The Department of Homeland Security (DHS) has proposed to United States Citizenship and Immigration Services (USCIS) that the minimum EB-5 investment amount be raised from US$500,000 to US$1,350,000.
A Summary of the Rule Changes
The DHS said the program is in need of reform to bring it up to date to reflect statutory changes, inflation since the program began, and current circumstances. The changes do not, however, affect current applications or those that are successfully filed in the near future. The main changes are as follows:
- The standard minimum investment amount will increase to US$1.8 million from US$1 million.
- The minimum investment in a targeted employment area (TEA) will increase to US$1.3 million (or 75% of the standard minimum) from its current US$500,000.
- Further increases will be based on the future unadjusted consumer price index (CPI-U).
- Most EB-5 investors will be able to use the priority date of an approved petition for any new EB-5 petition that may be filed at a later date.
- New standards exist for designating an area as a high unemployment area.
Full details of the EB-5 Immigration Investor Program Modernization statement can be found here.
The DHS believes the changes offer a major benefit. By aligning regulations with the statutory changes and by clearly defining key terms (see full document at the above link) the eligibility criteria will be clearer and more certain.
Investors Can Get Ahead of the Changes
The good news is that EB-5 immigration petitioners can still achieve green card status at the current investment amount of $500,000 by selecting the Chicago Metro Regional Center, LLC and Wabash Hotel and Condominium Project as their path to an EB-5 petition and permanent residence.
This is a major project in the heart of one of the world’s most important commercial districts: South Loop, Chicago, Illinois. The “Loop” is the USA’s second largest downtown business district. The area is already designated as a TEA, and the project is expected to generate 1,770 jobs in total. The minimum $500,000 investment will, therefore, apply. The economic impact of the completed project was analyzed by Wright Johnson, LLC., which they estimated at $110,075,721 annually.
The Project's Description
The existing Best Western Grant Park property will be completely redeveloped and repositioned. The business plan describes the project as:
- The complete renovation of the existing 172 room hotel
- Additional construction of a new mixed-use 29-floor tower on land the developer currently owns. The tower will contain 196 Homewood Suites (Hilton Hotel) and 85 residential units. The suites will be of four types. The residential units will have four different floor plans. They will initially be rented out at market rate, but the intention is then to sell them as condominium units.
- Construction of a 162-space parking facility.
- The building will include meetings rooms, a restaurant, a fitness center with pool, and ground floor retail space.
- The project’s total cost is calculated at $148,800,000
Financing the Project
- $49,500,000 is being sought from EB-5 investors. This means that there will be up to 99 investors who will pool their investment to help fund the construction and operational costs
- $41,000,000 Bank construction loan
- The developer will provide $58,300,000 equity
Total project cost: $148,800,000
- Construction will take approximately 21 months.
- All expected 1,770 jobs will be created within 2.5 years, which accords with USCIS policy and exceeds the 990 minimum number of jobs that investment must create.
- The jobs will be fully available for the EB-5 investors' subsequent I-829 petition filing.
- South Loop is Chicago’s central business district, Cook County’s seat of government, and where Chicago’s City Hall is located. It has a very busy nightlife, family-friendly entertainment, world-class retail outlets, historic sites, art museums, restaurants, 22 college campus sites and many other commercial buildings.
- The hotel industry is currently outpacing the rest of the US economy. Domestic travel is forecast to increase by 3.2% and inbound international travel by 3.5% a year over the next 5 years.
- TR Mandigo & Co. analyzed expected revenue returns and concluded both parts of the project (hotel and condo units) will deliver consistent profits throughout its first six years.
- EB-5 Investors will have added security, because the developer will give them first-lien position on the 85 residential units.
Investor Exit Strategy
- The developer intends to refinance the two hotel buildings, if appropriate, and to apply operating income during the five years. The operating income is estimated at $68 million between 2017 and 2021.
- Sale of the 85 residential units as condominium units should produce more than the original invested amounts.
- At the end of five years, those holding a USA EB-5 investor visa should have their initial $500,000 repaid in full.
High Net Worth Immigration is offering a free initial consultation to everyone interested in learning more about this project and about EB-5 Investment Immigration in general. The DHS expects all EB-5 opportunities to be over-subscribed this year, so it may pay to learn more as soon as possible. Please contact us to arrange your consultation.