The U.S. Citizenship and Immigration Services (USCIS), which is part of the Department of Homeland Security, issued new rules impacting investment in projects utilizing EB 5 funds. The program is set to expire on September 20, 2019, after receiving a six-month reauthorization extension. The new rules will take effect on November 21, 2019, so there is a timing gap that will need to be addressed by Congress.
NMHC, along with other real estate industry partners, have worked with Congress to request rational modifications to the program and are seeking a six (6) year reauthorization. A coalition letter was sent to members of the Senate Judiciary Committee on May 17, 2019, outlining the requests.
A number of the requests within the letter were adopted but several key changes will make access to these funds for developers more difficult to obtain and to utilize. The key changes to the rules are outlined below:
- Raising the minimum investment amounts: the standard minimum investment level will increase from $1 million to $1.8 million, the first increase since 1990, and increases the minimum investment amount in a Target Employment Area (TEA) from $500,000 to $900,000. The final rule also provides that the minimum investment amounts will automatically adjust for inflation every five years. Maintaining the 50% level for a TEA will favor rural and distressed areas for investment;
- Revising the standards for certain targeted employment area (TEA) designations; DHS will eliminate a state’s ability to designate certain geographic and political subdivisions as high-unemployment areas; instead, DHS would make such designations directly based on revised requirements in the regulation limiting the composition of census tract-based TEAs. These revisions will help ensure TEA designations are done fairly and consistently, and more closely adhere to congressional intent to direct investment to areas most in need.
- Clarifying USCIS procedures for the removal of conditions on permanent residence; makes clear that certain derivative family members who are lawful permanent residents must independently file to remove conditions on their permanent residence.
- Allowing EB 5 petitioners to retain their priority date under certain circumstances offers greater flexibility to immigrant investors who have a previously approved EB 5 immigrant petition.
NMHC and NAA will continue to work with our industry partners to assess and monitor the impact of these rule changes, as well seek modifications through Congressional action as appropriate.