On July 29, Representative Zoe Lofgren, Ranking Member of the House Judiciary Committee, Subcommittee on Immigration and Border Security, and Representative Luis Gutiérrez introduced H.R.3370, the Entrepreneurial Business Creating Jobs Act of 2015 to permanently reauthorize and reform the EB-5 Regional Center Program. Representative Lofgren’s sectional summary can be found here.
The legislation provides visas for foreign entrepreneurs who obtain venture capital or seed financing and wish to start businesses in the United States. And it provides visas for foreign entrepreneurs who are in the United States in non-immigrant status operating an existing business and can show that the business is growing.
The legislation also permanently reauthorizes the Conrad State 30 J-1 Visa Waiver Program, and authorizes for five years the E-Verify Program and the Special Immigrant Nonminister Religious Worker Program. Below are the major components of the legislation:
Provisions for “Venture Capital-Backed Start-Up Entrepreneurs”
- Visas are made available to foreign entrepreneurs on a conditional basis who are sponsored by, as defined by the legislation, a “qualified venture capital fund,” one or more “angel investors,” a “qualified business,” or who obtain funding through a “qualified seed accelerator.”
- In order to have conditions removed, the entrepreneur must show that within a two-year period, the business created full-time jobs for five or more U.S. workers; raised an additional $2 million in capital investment; earned $1 million in revenue; or created full-time jobs for three U.S. workers with salaries of $100,000.
Provisions for “Self-Sponsored Startup Entrepreneurs”
- Visas are made available, on a conditional basis, for a foreign business owner already in the United States who has created full-time jobs for three U.S. workers.
- After two years, the business owner must show, that the business created permanent, full-time jobs for 10 U.S. workers; or created 7 permanent, full-time jobs for 7 workers with salaries of $100,000 to have conditions removed.
EB-5 Regional Center Program Reauthorization, Reform, and Improvement
- Permanent authorization for the Regional Center Program; 5,000 visas set aside for the Program.
- New minimum investment amounts of $1 million for investment in a targeted employment area (TEA) and $2 million outside of a TEA.
- The bill permits 50 percent of the job creation requirement to be fulfilled with jobs created outside the regional center boundary.
- Directs the Department of Homeland Security (DHS) to establish a preapproval procedure of business plans and related documents.
- Requires DHS to conduct random site visits for at least 5 percent of approved regional centers and requires annual reporting to Congress on the details and results of the site visits.
- Enhanced annual reporting requirements for regional centers required.
- Premium processing option for EB-5 and EB-6 petitions of $5,000; processing time target of 60 days.
- Concurrent filing permitted for investors’ I-526 and adjustment of status petitions.
Targeted Employment Areas
- Minimum number of visas under the cap are set aside for use in TEA categories: 4,000 set aside for high unemployment areas; 2,000 set aside for rural areas; and 2,000 set aside for counties with a 20 percent or greater decrease in population since 1970, an area within a “State or Federal economic development incentive program,” or an area within the boundaries of a military installation closed under the BRAC law.
- TEA determinations remain in effect for at least five years.
High Unemployment Area Definition (for TEA eligibility)
- High unemployment area may consist of “one or more contiguous census tracts” within one Core Based Statistical Area that is 150 percent of the national average unemployment rate.
Extension of Conditional Residency Period
- Extension allowed for conditional residency period where unexpected delays occur that are outside the investor’s control and where program requirements can be met within the extension period.
Reports to Congress
- The legislation requires a study, reported to Congress, from DHS and the Department of Commerce, to include study of job creation methodologies
- The bill also requires biennial reports to Congress that measure the program’s economic impact.
- Annual disclosure reports by regional centers required.
- Authorization for sanctions: fines, suspension, debarment, termination of regional center status based on misrepresentation or other violations.
- No regional center participation if an individual has been found liable within preceding five years of a civil or criminal infraction involving fraud or deceit; or persons “known or reasonably believed” to be engaged in criminal acts.
- Secretary authorized to conduct background checks of regional center operators.
- Authorization for Secretary of DHS to terminate a regional center.
- Restriction on foreign government ownership or control; regional center principals limited to lawful permanent residents or citizens.
- Provisions included to ensure regional center compliance with securities laws.
- General authority for Secretary to deny or revoke regional center designation where designation was or is contrary to the national interest, a national security risk, or where the regional center is engaged in fraud, misrepresentation, or criminal misuse.
- Authority provided for Secretary of DHS to consult with Secretary of Commerce on regional center designations and business documents.
Contingent Increase in Visa Numbers
The bill would amend the Immigration and Nationality Act to provide an additional 10,000 visas for the program if all visas under the cap were exhausted in a fiscal year. To prevent contingent increase, Congress would be required to act by joint resolution to determine such increase unnecessary.
This blog post first appeared on Greenberg Traurig’s EB-5 Insights blog.