No End in Sight for EB-5 Investment Visa Program

The tremendously popular EB-5 Regional Center Pilot Program ("RC Program") was recently extended to September 30, 2015. The extension came about on September 28, 2012, when President Obama signed Senate Bill 3245, which ratified the three year reauthorization of the RC Program. This reauthorization was passed by the House of Representatives in a vote of 412-3 just a few weeks earlier. Because of the enormous popularity of the RC Program, it is very likely that the program will be extended again and again, with no end in sight.

Under U.S. immigration law, one way for an individual to obtain lawful permanent residence (a green card) is to invest $1 million (or $500,000 in certain geographic locations) in a new commercial enterprise. This is known as the "standard" EB-5 investor program. A "commercial enterprise" means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to: (1) a sole proprietorship; (2) partnership; (3) holding company; (4) joint venture; (5) corporation; or (6) business trust or other entity, which may be publicly or privately owned. This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.

This standard EB-5 program was created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. In 1992, The Immigrant Investor Pilot Program was created, which enables foreign nationals to invest in USCIS-designated "Regional Centers." EB-5 requirements for an investor under the RC Program are essentially the same as in the standard EB-5 investor program, except investing in Regional Centers provides for numerous investments that are affiliated with a single economic unit. Regional Centers are advantageous for many investors who are overseas, since such an investment does not necessitate that the investor be physically present for the day-to-day management of what otherwise would be her new commercial enterprise. In addition, these investments enjoy the advantage of a more expansive concept of job creation.

The foreign investors, their spouses, and their unmarried children under the age of 21 are all able to obtain green cards if the EB-5 investment, among other things, is "at risk," leads to the creation of 10 jobs for qualifying U.S. workers and such jobs are sustained for a period of at least two years. A Regional Center may encompass numerous different businesses, all acting as tenants in a real estate development, for example. In that situation, there may be tens or hundreds of EB-5 investors. Each investor's EB-5 contribution must each meet the requirement that ten full-time American jobs are created.

Since the EB-5 program's inception, there has been an annual quota of approximately 10,000 immigrant visas given to EB-5 investors and their derivative family members. This demand has never been met. In fact, in no previous fiscal year has demand exceeded 50% of the allocated quota. However, because of the Regional Center program's recent popularity, EB-5 visa usage reached its highest level in the fiscal year ending September 30, 2012, when, according to the U.S. Department of State, EB-5 visa usage totaled 7,641-more than double the usage in the prior fiscal year. To date, there is no quota of EB-5 visas allocated per-country. This could change in the future, however, since 80% of EB-5 investors are Chinese, and these investors largely prefer the RC Program over the standard EB-5 program. The State Department noted as of February 2013 that EB-5 visa usage was up by 75 percent compared to February 2012.

All of this is to say that Regional Center investment is popular-very popular. The evidence seems to overwhelmingly point toward the EB-5 RC Program being extended well into the future.

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