With a bill currently making its way through Congress that could raise minimum EB-5 investments after the end of September, many prospective investors are wondering if they should rush to file project plans.
Legislation that extended authorization of the Immigrant Investor Pilot Program is set to expire September 30. The American Job Creation and Investment Promotion Reform Act of 2015 would increase minimum investment amounts for international investors seeking EB-5 visas.
What may change with the EB-5 legislative update?
The proposed legislation would increase minimum EB-5 investments from $500,000 to $800,000 in a Targeted Employment Area. In addition, the bill would increase the minimum investment from $1 million to $1.2 million for projects in other geographic areas.
In its current form, the bill includes an exception to the date that the new provisions would take effect. Should the legislation become statute, applications for investments in regional center projects filed before the effective date would continue using the old per-investor minimums, as The National Law Review notes.
Should Regional Centers file exemplar petitions now?
To approve an EB-5 investment project, U.S. Citizenship and Immigration Services requires the filing of an “exemplar petition,” which includes crucial project documentation like a business plan, an investor prospectus, an economic study and related documents. Exemplars, typically filed by regional centers on behalf of their individual investors, are complex and often require assistance from an experienced EB-5 attorney to prepare.
Filing an exemplar before the new legislation potentially takes effect may be the best strategy for some regional centers, project sponsors and developers. However, rushing to file may not make sense in all cases. Key points to consider include:
- Will the project feasibly achieve the required job creation?
- Is there sufficient time for a financial advisor and EB-5 attorney to prepare the business plan and other required documents?
- Are contingencies in place in the event of default?
- Are risk factors properly identified?
- Are required consents from lenders and lien holders in place?
- Is the business plan sufficiently developed?
- Has an EB-5 attorney reviewed the proposed capital structure?
Keep informed about EB-5 legislative update
Filing an exemplar petition now may be the correct strategy, or it may be premature depending on individual project circumstances. For a consultation with an experienced EB-5 attorney, call (949) 383-5358 or contact the Law Offices of David Hirson & Partners, LLP.