By Anayat Durrani
The EB-5 Immigrant Investor program has many incentives for EB-5 applicants that invest in rural TEA projects that came about from the EB-5 Reform and Integrity Act of 2022 (the RIA). Foreign investors who invest in these rural areas can benefit from priority processing and set asides.
Projects located in a rural TEA qualify an EB-5 investor for the reduced minimum investment of $800,000 and priority processing of Form I-526 by United States Citizenship and Immigration Services. Investors also qualify for set-aside visas due to the rural TEA classification, which comprises 20% of the annual EB-5 visa allocation.
“The surging interest in TEAs is due to this new set-aside of reserved visas for projects within a TEA,” says Chad Graham, executive partner at Graham Adair. “This means that petitions for projects that fall within a TEA are processed within the new immigrant visa category that currently has no wait, which is a benefit especially for investors from certain countries such as China where there historically has been a wait in other immigrant visa categories.”
The RIA bill brought forth the creation of reserved visas with no cut-off date, which reduces the wait time for investors. Reserved visas are particularly helpful for investors from countries with visa backlogs and allow them to skip the line and speed up the immigration process. Reserved visas are prioritized including for countries experiencing retrogression.
“The EB-5 Reform and Integrity Act created a new visa set-aside for rural investments, and it provides for faster processing times,” says Daniel J. Healy, chief executive officer, Civitas Capital Group. “Unfortunately, USCIS has been slow to issue guidance or regulations on how these provisions of the law will be implemented, so it’s not yet clear what exactly the benefits are going to be to investors. But there is optimism that they could be significant, particularly for investors in countries like China that are prone to retrogression.”
Longevity of the EB-5 rural investment trend
How long this trend will continue is uncertain. Some industry insiders say it will be backlogged within two years.
Healy says time will tell and believes the rural category could be backlogged quickly due to the interest.
“Right now, the May Visa Bulletin shows no backlog,” says Graham. “As the fiscal year comes to an end this September, we will have to see if retrogression starts to show up. If not, then most of 2024 is likely to see Current priority dates as well. My best guess is that we may see current priority dates for at least two years, hopefully longer.”
However, he says with demand pushing more new projects to TEA areas, he believes it will likely attract more investors over the next couple of years. He says since the set-aside is new, and EB-5 projects take at least a year to get required approvals and permits, he believes there will likely be a lagging surge that may show up two to three years from now.
“Considering tightening restrictions and higher interest rates with normal borrowing, large projects requiring lots of capital are more likely to turn to EB-5 investors to fund the project,” says Graham. “This means the surge in demand on the TEA set-aside will likely see an even steeper adoption curve.”
Types of EB-5 projects in rural TEAs
Rural TEAs are areas not within a metropolitan statistical area (MSA) as designated by the Office of Management and Budget; or on the borders of a municipality with a population of 20,000 or more based on the most recent decennial census.
“Real estate is always a leader, specifically lodging and multifamily. But we are seeing more projects in a variety of areas such as ski resorts, restaurants and hospitals,” says Graham.
However, real estate seems to be popular and holding strong, particularly within TEAs, he says, which is due to it being a format that is tried and true.
“This means that EB-5 investors are drawn to the projects because they are predictable and the likelihood of success is high compared to other types of projects without strong track records,” says Graham.
Healy says there are not a lot of options with rural TEAs. However, he says Civitas is working on a multifamily project in Aspen, Colorado, which he describes as a billionaire’s playground that is among the wealthiest communities in the U.S. that also qualifies as rural.
“High-quality rural projects like these are rare, which is why Congress created the new rural category in the first place,” says Healy.
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