ALERT: DHS Proposes 160+% EB-5 Investment Price Increase, TEA Reforms
Prospective EB-5 Investors take note, this is a BIG one: the US Department of Homeland Security has shocked the EB-5 industry by proposing a series of important changes to the EB-5 law which will fundamentally transform the EB-5 landscape if they are adopted (as they are expected to be). The proposed regulations address a number of items but two major changes will dominate EB-5 headlines as news of this just-published proposed rule reaches investors worldwide: 1) a massive increase in the cost of EB-5 investment for both TEA and non-TEA EB-5 project investors and 2) taking a way TEA status determination from states and handing to the USCIS in order to end the abusive practice of so-called “gerrymandering” of TEAs, via which luxury projects in wealth U.S. areas can procure investors by falsely claiming to be in “targeted employment areas”. The proposed changes have been long overdue and were finally realized after the U.S. General Accounting Office (GAO) confirmed in the fall that despite the protests to the contrary, the reality is that big-city high rise developers using EB-5 funds by claiming to be in TEA areas have actually be directing TEA investor funds to the wealthiest parts of the U.S., where they are least needed.
While experts expected an EB-5 price increase (since the $500,000 has remain unchanged since 1990), the proposed increase is dramatically larger than anticipated: using year-to-date inflation calculations from the EB-5 law’s original creation over 25 years ago, the new required investment TEA (rural/high unemployment are) amount mandated by USCIS will soon jump from $500,000 to $1,350,000. Non-TEA EB-5 projects will skyrocket from $1 million to $1,800,000.
But it a second proposed change would dramatically change the EB-5 project feasibility permanently: currently, virtually 100% of the EB 5 Regional Center projects on the market are presenting themselves as TEA – projects, despite the fact that few actually meet TEA rules; most are sited wealthy urban areas and developers fabricate false TEA claims by piecing together an unlimited number of US census tracts until they meet TEA unemployment averages, manipulating what Congress intended in order to offer investors the reduced TEA amount. Under the proposed rules, states will no longer be authorized to approve these artificial TEAs, and USCIS will directly approve TEA status. Under the new rules, in order to qualify as a TEA project, the project MUST be located specifically in a classified TEA census tract or actually be adjacent and contiguous to a TEA tract. The new rules will prohibit the current practice of “gerrymandering”utilized by the many large projects, which will now only be able to secure investors willing to invest $1.8 million.
Since very few of the 700+ USCIS–approved EB 5 Regional Centers offer projects which truly qualify as “high unemployment” or urban TEA under the clarified regulations, Investors must be extremely careful to ensure that the EB-5 project they select is one that withstands the new TEA revisions proposed by the US Department of Homeland Security. Be careful out there, folks, it’s going to get ugly out there, so choose wisely!
AVS Regional Center EXCLUSIVELY offers EB-5 projects sited in TRUE TEA or rural areas and currently has approximately 34 remaining EB-5 limited partner positions in both equity and loan based structures available to accredited non-U.S. investors. Based on the breaking news, we expect to complete the current offerings prior to the implementation of the proposed changes in order to protect our investors under the current $500,000 authorized TEA investment amount. If you qualify as an EB-5 investor and wish to commit to EB-5 before the increase in investment amount while insuring that you do not face any risk of having the project you select declassified from TEA-status, please contact firstname.lastname@example.org or call our Miami, Florida headquarters at 1-786-866-9775 for further information.
This communication is exclusively intended to communicate critical proposed changes to our readers and shall not constitute an offer to sell or the solicitation of an offer to buy securities nor shall there be any sale of these securities in any state in which such solicitation or sale would be unlawful prior to registration or qualification of these securities under the laws of any such state.
May 23, 2022
Oct 04, 2021