States. A company that is owned, run, or controlled by individuals associated with the new business endeavor or the EB-5 Regional Center is considered an “affiliated job-creating entity” in this context. According to this, a company falls under this category if it has ties to the people who control the business or Regional Center.
These associated entities play a critical role in achieving the job creation objectives of the EB-5 program. These entities are not isolated in their activities; rather, they are closely linked to new business ventures and regional hubs that manage the flow of capital and ensure the development of employment-generating projects.
The RIA protects the integrity of the EB-5 Program by ensuring that these businesses are managed properly and that investments are directed toward job creation in a way that is both efficient and legal.
Investors must understand how companies that create jobs are set up. It dictates the utilization of their capital and the creation of jobs that meet EB-5 Program conditions. To safeguard the investors and the success of the projects they support, Regional Centers must make sure that these associated firms abide by all applicable laws.
A number of key terms are defined EB-5 Reform and Integrity Act of 2022 (“RIA”). Herein we explain the terms “Affiliated Job-Creating Entity,” “Job-Creating Entity,” and “New Commercial Enterprise.” Understanding these definitions is essential for both investors and businesses involved in the EB-5 program.
A New Commercial Enterprise refers to a for-profit organization formed in the U.S. for the purpose of conducting lawful business activities and is receiving investment capital from foreign investors to participate in the EB-5 Program. This could include a wide variety of business structures, such as sole proprietorships, partnerships, registered companies, and others. The New Commercial Enterprise may be publicly or privately owned and receives capital investments from foreign investors.
A Job-Creating Entity is any organization that is formed in the United States to conduct lawful business activities, regardless of the legal structure, similar to a New Commercial Enterprise. The Job-Creating Entity is the entity that is in most instances responsible for the creation of jobs, often through receiving and utilizing capital investment from foreign investors participating in the Regional Center program. In some structures, the Job-Creating Entity and the New Commercial Enterprise is the same entity. In most structures, the Job-Creating Entity is receiving the investment capital from the New Commercial Enterprise in the form of a loan or a direct equity investment.
A company that is owned, run, or controlled by individuals associated with the new business endeavor or an EB-5 Regional Center is considered an “Affiliated Job-Creating Entity”. A company falls under this category if it has ties to the people who control the business or Regional Center. Understanding the roles and relationships between these entities helps investors identify where funds are flowing, job creation responsibilities, and risks, and ensures that their investment plans comply with EB-5 regulations.
There can be many permutations of an EB-5 structure but most will have one or all of these entities involved.
Section 203(h) of the Immigration and Nationality Act (8 U.S.C. 1153(h)) was amended by the EB-5 Reform and Integrity Act of 2022 (“RIA”) to clarify how in some instances the age of children of investors is determined during participation in the EB-5 program.
Under the RIA and the amendment to Section 203(h)(5), an investor’s “child” who has reached 21 years of age and was admitted as a Conditional Permanent Resident as the child of an investor lawfully admitted for permanent residence under subsection (b)(5) will continue to be considered a child of the principal petitioner. Most importantly, this continued classification as a “child” is maintained for any subsequent EB-5 Form I-526 Petition, provided specific conditions are met.
It may be interesting to note that under U.S. immigration laws, a “child” is defined as any offspring of a parent that is under 21 years old. Once a “child” turns 21, then they are defined as a “son or daughter”.
The following conditions must be met for the child’s status to be maintained for a subsequent Petition. The child must remain unmarried, and the Petition must be filed by the principal investor (the parent or primary investor) no later than one year after the termination of the investor’s Conditional Resident Status. This helps ensure that the child, even after turning 21, can still benefit from the family-sponsored EB-5 immigration process, maintaining continuity for the family.
A crucial limitation in this clause is that no foreign national may be regarded as a “child” for more than one Petition submitted after turning twenty-one. This gives the immigration process boundaries and guarantees that the “child” status is not extended indefinitely.
Concurrent Filing in the EB-5 visa classification, introduced under the EB-5 Reform and Integrity Act of 2022 (“RIA”), allows eligible EB-5 investors already in the U.S. to file Form I-526/I-526E – the immigrant petition by an EB-5 investor – (“EB-5 Petition”) and Form I-485, Application to Register Permanent Residence or Adjust Status (“Application”) simultaneously, streamlining the path to permanent residency. With concurrent filing, eligible investors can submit both forms at the same time, potentially reducing waiting periods and providing immediate benefits, such as work and travel authorization.
To qualify for concurrent filing, an EB-5 investor must:
Concurrent filing has a number of important advantages. Applicants can qualify for advance parole (“AP”) and employment authorization (“EAD”), which permit them to travel abroad and engage in lawful employment while their EB-5 Petition and Application is being processed. Moreover, they do not need to travel outside the U.S. to interview at a U.S. Consulate for an immigrant visa. The process to being granted “conditional” lawful permanent residence can be completed in the United States.
Those who qualify for concurrent filing should discuss this with a qualified immigration lawyer to understand their full rights and potential issues with this option.
The EB-5 Reform and Integrity Act of 2022 (“RIA”) reauthorized and reformed the EB-5 Immigrant Investor Program, a U.S. immigration program that offers foreign nationals a pathway to U.S. permanent residency through investment in American businesses that create jobs. A significant component of this program is the EB-5 Immigrant Investor Regional Center Program, which allows investors to consolidate their resources through designated Regional Centers and invest in projects that drive economic growth and job creation.
The Regional Center Program was introduced by Congress in 1992 as a pilot program to enhance the EB-5 visa classification. It was classified as a pilot program – a short-term “test” program – to allow for more flexibility for job creation based on the minimum investment. Investments may be made into businesses or “projects” sponsored by Regional Centers, which are approved by the United States Citizenship Immigration Services. Typically, these Regional Centers manage or oversee investment projects in sectors like technology, infrastructure, and real estate in specific geographic locations. Indirect and induced job creation can be included toward the 10 full-time jobs per investment, instead of just direct employment. The ability to count indirect and induced job creation is one of the main benefits of the Regional Center Program. Large-scale economic development projects around the U.S. have benefited from the Regional Center Program’s increased investor appeal due to this flexibility in showing job creation.
Unlike the original, permanent, direct part of the EB-5 Immigrant Investor Program (once generally referred to as “Direct” EB-5, but now renamed as “Standalone Investor” by the RIA), the Regional Center Program continues to operate under temporary authorizations that require periodic renewal by Congress. This structure has led to periods of uncertainty, particularly when legislative approvals are delayed. The most recent reauthorization occurred on March 15, 2022, when President Joe Biden signed the EB-5 Reform and Integrity Act into law, extending the Regional Center Program until September 2027. This five-year extension aimed to provide stability and predictability for investors and developers alike.
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The EB-5 Reform and Integrity Act of 2022 (“RIA”) introduced significant changes to the EB-5 Immigrant Investor Program, including changes to the establishment and oversight of Regional Centers. A Regional Center’s establishment represents a strategic effort to stimulate economic growth by drawing in foreign investment and generating employment opportunities within
The EB-5 Reform and Integrity Act of 2022 (“RIA”) reauthorized and reformed the EB-5 Immigrant Investor Program, a U.S. immigration program that offers foreign nationals a pathway to U.S. permanent residency through investment in American businesses that create jobs. A significant component of this program is the EB-5 Immigrant Investor
Concurrent Filing in the EB-5 visa classification, introduced under the EB-5 Reform and Integrity Act of 2022 (“RIA”), allows eligible EB-5 investors already in the U.S. to file Form I-526/I-526E – the immigrant petition by an EB-5 investor – (“EB-5 Petition”) and Form I-485, Application to Register Permanent Residence or
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