Saturday, July 28, 2012

Will EB-5 Expire Soon?

Rumor has it EB5 program is sunsetting in September 2012. Really? It is partially true. To make it clear, it is important to clarify what type of EB5 program they are talking about. There are more than one type of EB5 programs? Yes, indeed. 

What is EB5 Program?

USCIS administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. All EB-5 investors must invest in a new commercial enterprise, which is a commercial enterprise:

What is EB5 Pilot Program?

The Immigrant Investor Pilot Program (“Pilot Program”) was created by Section 610 of Public Law 102-395 (October 6, 1992), and was  recently extended through September 30, 2012.
EB-5 requirements for an investor under the Pilot Program are essentially the same as in the basic EB-5 investor program, except the Pilot Program provides for investments that are affiliated with an economic unit known as a “Regional Center”.  These investments allow for a less restrictive job creation requirement based upon the creation of “indirect” and “direct” jobs.   

Direct jobs are those jobs that establish an employer-employee relationship between the commercial enterprise and the persons that they employ. Indirect jobs are the jobs held by persons who work for the producers of materials, equipment, and services that are used in a commercial enterprise’s capital investment project, but who are not directly employed by the commercial enterprise, such as steel producers or outside firms that provide accounting services.  There is a sub-set of indirect jobs that are calculated using economic models that are known as induced jobs. Induced jobs are those jobs created when direct and indirect employees go out and spend their increased incomes on consumer goods and services. 
Now we know there are EB5 basic program and EB5 pilot program, we understand why the answer is “partially true”. EB5 basic program will stay and does not have an expiration date but EB5 pilot sooner or later will sun-set, which may be this September.