The EB-5 Immigrant Investor Program, established in 1990, has undergone significant changes with the EB-5 Reform and Integrity Act of 2022 (RIA). Understanding this law is crucial for potential investors as it includes insight into how the United States government will handle increases in the minimum EB5 investment amount moving forward. Increases are expected to take effect in January 2027, less than two and a half years from now.
Historically, the required EB5minimum investment was $1 million for non-targeted employment areas and $500,000 for projects in targeted employment areas (TEAs), regions characterized by high unemployment or rural status. The Reform and Integrity Act of 2022 raised these thresholds significantly to reflect economic changes since the program's inception. The new minimum EB 5visa investment amount requirement is now $1,050,000, reduced to $800,000 for TEAS] and qualifying infrastructure projects.
A notable requirement in the RIA law mandates automatic adjustments of the investment thresholds every five years, beginning January 1, 2027. These adjustments will be based on the cumulative annual percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) reported by the Bureau of Labor Statistics. This ensures that the investment amounts remain aligned with inflation and economic conditions, preventing another extended period without adjustment.
Using CPI data from January 1, 2022, through July 31, 2024, we can understand the impact of inflation on the investment thresholds. As of July 31, 2024, the CPI-U index was recorded at 314.340, reflecting a 12.75% cumulative change since December2021 when it was 278.802. This real-time data provides valuable insights into how inflation influences the EB-5 investment requirements.
The increased thresholds and automatic adjustments reflect public policy choices by Congress to ensure the EB-5 program remains practical and reflects current economic conditions. This means a higher initial investment. Understanding the automatic adjustment helps investors plan their finances better, knowing that the requirements will evolve with inflation.
The changes brought by the RIA mark a significant shift in the investment landscape for prospective EB-5 investors. The program aims to remain relevant and economically viable by incorporating automatic adjustments based on inflation. Investors should stay informed about these changes and consider potential future increases in their planning.
So what will increases look like? According to the Peachtree Group EB-5 team’s conservative calculations, in January 2027, we expect the lowest investment threshold will increase from $800,000 to between $900,000 to $975,000. Here’s how we came to this conclusion.
To set a baseline, the Peachtree Group team reviewed the relevant CPI index numbers from Dec. 21, 2021 to August 14, 2024, and projected future CPI increases based the Federal Reserve’s target inflation rate of 2% per year to demonstrate the projected CPI number (blue line).
Using this data the team created lines for the project amount of the targeted employment area amount and reviewed three scenarios:
Under the latest inflation rate reported for July 2024 (1.4% per year), the investment threshold as of January 1, 2027 would increase to $900,000. (yellow line)
If inflation settles at the Federal Reserve’s target of 2% per year from today, the investment threshold would be $900,000 as of January 1, 2027 (green line)
If inflation continues at the cumulative average rate since the reference date of January 1, 2022(4.9% per year), the investment threshold as of January 1, 2027 would increase to $975,000 (red line)
Using the law and statistics and extrapolation to 2027, we reach our conclusion that we expect as of January 2027, the lowest investment threshold will increase to between $900,000 to $975,000.
What Can You Do Now?
No one can be certain of what the future holds, even when hypothesizing based on historical data. However, what we do know is there will be automatic adjustments to the minimum EB5 investment amount per the RIA and those adjustments are expected to take effect in January 2027, less than 2.5 years from today.
To lock in the lower EB5 investment amount, it is important to get the process started. Peachtree Group is an integrated investment management firm specializing in identifying and capitalizing on opportunities in dislocated markets, anchored by commercial real estate. Today, we manage billions in capital across acquisitions, development, and lending, augmented by services designed to protect, support, and grow our investments.
Our EB-5 Team has more than30 years combined experience in EB-5 investments managing over $2 billion in EB-5 transactions. Learn about the Peachtree Advantage and let us help you navigate the difficult EB-5 process before investment amounts rise.
