BREAKING NEWS – NEW SENATE BILL TO EXTEND RC STATUTE

A bi-partisan bill was introduced in the Senate by Senators Leahy and Grassley to extend the regional center (“RC”) statute set to expire on September 30, 2015.  It proposes some radical changes and is missing a critical proposal that would resolve a major issue.  Here is a brief description of the bill’s main points.  A more detailed analysis will be provided.  The bill would, if enacted in its present form:

Extension:

• Extend the EB-5 RC statute for 5 years.

Investment Amount:

• Increase the Targeted Employment Area (“TEA”) investment   amount to $800,000.
• Increase the non-TEA investment amount to $1.2 M.

TEA:

• Radically change the TEA rules:
  • To be comprised of a single census tract 150% above the national unemployment rate, a closed military base or a rural area (rural is outside a Metropolitan Statistical Area (“MSA”)).
  • For a TEA within a MSA, or Combined Statistical Area, at least 50% of the jobs must be created in the MSA.
  • For outside of a MSA, 50% of the jobs must be created in the county of the TEA or be reduced by 50%. (If enacted, these TEA rules will greatly favor rural vs. metropolitan areas.)

Jobs:

• Job creation measured by a statistical model can only count 90% of the jobs created, and
• Jobs created by non EB-5 capital are limited to 30% of those created by the project.  (Not allowing all the jobs created by capital stack is a major change.)

Exemplar Filing:

• Project pre-approval would be mandatory, i.e., exemplar filings (today, an exemplar cannot be filed unless there is a shovel ready project).
• Exemplar must be decided in 120 days and a premium (expedite) fee would be created.

         NOTE: Filing an exemplar before September 30th will lock in a pre-existing TEA and current investment amount, i.e., $900,000.  If          possible, projects should file exemplar applications this summer.

Source of Funds:

• Investment and administrative fee must have lawful source.
• 7 year tax returns required.
• Loans must have investor’s personal asset as collateral.
• Gift of funds can only be from spouse, parent, child, sibling or grandparent (gay partners; ex-spouse and a parent’s new spouse who is not a step-parent, etc. could not gift).
• Loans must be from a reputable bank verified by U.S. Government database.

Procedural Matters:

• Concurrent filing of I-526 and adjustment for applicant is in U.S. provided there is a current priority date.
• An immigrant who’s case is pending 2 years may file an I-829 and, if the jobs are created, immigrate as a full not a conditional resident.

Compliance:

• The bill has many rules for reporting data, information, site visits by government officers and a $20,000 annual fee, etc.
• Government may suspend, fine, and terminate RC and regulate fees of the RC’s agents.
• Conditional residents invested in a terminated RC could move the investment with a new RC or make another EB-5   investment and receive conditional residence again for 2 years.
• RC owner and principals must be green card holders or U.S. citizens.

Many of these proposals need clarification.

The bill says nothing about the China quota retrogression and the concept of not requiring visa numbers for spouses and children, which would eliminate the quota retrogression.

In summary, you need to immediately contact your representative and urge them to:

• Oppose the TEA change!
• Allow full capital stack to create EB-5 jobs!
• And, if possible, file exemplar applications for current projects.

I will write more about this bill.