With concerns over fraud and poor oversight, the debate over EB-5 visas has prompted Congress to respond with a draft to renew current EB-5 legislation that is set to expire on December 11, 2015. This concern is related to the many high-end real estate projects in larger cities that have benefited with job creation from the program for the past several years. Meanwhile, smaller projects in more rural areas or impoverished areas may have been crowded out of the program because of the limited number of green cards available each year to foreign investors.
Proposed Changes
With this draft, which is co-sponsored by Senators Charles Grassley and Patrick Leahy, proposed changes to EB-5 program seek to prevent future program abuses from occurring. It’s expected that these changes will increase opportunities for investors with smaller projects to qualify for EB-5 visas.
Included in the draft legislation:
- The number of green cards for lower level projects would increase from 3,000 to 4,000 out of the 10,000 EB-5 visas available.
- Projects, including government infrastructure or manufacturing would be placed in their own categories that will qualify them for a lower fundraising level, along with those in designated federal economic development zones.
- Fundraising levels would rise from $500k to $800k for lower level projects and from $1 million to $1.2 million for larger projects.
- To qualify for high unemployment area benefits, the location of the project would need to take place or next to a census tract that has an unemployment rate of that is equal or more than 150% of the national average.
- Projects located in areas where the poverty rate is 20% or higher will qualify for additional consideration with other federal economic development programs.
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