Here’s how you can begin your journey to U.S. residency with an EB-5 investment.
Start by visiting our website where you can learn more about our specific EB-5 investment opportunities.
We designed our site to be user-friendly and simple.
The EB-5 Visa program is a pathway for foreign investors seeking permanent residency in the United States. The EB-5 Regional Center Program stands out because it pools investments in specific geographic areas, stimulating economic growth and job creation.
To improve the administration of the Regional Center Program, on February 5, 2024, a bipartisan group of four US Congressmen introduced the EB-5 Regional Center Program Advisory Committee Authorization Act. Adam Greene, EVP EB-5 for Peachtree Group was in Washington D.C. recently meeting with congressional staffers as part of the IIUSA quarterly fly-in. It was a hectic day meeting and discussing EB-5 with 18 Congressional offices. Here is what the IIUSA delegation explained to the staffers:
The EB-5 Regional Center Program Advisory Committee Authorization Act, which is supported by IIUSA, would establish an advisory committee inside U.S. Citizenship and Immigration Services (USCIS) to communicate, coordinate, and advise USCIS on administering the Regional Center Program.
The purpose of the Act is to establish an advisory committee to communicate, coordinate, and advise USCIS on administering the Regional CetnerProgram.
The EB-5 Regional Center Program Advisory Committee Authorization Act will help EB-5 investors navigate the complex landscape of the EB-5 Program in the United States. As an officer of IIUSA and a member of the Public Policy committee, Peachtree’s Adam Greene is able to participate in discussions with policymakers as they refine the details of this legislation. EB-5 investors can look forward to potential enhancements that will strengthen their confidence in the program and pave the way for successful outcomes.
For more information on the EB-5 Visa Program or Peachtree Group’s offerings, Contact Us.
About Peachtree Group
Peachtree Group is an investment firm driving growth with a diverse portfolio of commercial real estate assets and other ventures, with a specialty in hospitality. We’ve executed hundreds of investments since inception with a focus on real estate acquisition, development, and lending. Today, we manage billions in equity, augmented by services designed to protect, support, and grow your investment.
The United States Citizenship and Immigration Services (USCIS) has recently announced a significant 204% increase in the filing fees for the I-526E, Immigrant Petition by Regional Center Investor, the crucial, first step in the EB-5 Immigrant Investor process. This adjustment in fees has near-term implications for prospective EB-5 investors. This article delves into the details of the fee increase and its potential impact on individuals seeking U.S. permanent residency through the EB-5 program.
The EB-5 Immigrant Investor Program offers a pathway for foreign investors to obtain a U.S. green card by making a qualifying investment in a new commercial enterprise that generates employment for U.S. workers. TheI-526E petition is a vital component of the application process, serving as the initial step in demonstrating the investor’s commitment to the program.
According to the USCIS website (Frequently Asked Questions on the USCIS Fee Rule | USCIS), the I-526E fee will increase from $3,675 to $11,160, a 204% increase, on April 1, 2024. This adjustment is part of the USCIS’s broader efforts to cover the escalating costs associated with processing and adjudicating immigration petitions. The fee increase applies to all new I-526E filings. EB-5stakeholders are still waiting for USCIS to conduct a separate fee study required by the new EB-5 law (the EB-5 Reform and Integrity Act of 2022, or the “RIA”). Section 106 of the RIA requires USCIS to perform a fee study about the level of fees needed to adjudicate EB-5 related petitions in a timely manner. The April 1, 2024 increase in fees is separate from any future increase that may result from this required fee study, so investors should stay informed about potential further increases in the future.
The USCIS’s decision to raise the I-526E filing fees introduces a new dimension to the already intricate landscape of the EB-5Immigrant Investor program. Prospective investors are advised to closely evaluate the updated fee structure, engage with immigration professionals for tailored advice, and make informed decisions based on their individual financial circumstances. As the EB-5 program remains an attractive avenue for obtaining U.S. permanent residency, investors should stay informed and adapt to changes in order to navigate the evolving landscape successfully.
