In the late 80s, when the U.S. economy struggled, lawmakers explored new ways to revive it. Around this same time, it had become popular for governments to boost commercial activity in their countries by attracting global talent and foreign investments. After observing the potential benefits of this strategy, Congress adopted the investment immigration option, which we now know as the EB-5 Immigrant Investor Program.

The EB-5 program provides a pathway for foreign investors to obtain permanent residency in the U.S., if they satisfy the EB-5 eligibility requirements regarding investments and job creation quotas. The EB-5 initiative works because both parties benefit from it: the U.S. boosts its economic growth while foreign nationals obtain permanent residency.

However, the EB-5 program has its pain points, and over the years, Congress and other stakeholders have sought several ways to improve its effectiveness. In this article, we will break down the EB-5 program history and explore the development of the program from its inception until now.

How Did the EB-5 Program Start?

Between the late 1980s and early 1990s, the U.S. experienced an economic decline due to high inflation and other tight monetary policies. As a result, the country faced rising unemployment rates, urging the U.S. Congress to enact new policies to improve the situation.

One such policy is the EB-5 visa program, which Congress enacted through the Immigration Act of 1990. The immigration initiative was the perfect match for the economic situation in the U.S., aiming to create more job opportunities and promote infrastructure by encouraging foreign investments.

The EB-5 Program Timeline

The success of the EB-5 program is largely due to several regulatory adjustments made by the U.S. Congress and other immigration regulators. This section will feature a comprehensive analysis of the program’s issues and the reforms put in place to maintain its economic relevance.

Inception to Late 1990s

When the U.S. Congress launched the EB-5 visa program in the 1990s, foreign investors’ participation was relatively low. This was primarily due to the significant capital investment amounts needed and other complex regulatory requirements of the program.

To encourage EB-5 investors, the U.S. immigration regulators introduced the EB-5 Regional Center Program in 1992. Regional centers are entities designated by the U.S. Citizenship and Immigration Services (USCIS) to facilitate investments on behalf of foreign investors.

The new entities made the EB-5 pathway to permanent residency more accessible, being able to rely on regional center teams to navigate the EB-5 program’s regulations.

The regional center concept successfully increased investors’ participation in the initiative and drove employment opportunities in targeted employment areas (TEA) through direct and indirect job opportunities.

However, the initial EB-5 program model was also vulnerable to fraud and misuse. In the high-profile fraud case of the U.S. District Court v. O’Connor, the defendants falsified bank transactions, claiming that investors had met the EB-5 program’s investment requirements. To combat this issue, USCIS and the Administrative Appeals Office (AAO) enforced more stringent regulations to ensure EB-5 investments were legally funded.

Following the new reforms, the AAO used specific examples to ensure decisions were consistent and the new rules were applied correctly. The following four cases, in particular, were critical in defining the structure of the EB-5 visa program in operation today:

• Matter of Ho: The case informed the USCIS regulations on the EB-5 job creation criteria. The ruling emphasized the need for comprehensive and feasible business plans to meet the EB-5 job creation requirements.
• Matter of Izummi: In this case, the court highlighted the need for investors to be involved in managing their EB-5 projects. The case reinforced the “at-risk” requirement of EB-5 programs, clarifying that only projects subject to profit or loss will be valid EB-5 investments.
• Matter of Hsiung: The decision in this case stressed the EB-5 program requirement that all investment funds must belong to the investor(s) and be obtained legally.
• Matter of Soffici: This case supports the Matter of Ho, specifying that EB-5 investments must create employment for at least 10 full-time U.S. workers, among other key decisions.

The EB-5 Program in the 2000s

In 2005, USCIS established the Investor and Regional Center Unit (IRCU) to enhance the management of the EB-5 regional centers. The new regulatory body worked to improve the integrity of the EB-5 program by streamlining the process and ensuring better compliance with its regulations. By this time, the EB-5 program had become more popular, with more foreigners gaining confidence in the effectiveness of the EB-5 pathway to U.S. residency.

The 2012 EB-5 Reform

By 2012, demand for EB-5 applications had increased vastly. However, immigration regulatory bodies struggled to keep up with the scale and complexity of investors’ applications. In addition, fraud and mismanagement were still rampant within the EB-5 industry, requiring stricter policies and more reforms by USCIS.

In response to these issues, USCIS introduced the annual reporting requirement for regional centers and released memoranda clarifying previous EB-5 regulations for better implementation of the program. The immigration agency also worked to increase engagement with investors to address their concerns and improve EB-5 investment transparency.

2015 – 2019: Major Policy Changes in the EB-5 Program

From around 2015, the U.S. Congress began to introduce new bills to modernize the EB-5 Immigrant Investor Program. By the end of 2019, these legislative changes took effect, representing one of the most significant reforms to the EB-5 program since its inception.

The updated EB-5 legislation included an increase in the minimum investment amount from $1 million to $1.8 million, and $500,000 to $900,000 for targeted employment areas.

Furthermore, the new rules modified the criteria for designating targeted employment areas and authorized the Department of Homeland Security (DHS) to designate them. The objective here was to ensure a fairer distribution of benefits across rural and urban areas and channel investments to areas that needed it the most.

Relapse of the Regional Center Program in 2021

The Regional Center Program is subject to periodic renewals by Congress. The existing Regional Center Program was set to expire on June 30, 2021. However, stakeholders felt the need to modify the program before reauthorizing it.

Unfortunately, Congress could not agree on what legislative adjustments to include in the new reform, further delaying the passage of a reauthorization bill. The bill was not passed by the given deadline, resulting in the lapse of the Regional Center Program.

Consequently, new and ongoing EB-5 applications were suspended indefinitely, causing significant disruption of the EB-5 processes for many investors.

Reinstatement of the Regional Center Program in 2022

In 2022, Congress worked out a more stable framework for the EB-5 program by enacting the EB-5 Reform and Integrity Act of 2022. The new act aimed to combat fraud by enforcing stricter auditing and reporting requirements for direct investors and regional centers.

Also, the act authorized a new Regional Center Program that will last until September 30, 2027, with the new minimum investment threshold of $1,050,000 (and 800,000 in targeted employment areas). The idea was to reinstate an extended Regional Center Program to provide more stability to EB-5 investors and ensure the initiative’s sustainability. In addition, the act included provisions that shorten EB-5 processing times and offer various benefits to new investors.

The Current State of the EB-5 Program

There have been more adjustments in the EB-5 framework since 2022. In 2023, USCIS changed the status of approximately 100 rural TEA and metropolitan statistical area designations across the nation. Most recently, the agency’s fee hike of April 1, 2024, increased the filing fee of Form I-526E to $11,160.

There are also ongoing discussions about the agency’s policies, including the EB-5 investment sustainment period update.

Prospective investors are encouraged to follow industry updates closely to stay informed about EB-5 visa developments and recent trends.

Achieve EB-5 Success with EB5AN

The numerous adjustments to the EB-5 program have resulted in a reliable pathway to obtaining permanent residency in the U.S.

However, like all other immigration processes, this one can also be complex, so investors should plan for challenges in their EB-5 journey. After you’ve chosen the EB-5 route to U.S. residency, the next step should be to contact professionals in the industry.

EB5AN has successfully facilitated the EB-5 process for over 2,300 families. Our team of experts includes highly experienced EB-5 specialists who can guide you in achieving financial and immigration success.

If you would like to learn more about the EB-5 program, please schedule a free consultation today.