By Debbie A. Klis and Ellen Jerrehian
Legislation has been introduced in the U.S. House of Representatives to reform and make permanent the EB-5 Immigrant Investor Program (EB-5 Program). The American Entrepreneurship and Investment Act of 2014 (the Act) seeks to provide certainty to investors and other participants in the EB-5 Program, as well as improve the program’s effectiveness and accountability. Set to expire in September 2015, the EB-5 Program enables foreign nationals to obtain permanent residence status (a “green card”) through investments that create jobs.
Under the EB-5 Program, a foreign national must invest at least $1 million, or at least $500,000 if the project is in a Targeted Employment Area (TEA)—a rural area or area with an unemployment rate that is at least 150 percent of the national average. The investment must create a minimum of 10 full-time jobs in the United States.
The Act is sponsored by Representatives Jared Polis (D-CO), Joe Garcia (D-FL), Matt Salmon (R-AZ), and Mark Amodei (R-NV). Its provisions are outlined below.
Permanent Authorization of the EB-5 Program
The Act would make the EB-5 Program permanent, giving certainty to businesses, real estate developers, and investors. The Act also reforms and improves the EB-5 Program’s efficiency and accountability and makes it more “user friendly.”
Amended Definition of Targeted Employed Area (TEA)
The Act would clarify and expand the TEA definition to add the following:
In addition, a determination that an area is a TEA by a delegated state agency using acceptable data sources, including U.S. Census Bureau data and Bureau of Labor Statistics data, shall be deemed conclusive. All determinations shall remain in effect for two years.
Improved Calculation of Job Creation
The Act would make clear that the full-time employment required for job creation could be satisfied by calculating the number of full-time equivalent employees who could have been employed (i.e., dividing the number of hours worked by 35). This means that hours worked by part-time, intermittent, or seasonal employees such as construction workers would be counted in the job creation calculation.
Elimination of Limits on Individual Foreign States
The Act would eliminate the per-country quotas for all immigrant visas, which would alleviate the backlog in the Chinese visa category.
Preapproval of Projects
The Act provides for a procedure for the approval of a proposed business plan before involvement by the foreign investor. This would reduce risk to the investor and make these investments more attractive, as well as make the process more efficient for all parties.
Definitive Processing Times
The Act sets forth specific processing times for determinations regarding regional centers, proposed businesses, and visa petitions, which would offer needed relief from the delays of recent years. In each case, the filing party shall receive notification in writing within 30 days if the filing does not meet the standards for approval and a final determination shall be made within 180 days, or 30 days after the receipt of any additional information or documentation requested.
Adjustment of Capital Requirements
The Act includes a proposal for the automatic adjustment of threshold investment amounts on January 1, 2016, by the percentage change in the Consumer Price Index (CPI) during 2015 and on every fifth subsequent January 1 by the cumulative percentage change in the CPI during the previous five years.
Since 2005, the EB-5 Program has resulted in the investment of more than $4.7 billion in qualified U.S. projects, creating more than 95,000 American jobs. Ballard Spahr will continue to monitor the Act and other developments affecting the EB-5 Program.
Ballard Spahr’s EB-5 Group establishes regional centers, negotiates loans, prepares offering documents, and advises on issues related to the EB-5 Program. The firm is one of few national law firms in the country with a team dedicated to the program.
To learn more about this proposed legislation, please contact Debbie A. Klis at 301.664.6211 or firstname.lastname@example.org, Ellen Jerrehian at 215.864.8582 or email@example.com, or any other member of the Group with whom you work.
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