Senior and assisted living projects have been a vital part of the EB-5 Immigrant Investor Program for years. Over the years, the EB-5 rules have changed, and the program has become more popular, with more and more people looking to invest in these types of projects.
With the new EB-5 rules released in July 2019, a few changes have been made that could impact senior and assisted living projects.
Here are a few things to keep in mind:
1. Minimum Investment Amounts
The revised rules have increased the minimum investment amounts for all EB-5 investments, including those in senior and assisted living projects. The new minimum investment amount is $1.8 million (up from $1 million).
This could have a few impacts on senior and assisted living projects. First, it could make it more difficult to find investors, as the pool of potential investors shrinks when the minimum investment amount goes up. It could also increase the cost of these types of projects, as developers will need to raise more money to reach the new minimum investment amount.
2. TEA Designations
The new EB-5 regulations have also made some changes to the way that Targeted Employment Areas (TEAs) are designated. Under these rules, a TEA can only be designated as high unemployment if it is a rural area or has an unemployment rate of at least 150% of the national average.
For assisted living projects, this could mean they will no longer be able to automatically qualify as a TEA. This could lead to an increase in the cost of these projects, as developers will need to find other ways to designate their project as a TEA to qualify for the lower minimum investment amount.
3. Job Creation
In addition to the changes to the minimum investment amount and the TEA designation process, the revised EB-5 rules have also changed how job creation is calculated. Under the recent rules, you can count only indirect and direct jobs towards the job creation requirement. This means that jobs created by construction or other economic activity related to the project will not be counted.
We could see a decrease in the number of jobs created by senior and assisted living projects according to the recent changes. This could come as a result of both the higher minimum investment amount and the change to the way that job creation is calculated.
Additionally, it could increase the cost of these types of projects, as developers will need to find other ways to reach the required number of jobs.
4. Affiliate Network Projects
The new EB-5 rules have also made some changes to the way that affiliate network projects are treated. Based on these changes, an affiliate network project can only be counted as one project, regardless of how many individual affiliates are involved.
In the future, EB5 Affiliate Network projects might not be able to take advantage of the economies of scale they have in the past. This could increase the cost of these types of projects, as developers will need to raise more money to reach the minimum investment amount.
5. Source of Funds
Although the new EB-5 rules don’t specifically mention the source of funds, they do make some changes that could impact how investors can show that they have the required amount of money to invest. Investors will need to provide more documentation to show the source of their funds. This could include bank statements, tax returns, and proof of employment.
The new documentation requirements could make it more difficult for investors to show they have the required investment money. Additionally, it could increase the cost of these types of projects, as developers will need to provide more documentation to show that their project meets the set requirements.
6. Project Timeline
Many of the changes made to the EB-5 program will likely lead to an increase in the project timelines. For example, the higher minimum investment amount could lead to a long search for investors, as fewer potential investors meet the new standards.
Additionally, they could lead to delays, as investors must gather and submit the required documentation to the USCIS.
The increased timeline could increase the cost of these types of projects, as developers will need to pay for things like extended marketing campaigns and additional legal fees.
The revised EB-5 rules could potentially increase the cost of senior and assisted living projects. These changes could come from the higher minimum investment amount, the change in how job creation is calculated, and the new documentation requirements.
Additionally, the increased timeline for these types of projects could also lead to an increase in cost. However, it is essential to note that these changes could also lead to positive outcomes, such as an increase in the quality of these projects.
