In the EB-5 Immigrant Investor Program, investors have two options for investment: direct investment and regional center investment. While investors can retain more control over their investments through the direct route, engaging in day-to-day management work at the new commercial enterprise (NCE), regional center investment is by far the more popular option. Not only are regional center projects more likely to be located in targeted employment areas (TEAs) and thus qualify for a lower investment amount, but they also offer relaxed job creation requirements, making it easier to qualify for an EB-5 green card.
Despite the popularity of regional centers, the EB-5 Regional Center Program is not permanent in the law. Since 2015, Congress has continually reauthorized the program for periods of one year or less, announced alongside continuing resolutions to fund the program. The program is set to expire on September 30, 2020, but a continuing resolution is in the works and is likely to include a new reauthorization of the program.
Previous reauthorizations have extended the program’s validity without introducing any changes, and it’s expected that the next reauthorization will not bring any changes to the program, either. With the expiration date a mere two weeks away, there isn’t enough time to introduce comprehensive legislation to change the EB-5 program.
EB-5 investors interested in working with regional centers shouldn’t fear this expiration date—in all likelihood, they will be able to proceed with their regional center investment. By far the most popular way to invest in the EB-5 program, the Regional Center Program is not expected to end anytime soon.
Why Invest through a Regional Center?
Even if the Regional Center Program were abolished, the EB-5 program would continue on, albeit with potentially diminished interest from investors. In direct investments, the investor must participate in the daily management of the NCE. This gives the investor more control over their investment but constitutes a major turn-off for investors with little managerial experience or other commitments.
In a regional center investment, investors can generally satisfy the requirement of active participation in the NCE by signing on as a limited partner. While they will be obligated to vote on certain company matters, for the most part, they are uninvolved in the NCE’s operations and even have the freedom to live on the opposite end of the country.
Another important advantage of regional center investment is the relaxed job creation requirements. To receive unconditional permanent resident status in the United States, an EB-5 investor must prove their capital funded the creation of no fewer than 10 full-time jobs for U.S. workers within their two-year conditional permanent residence period. In direct investments, EB-5 investors may only count direct jobs (i.e., those on the payroll of the NCE or directly involved in the construction of the building). In regional center investments, investors may also count indirect jobs (jobs funded by the NCE’s expenses on products and services) and induced jobs (jobs funded by the NCE’s employees spending their wages in the community).
The EB-5 program was a boon to the U.S. economy during the recovery from the Great Recession in 2008. Now, in September 2020, as the nation begins to emerge from the economic damage inflicted by the COVID-19 pandemic, the EB-5 program can once again boost the economy and help create much-needed jobs to help the American people regain their footing.