NOVEMBER 2019 LAWSUIT FILED AGAINST OMB’S IMPLEMENTATION OF EB-5 REGULATIONS

On November 29th, Christian Tyler Properties co-funded a lawsuit along with several other supporters, who are behind the scenes, challenging the legality of the $900K increase in the EB-5 Program has been filed on behalf of the regional center community. As part of the legal challenge, an injunction is being sought to prevent the implementation of the new regulations.

Our legal scholars evaluate that the challenge has a roughly 80% chance of being successful, which would have the effect of bringing the EB-5 minimum investment back to $500K for a limited time only. Now that the suit has been filed, we would expect a decision from the Court within approximately five (5) to fifteen (15) business days of the hearing date, which is currently scheduled for Tuesday, December 3rd, 2019. There are several issues being challenged as part of this lawsuit, which are quite technical in nature, but we have summarized how it would affect you and the potential EB-5 investor community below.

While the lawsuit is being evaluated by the U.S. judicial system, a legislative bill is currently being drafted and proposed by ranking members of the U.S. Senate (Senators Graham and Cornyn) that would have the effect of changing the EB-5 in different ways on a more permanent and official basis. This bill is expected to pass around or before December 20, 2019. The new bill, while still being formalized, is likely to bring some or all of the following changes to the Program:

  1. A 60-90 day grace period after enactment during which the $500K investment amount (which may be longer if the challenge in Court is granted) and current TEA qualifications will continue;
  2. Both I-924s and I-526s would be subject to premium 120 day processing for the price of $50,000, and pending I-526s could be amended to ask for premium processing;
  3. All new I-526s will come with a $50,000 filing fee as opposed to the current $3,675.
  4. The minimum investment would increase to $1.1 million in a non-TEA. Investment in a recognized TEA project would be $1 million minimum (but the definition of a TEA will be much more restrictive). In other words, this would essentially eliminate the big city projects.
  5. Applicants in the “retrogression backlog delay” would have the right to get “parole” status to allow them to live and work in the US upon the passage of 3 years after I-526 approval. This would re-open the China, India, and Vietnam markets.

 

If all goes as expected, the combined effect of the legal challenge and of the new bill would therefore be as follows:

i. If the Court grants the injunctive challenge, the EB-5 Program’s investment amount for TEA projects would be brought back from $900K to $500K for a limited period of time;

ii. Meanwhile, the new Bill would become law with a 60-90 day grace period, therefore keeping the EB-5 at $500K for another limited period of time before imposing an increase to either $800,000 or up to $1.1 million

iii. After that, the $500K EB-5 would be gone forever, leaving room for a new, more expensive EB-5 but which also offers faster processing times, although with significantly more expensive application fees (i.e. $50K-$100K government fees vs. the current $3,675)

 

We therefore are likely to have ONE LAST WINDOW to file applications at $500K. This will be gone forever afterwards.

 

We remain available should you have any questions. Please reach out to our team at info@ctp-fl.com.

 

References:

  1. Overhaul of Immigrant Investor Program Challenged in Court