Peachtree Group has current offerings that are structured to qualify investors to apply for the EB-5 program.
To learn more about EB-5 and Peachtree’s EB-5 offerings, fill out our contact form.
About Peachtree Group
Peachtree Group is an investment firm driving growth with a diverse portfolio of commercial real estate assets and other ventures, with a specialty in hospitality. We’ve executed hundreds of investments since inception with a focus on real estate acquisition, development, and lending. Today, we manage billions in equity, augmented by services designed to protect, support, and grow your investment.
On October 11, the U.S. Citizenship and Immigration Services, (USCIS), the American federal agency that oversees immigration, issued long-awaited guidance about the investment period (known as the “sustainment period”) required for EB-5, America’s residency by investment program.
The guidance stated that investors may receive back their required $800,000 capital after just two years from investing. While many in the EB-5 world have been waiting for USCIS to clarify the sustainment period requirement, the October 11 USCIS policy leaves open many questions, including whether the guidance itself was issued in accordance with proper procedures required under US law.
The Official Statute
The official statute regarding EB-5 was updated with the passage of the “EB-5 Reform and Integrity Act of 2022” (the “RIA)” on March 15, 2022. As with the federal agency administering any official statute, USCIS must write formal regulations under a proscribed process. Only after a formal rulemaking process, which requires a public notice and comment process, do regulations become the rules under which the law is administered.
While EB-5 program participants have been asking USCIS to issue guidance and regulations, it is not clear that USCIS has the legal authority to change existing rules unless and until it follows the rule making process. This is especially true in cases where existing regulations can be read as consistent with the new statute, as in the case of the sustainment period.
The Cause of Confusion
The cause for this confusion is statutory language in the new law itself. The law requires that the would-be immigrant’s investment “is expected to remain invested for not less than 2 years.” The section of the EB-5 law regarding “removal of conditions”, or when the investor has a permanent green card, was edited to eliminate specific wording that the investor “sustain” the investment. The removal of conditions section, however, allows for an investor to have an extra year, beyond the initial two-year period of conditional residency, to prove job-creation only if they keep their capital invested.
USCIS Interpretation
It seems that USCIS interpreted these two provisions to require just two years of active investing. USCIS went further to require that the initial investment remain in the initial project until sufficient jobs have been created. However, the new law also provides for “redeployment” if an initial investment is repaid before an investor is qualified to be repaid.
Remain Invested or Redeployment
A requirement to redeploy capital is illogical if the initial investment must satisfy the minimum sustainment period and job-creation requirements. The ability to withdraw capital after just two years seems illogical if the law allows an extra year to prove job-creation only if that capital remains invested for longer. When the RIA is read in its entirety, the new USCIS guidance does not seem to hold up.
Investment Timeline Defined
The question of when the two-year investing timeline starts is also unanswered. The USCIS guidance indicates that the start date is when the full amount of the investment is “made available to the job-creating entity.” Is this when the EB-5 money is spent? When the loan is closed, but not yet funded? Can the EB-5 funds be deposited and not used by the job-creating entity? How does bridge financing affect this calculation? These are all unanswered questions.
Structuring EB-5
In conclusion, EB-5 project sponsors must structure the EB-5 instrument responsibly, and EB-5 investors should not just rush into a deal that promises money back in two years. For now, it seems safest to maintain the EB-5 investment in the initial project for at least two years after the full amount of the EB-5 funds have been transferred to the JCE/borrower. Investors should stay informed of ongoing developments about the sustainment period, as this issue is sure to come up, again, in courts or USCIS policy in the future. More importantly, no matter what may or may not have changed in the rules, EB-5 investors must evaluate the financial and immigration risks of potential investments thoroughly.
To learn more about the EB-5 Visa program and Peachtree’s EB-5 offerings, fill out our contact form.
