Sen. Grassley and Sen. Leahy co-sponsored a bill to extend, modify and reform the EB5 program. Senate bill S.1501 was introduced on June 3 2015 and referred to Committee on the same day. The EB5 pilot program is to sunset on Sept. 30 2015. The bill will extend the date to Sept. 30, 2020. The Pilot Program, to invest money in a pre-approved regional center- was first enacted in 1992 and regularly reauthorized since then. The EB5 program itself was created in 1990.
Among some other modifications- there are 3 significant modifications/reforms that stand out to me:
1. Minimum investment amounts to be raised to $1.2 million for non- targeted employment areas (increase of $200k) and $800,000 (increase of $300k) to targeted employment areas.
2. Gifts of funds to the investor will be limited from immediate family members, siblings and grandparents.
3. Regional Centers will have to pay an annual ‘EB5 Integrity fee’ of $20,000.
There is much more to the bill and anyone interested in reading it can find a link here from the IIUSA website. Hard to say what will actually happen when it is time to pass the extension of the program- at a very minimum, I expect the extension to go through just like it has since 1992 when the program was introduced.
Will the investment amount increase? There is certainly arguments in favor of it- Australia introduced the Significant Visa in 2012 which is more expensive that our EB5 visa and that has been popular. So popular, that now Australia is modifying the program and allowing investments to be made in startups (the program is currently suspended pending modification to the program). While there are many other similar visas around the globe, none is specifically for creating jobs and this is where the EB5 is an actual winner.
In July 2014, Bill Gates and Warren Buffet, in an OpEd in the New York Times. argued that the minimum investment amount should be increased. If we look at our local area in Washington State and Seattle specifically, investors are snapping up property in every direction. The latest was the historic downtown Seattle Columbia Tower purchase by Asian investors- reported only 2 days ago. While we don’t know for sure if EB5 funds was used for this investment, it is not a stretch think that it was. So, there is definitely an argument for raising the minimum investment. But a balancing act will need to be made taking into account the complexity of the process, the sheer length people have to wait to get the visa (on average 2 years from the investment) and that jobs must be created through the investment. No other investment visa around the world has such stringent requirements.
We will be watching this space and will be interested in hearing your thoughts- should the minimum investment amount be increased?