Action of Proposed Rulemaking for EB-5

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Quentin Byrd
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1 Action of Proposed Rulemaking for EB-5 Nick Berning AILA NW Annual Conference 2018 Direct Investment EB 5 Basic Requirements EB 5 Legal Sources INA 203(b)(5) 8 CFR CFR 216 USCIS Policy Manual, Volume 6, Part G Investors May 30, 2013 Policy Memo AILA Doc March 15-16, 2018 Page 1 of 9

What is included in the proposed regulations?

and $1,800,000 2) Changes in TEA eligibility and designation

changes Increased Investment Threshold Minimum Investment

$1,350,000 Non TEA investment threshold increased from

2 What is included in the proposed regulations? 1) Increase in the minimum investment thresholds to $1,350,000 and $1,800,000 2) Changes in TEA eligibility and designation process 3) I 526 Priority Date retention 4) Minor technical changes Increased Investment Threshold Minimum Investment threshold for TEA investments increased from $500,000 to $1,350,000 Non TEA investment threshold increased from $1,000,000 to $1,800,000 Investment thresholds will be adjusted by CPI every 5 years March 15-16, 2018 Page 2 of 9

encourage The increased investments investment at the amount standard is

which will counter over investment in underprivileged areas What does this

Increased Investment Threshold Increased investment threshold will reduce

3 $1,350,000? WTF!?!? Popularity of the TEA program was undermining congressional aims to also encourage The increased investments investment at the amount standard is based minimum on the unadjusted investment consumer amount price index increase from 1990 to USCIS increased the TEA investment threshold to 75% of the full investment which will counter over investment in underprivileged areas What does this mean for EB 5 investors? Increased Investment Threshold Increased investment threshold will reduce demand for visas Reduced demand will make it difficult for some regional centers to complete capital raises for projects, and will leave some projects unfunded In ten years, reduced demand will further USCIS goal of reducing backlog March 15-16, 2018 Page 3 of 9

threshold will force investors dig deeper into their

Changes in TEA Designation TEA designations will be

4 What does this mean for EB 5 investors? Increased Investment Threshold Increased investment threshold will force investors dig deeper into their assets, using investment funds which cannot be easily sourced. Applications will require more documentation to demonstrate source of additional funds. Processing times may increase. Changes in TEA Designation TEA designations will be made by USCIS, not state employment security departments TEA designations for high unemployment can be made for an MSA, a county, or a city. March 15-16, 2018 Page 4 of 9

TEA designation by census tract Smallest unit a TEA can be

Only census tracts adjacent to the tract containing the NCE

Contiguous tracts can no longer be used to create amoeba

TEA Designation TEA designation rules were overdue for

designation based on unemployment, which may increase

5 TEA designation by census tract Smallest unit a TEA can be designated for is a census tract not a census tract block. Only census tracts adjacent to the tract containing the NCE can be used for designation. Contiguous tracts can no longer be used to create amoeba TEAs What does this mean for EB 5 investors? TEA Designation TEA designation rules were overdue for reform to curb abuse Fewer projects will qualify for TEA designation based on unemployment, which may increase investment in rural areas USCIS will likely take longer to designate TEAs than state ESDs March 15-16, 2018 Page 5 of 9

Priority Date Retention The priority date of an approved I 526 petition will

is not subsequently denied No finding of fraud No material misrepresentation No

jurisdiction over the NCE, over the investor s residence, or at the IPO.

6 Priority Date Retention The priority date of an approved I 526 petition will apply to any subsequent I 526 filed by the same investor if: The approved I 526 is not subsequently denied No finding of fraud No material misrepresentation No material error by USCIS The I 526 has not already been used for entry I 829 Adjudication I 829 investors can select an interview at the USCIS field office with jurisdiction over the NCE, over the investor s residence, or at the IPO. USCIS may waive the interview if the investor meets the conditions in 216.6(c)(1) i.e. the investor met conditions for approval. March 15-16, 2018 Page 6 of 9

Who can file an I 829 Petition The Investor s spouse and children may be included

If the spouse and children are not included on the investor s I 829 then: If the

deceased, the spouse and children may be included on the same I 829 Miscellaneous

to entrepreneurs replaced with investors Removes the requirement in 8 CFR 204.

7 Who can file an I 829 Petition The Investor s spouse and children may be included on the investor s I 829 petition. If the spouse and children are not included on the investor s I 829 then: If the investor is alive, each dependent must file his or her own I 829 If the investor is deceased, the spouse and children may be included on the same I 829 Miscellaneous Spring Cleaning Changes Reference to US Customs Service replaced with CBP Reference to entrepreneurs replaced with investors Removes the requirement in 8 CFR 204.6(k) that an I 526 denial notice includes a finding on whether the NCE was principally doing business within a TEA March 15-16, 2018 Page 7 of 9

More miscellaneous changes Compliance with Public Law 107 273

to allow investors to engage in the NCE either through the

operating agreement grants the investor rights, powers, and

How does the regulation affect the EB 5 Reform Bill?

8 More miscellaneous changes Compliance with Public Law Investor no longer required to create new NCE Updates language to allow investors to engage in the NCE either through the exercise of day to day managerial control or through policy formation. Policy formation requirement is satisfied if the NCE s operating agreement grants the investor rights, powers, and duties normally granted to equity holders. How does the regulation affect the EB 5 Reform Bill? Regional Center Pilot Program is set to expire on, 2018 Reduces pressure for Congress to change the investment threshold by statute March 15-16, 2018 Page 8 of 9

Planning for Success What should you do to help

funds Submit I 526s before the regulations take

9 Planning for Success What should you do to help your clients Apply for TEA designation early Work with investors to select a source of funds that can be documented before transferring funds Submit I 526s before the regulations take effect on, 2018 Thank you! March 15-16, 2018 Page 9 of 9

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