The United States Citizenship and Immigration Services (USCIS), has raised its minimum requirement for the EB-5 immigrant investor scheme from $500,000 to $900,000. Under the program, individuals are eligible to apply for conditional lawful permanent residency (Green Card) in the United States if they invest in a groundbreaking real estate project or create jobs such as 10 permanent full-time employments for qualified US workers.
The new change marks the first significant revision of the program since 1993. The new rule came into effect on November 21, 2019. The less popular standard minimum investment level will also increase from $1 million to $1.8 million. Nigerian investors are known to have staked their money in projects like the District Lofts, Sugarland and Thompson Hotel and Residences in San Antonio, Texas. They raised $125 million in foreign investment in the last five years with about 2,455 million in square feet of development. Under the projects, for instance, investors share in 2% of the profits and receive a 4% annual preferred return for up to three years.
New developments under the rule include: raising the minimum investment amounts; revising the standards for certain targeted employment area (TEA) designations; giving the agency responsibility for directly managing TEA designations. Others are clarifying USCIS procedures for the removal of conditions on permanent residence and allowing EB-5 petitioners to retain their priority date under certain circumstances.
Specifically, the new rule revises regulations requiring certain derivative family members who are lawful permanent residents to independently file to remove conditions on their permanent residency. The requirement would not apply to those family members who were included in a principal investor’s petition to remove conditions. The rule improves the adjudication process for removing conditions by providing flexibility in interview locations and adopting the current USCIS process for issuing Green Cards. The rule also offers greater flexibility to immigrant investors who have a previously approved EB-5 immigrant petition. When they need to file a new EB-5 petition, they will now be able to retain the priority date of the previously approved petition, subject to certain exceptions.
Prior to its publication, a previous draft of this regulation called for increasing the minimum investments from $500,000 to $1.35 million and from $1 million to $1.8 million. The earlier proposal provoked fear in the EB-5 community that the higher investment amounts would scare away foreign investors and close down the program. With the reduction however, it remains to be seen how foreign investors will adapt to the changes.
“Nearly 30 years ago, Congress created the EB-5 program to benefit US workers, boost the economy, and aid distressed communities by providing an incentive for foreign capital investment in the United States,” said USCIS Acting Director Ken Cuccinelli. He said: “Since its inception, the EB-5 program has drifted away from Congress’ intent. Our reforms increase the investment level to account for inflation over the past three decades and substantially restrict the possibility of gerrymandering to ensure that the reduced investment amount is reserved for rural and high-unemployment areas most in need. This final rule strengthens the EB-5 program by returning it to its congressional intent.”
The managing director, Houston EB-5, Mr. Acho Azuike, told reporters that the initiative is a gateway for many Nigerians to secure Green Cards. Seven years ago, Houston EB-5 tapped into a federal program targeting wealthy foreigners including Nigerians to fund real estate projects: a $70 million residential tower in the vibrant Houston Galleria area called Astoria and a $48 million eight-storey, 242-unit apartment building in the heart of Downtown Houston called Block 384.
According to Azuike, “The EB-5 investment program allows investors who make a qualified investment to fast-track permanent legal residency in the United States for themselves and their immediate family without the usual roadblocks or red tape associated with the immigration process.
“Houston EB-5 has stayed committed to bringing developments of impeccable design and elegance to Houston and sustaining the strong economic environment from which the city has grown,” he said. The chairman, Royal Institution of Chartered Surveyors (RICS), Nigerian chapter, Gbenga Ismail, however said the new policy would reduce the number of Nigerian applicants for the program. “In the scheme, the money you bring in is returned to you after five years. It means that as the price goes up, demand will drop,” he said.
Country Managing Partner, Kings Court Realtors, Emeka Okoronkwo, said: “The EB-5 is a vehicle of mutual exchange for financial investment into real estate in America, but it acquired interesting dimension because the business community offered permanent residency to individuals through it.
“The program has raised the stakes, boosted the American real estate industry and closed the gaps in the market. It has benefitted a lot of people, including the Chinese and has also become popular in Nigeria.” Okoronkwo therefore urged the Federal Government to introduce a program that would offer incentives to investors in the real estate sector and attract Nigerians abroad to invest in the industry.