On November 5, the “Immigrant Investor Program Relief Act” was introduced. As it proposes $1 million for TEA and just $1.1 million for non-TEA investments, it clearly aims to promote urban interests, counter to the Modernization Rule’s mandate to help rural regions. The bill gives some investors the chance to live and work in the U.S. sooner for a $50,000 fee; it allows for premium processing for a $50,000 fee; and it features a $50,000 fee for all new petition filings.
Introduced by Senators Graham (R-SC), Rounds (R-SD), and Cornyn (R-TX), the “Immigrant Investor Program Relief Act (S.2778), claims to bring some “balance” between urban and rural interests, generate extra revenue, and address the investor backlog.
Firstly, if the legislation were to pass, the program would be extended six years until September 30, 2025.
TEA designation for rural & urban areas
The current and impending new regulations determine Targeted Employment Area designation based on high unemployment rates; this new act would designate rural areas as a TEA if that area is within a census tract larger than 100 square miles and has a population of less than 100 people per square mile.
“Urban distressed” areas would receive TEA designation if they are determined by the U.S. Treasury Department to be a Qualified Opportunity Zone. See here for Opportunity Zone resources.
New investment amounts
The new bill would increase the TEA amount to $1,000,000; however, it would lower non-TEA amounts to just $1,100,000, for a difference of just $100,000.
The bill proposes setting aside 15% of visas for rural areas and a separate 15% for “urban distressed areas.” The set-aside visas not used would then, at the end of every year, go into the non-TEA pool for the upcoming year.
How this bill is at odds with the new Modernization Rule
The Modernization Rule makes numerous references to aiming to preserve the original intent of Congress in helping rural areas and communities that are in true need of economic stimulation. To that end, the Rule redefined TEA requirements to prevent the “gerrymandering” that allowed upscale urban projects like Hudson Yards to receive EB-5 funding as a Targeted Employment Area.
“DHS believes the final rule does ensure that both urban and rural projects have equal opportunity to improve their respective communities. Petitioners have overwhelmingly obtained TEA designation in urban (i.e., non-rural) areas in recent years.”
This new bill, however, is clearly giving further support to urban areas while trying to sell the idea of “balance” between urban and rural EB-5 investments. But stats bear out that that the majority of investing weight has been in the favor of urban areas, and if any balance is to be achieved, it must be on the side of rural investments. As an example, in the fourth quarter of 2015, only 2.5% of EB-5 investments were made in rural areas, according to the Government Accountability Office (GAO).
The Modernization Rule repeats many times the need to preserve a 50% differential between TEA and non-TEA investments. Here is one example:
“Thus, in the final rule, DHS maintains a 50 percent differential between the TEA investment amount and non-TEA investment amount in order to encourage development outside of affluent areas and increase investment in TEAs.”
The Rule goes as far as to explicitly declare that decreasing the differential would come at a cost to those areas in need:
“DHS agrees with the commenter that decreasing the monetary differential between TEA and non-TEA investment amounts undermines the incentive to invest in TEAs.”
If this new bill S. 2778 were to become law, it would directly oppose this mandate of DHS in two significant ways: 1) It would make TEA designation easier for urban projects to achieve 2) The almost-negligible $100,000 differential between TEA and non-TEA projects would be at the expense of rural investments and benefit urban ones that investors have typically chosen.
The Immigrant Investor Program Relief Act features provisions to address the investor backlog. Investors with an approved I-526 who have been waiting three years could pay a fee to have themselves and their derivative family members be issued travel and work authorization in the U.S. Also, Investors could pay $50,000 to have “premium processing” that would see their cases processed in 120 days.
Extra cost for all new petitions
Of note, every new investor would pay $50,000 to file their petition.
No more “aging-out” of derivative children
Retrogression has seen many children of the main applicant’s “age out” and lose their opportunity for an EB5 Green Card. This bill addresses this problem and would “freeze” a derivative child’s age at the point of filing the I-526 petition until they have their conditions removed on permanent residency.
Security and anti-fraud measures
In the interest of program integrity and national security, provisions would give further authority to the Department of Homeland Security (DHS). This would include greater oversight and enforcement ability over regional centers, EB-5 applicants, and third-parties, like agents, who promote regional centers.
Read about bill details in this Greenberg Traurig blog
See the EB-5 Modernization Rule
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