Summary and Analysis of the 2022 EB-5 Reform and Integrity Act
Breaking News:
Below we are outlining the summary terms within the new EB-5 Reform and Integrity Act of 2022. We are also hosting a webinar event to discuss the new changes. A replay is available for those who register after the broadcast date.
***New EB-5 Bill Officially Out. Download here.***
***Read our White Paper on the New Bill. Download here.***
2022 EB-5 Reform and Integrity Act Summary Terms:
Reauthorization Term: 5 years (to 2027)
Minimum Investment Amount: $800,000 (TEA); $1.05 million (non-TEA). On 2027 and every 5 years thereafter, EB-5 investment amounts will be automatically adjusted with inflation.
Reserved Visas & Visa Carryover: Of the annual 10,000 visas, 20% reserved for rural, 10% for urban high unemployment, and 2% for infrastructure. Any unused visas in a fiscal year will carry over to the same category the following year. For the third year, unused visa carried over to the general EB-5 pool.
TEA – Adjacent and Contiguous Census Tracts for High Unemployment Areas: High unemployment area for each applicable census tract and any adjacent tracts in which the NCE is principally doing business and for which the weighted average is not less than 150% of the national average unemployment rate. Similar definition from the 2019 EB-5 Modernization Rule.
TEA Designation & Duration: TEAs will be designated only by DHS or other federal officials. State and local governments cannot designate TEAS. TEA designation lasts for 2 years and can be renewed for 2-year periods.
TEA – Infrastructure Projects: A project that is administered by a governmental entity (federal, state, or local) and which is the job-creating entity that receives EB-5 capital investments from the new commercial enterprise (NCE) under the Regional Center Program or from the NCE as financing for maintaining, improving, or constructing a public works project.
Age Determination for Children: A child who is 21 years old and has been admitted, i.e., has received the conditional green card, as the child of the primary application whose conditional status is terminated or I-829 petition is denied, may still be considered a child under 21 (if still unmarried) if the primary applicant files a new I-526 petition.
Prioritized Processing: USCIS will prioritize (undefined) processing petitions for rural areas.
Concurrent Filing: If approval of the I-526 petition would make a visa immediately available to the EB-5 investor (i.e., visa bulletin is current under country of chargeability), then they may file the I-485 Application for Adjustment of Status concurrently or subsequent to the I-526 petition.
Job Creation for Regional Center Projects: Only 90% of required job creation may be satisfied counting indirect job creation. The 10% direct job creation may still be determined using economically and statistically valid methodologies. If construction activity lasts less than 2 years, then only 75% may be indirect jobs. Tenant occupancy can count if they are not relocated jobs.
EB-5 Investments cannot be used to purchase bonds: EB-5 capital may not be used by the NCE to purchase publicly municipal bonds or any other bonds.
Redeployment Guidelines – no stocks or bonds: DHS will promulgate new regulations on EB-5 redeployment. But the 2022 EB-5 Reform Act allows redeployment to be made anywhere in the U.S. (regardless of the Regional Center or NCE’s location) if (1) the NCE has executed the business plan in good faith without material change; (2) the NCE has created enough jobs for all the NCE’s investors; (3) the JCE has repaid the capital initially deployed in the initial project; and (4) the capital is maintained at risk. No passive investments such as stocks or bonds.
Source of Funds Requirements: The EB-5 investor must prove the lawful source of funds for the EB-5 capital plus any funds used to pay administrative costs and fees. Documentation includes any and all tax returns filed during the past 7 years. For gifts and loans, gifts and borrowed funds may not be used unless such funds are gifted/loaned in good faith and not gifted/loaned to circumvent any limitations on permissible sources. Donors and lenders must provide similar SOF documentation, with exceptions made if funds loaned by a bank.
Priority Date Retention: If a Regional Center, NCE or JCE is terminated or debarred from participating in the EB-5 Program, then an EB-5 investor may retain his or her priority date (and prevent age-out of child beneficiaries) if, within 180 days, the investor’s NCE associates with another approved Regional Center, or the investor makes a qualifying investment in another new NCE.
Grandfathering of EB-5 Investors: For any petitions filed on or before September 30, 2026, UCIS shall continue to process I-526 and I-829 petitions even if the EB-5 Regional Center Program lapses. A lapse in the program is not a basis for denial, and DHS shall not suspend or terminate the allocation of visas to approved petitions.
Integrity Measures: The 2022 EB-5 Reform Act contains several program integrity measures, including:
- The establishment of an Integrity Fund
- $10-20,000/year per Regional Center (depending on number of investors)
- $1000 paid by EB-5 investors, in addition to the I-526 Petition filing fee
- Regional Centers must file I-924 / I-526 exemplar before any investors file an I-526 petition for the project. Approval is binding unless fraud or material change.
- Regional Centers must timely notify USCIS of any significant structural changes
- USCIS must conduct periodic site visits to the Regional Center, NCE, and JCE
- Regional Centers must provide annual statements to USCIS, and their investors upon request, accounting for investor capital and certifying compliance with program requirements.
- Regional Centers must certify that they have reasonable policies and procedures in place to comply with US securities laws and protect against fraud.
- DHS must conduct background checks of certain persons of regional centers, NCEs and associated JCEs, and prohibits certain foreign ownership and involvement in regional centers, NCE and associated JCEs.
- DHS may terminate, debar, and impose penalties against regional centers, NCEs and associated JCEs and relevant persons involved for violating EB-5 regulations.
- Direct and third-party promoters, including migration agents, are required to register with USCIS, certify compliance with EB-5 and US securities rules, and disclose fees received with a description of services rendered.
- EB-5 projects must use a fund administrator or commission independent annual audits
- EB-5 capital must be maintained in non-commingled accounts
Administrative Appeals: If a regional center or EB-5 investor wishes to contest the denial, revocation, termination, or sanction issued by DHS/USCIS, the party must first apply for administrative appellate review by the Administrative Appeals Office of USCIS. This means that neither the regional center nor the EB-5 investor may seek judicial review (i.e. challenge USCIS decision in court) until the administrative review process is completed. Note: This should not apply to writ of mandamus actions that are challenging USCIS delay instead of a final decision.
Timely Processing: The 2022 EB-5 Reform Act requires USCIS to perform a study within 1 year to determine what fee adjustments are necessary in order for USCIS to adjudicate EB-5 petitions timely (i.e. I-526 approval within 90 days for TEA projects).
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