The American EB5 community’s back is up against the wall. A proposed new regulation has set off alarm bells throughout that community because the regulation threatens to destroy the EB5 investor immigration program. The EB-5 green card program was first introduced in 1990, with the intent of issuing 10,000 investors green cards in exchange for them investing money in the USA. The sum was set at $1 million. Two years later, a regional center version of the program was added, reducing the required amount to be invested to $500,000. The funds were to be invested in commercial projects, and the money was to go towards impoverished parts of the U.S., where the employment rate was at least 150% of the national average – so-called Targeted Employment Areas (TEAs). Unfortunately, the way in which TEAs were determined had a few loopholes, leading to some scandalous abuses of the program, such as the fact that money from the EB-5 program was going to fund prime properties in Manhattan and Beverly Hills, rather than the poor and impoverished areas. The new regulation proposes that EB5 investors be required to invest $1.3 million for regional center projects (up from the current $ 500,000) and $1.8 million for direct investment projects (up from the current $ 1 million). Furthermore, the regulation proposes to centralize Targeted Employment Area designations, something currently undertaken at the state level. In short, the new regulation aims to correct what the federal government sees as two shortcomings in the program as it stands at this moment: investment requirements that have not been increased since the 1990s and that are too low, and the abuse encountered in the TEA designation process where a kind of gerrymandering has been taking place. Neither proposed correction is popular.
By Andy J. Semotiuk for FORBES
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