Congress punishes Urban EB5 ecosystem
May 24, 2023
The original intent of the EB5 Program, continually maintained by Congress, was to create jobs in rural areas and chronically high unemployment areas in cities. However, 95% of EB5 monies went into glitzy urban areas in New York, Miami, and Los Angeles metropolitan areas.
Despite repeated protests from US Congress, the EB-5 industry succeeded in gaming Congress by gerrymandering TEAs.
However, this changed in 2022. With the introduction of the Reform and Integrity Act (RIA) 2022, which is now law, large urban EB-5 developers have now been banished from the EB5 industry, and those agents and investors who put their trust in large urban EB5 developers in the past have been severely punished.
The entire urban EB5 ecosystem i.e. urban developers, previous urban EB5 investors, new urban EB5 investors, and EB5 agents have now been punished with 50% longer waiting times. This is especially true in the case of investors from retrogressed countries like China, India & Vietnam, which together accounted for over 2/3rds of urban EB5 investments in the pre-RIA world.
Investors in the US EB5 must now be aware of the following important facts that apply to their investments:
- Investing in EB5 projects in urban areas will result in investors from China having to wait for up to 20 years for the Green Card and for investors from India & Vietnam up to 10 years. This rule would apply even for investments in projects that are not Regional Centers.
- EB5 promoters and agents who have sold urban EB5 projects to investors in the past will now have to face the ire of investors since these investors would now have to wait for much longer periods for their Green Cards.
- The longer waiting periods do not apply to rural projects.
- Investors must note that the urban EB5 industry is still trying to get around the strict TEA definition using the temporary scrambling of unemployment data due to Covid–using one-time blips in unemployment to pass off hearts of downtown as chronic unemployment areas. But TEA is no longer a game, and using covid data as a subterfuge will not work. The congressionally mandated policy for the United States is to use EB5 investments to alleviate chronic unemployment. If technical unemployment measures are too far from a Congressionally set policy, RIA gives USCIS a suite of tools to intervene.
- Under RIA, USCIS can now enforce Congress’s will in a myriad ways including site visits, indefinite delays of 526E processing for urban developers with questionable TEAs (possibly 5+ years), and many other prosecutorial tools.
Stay away from large, glitzy urban projects.
Contact us to ensure that you are investing in an EB5 project that satisfies all new regulations in the RIA, and can guarantee your return of investment & your Green Card in the stated time periods.