New EB-5 rules put developers under the gun to raise capital in four months

Orlando area developers will be scrambling over the next four months to raise capital from international investors before new Trump Administration regulations for the EB-5 visa program take effect Nov. 21.

The new guidelines published last week nearly double the investment threshold for EB-5 projects from $1 million to $1.8 million. Projects located within qualified Targeted Employment Areas (TEAs) would require foreign nationals to invest $900,000, up from $500,000.


“There’s going to be a big push to get as many investors filed as possible in the next 120 days,” Orlando immigration attorney Edward Beshara told GrowthSpotter. “So the developers have to get a whole team of EB-5 professionals and lay out a plan of action.”

Beshara estimates that about 40 percent of existing or future EB-5 investors could get priced out of the system.


“These regulations will affect new projects that want to raise funds, and we know it will affect existing projects,” he said. “The good news is the Orlando area is booming, there’s new development and new industry, so it’s an attractive area for development.”

Park Square Enterprises is currently raising capital through EB-5 for a new Woodspring Suites hotel in Sanford. CEO Suresh Gupta said the company is only two investors shy of reaching its $3 million goal.

“I’m sure now given that there’s a new deadline, we won’t have any trouble getting the last two,” Gupta said on Monday. “This will actually help us because we’ve got the project, and it’s already started. There’s going to be a mad dash for investors to apply."

David Townsend, master developer of Ocoee’s City Centre West Orange, said he too expects an influx of new EB-5 investors looking to beat the November 21 deadline. The mixed-use project is already underway and features a hotel, luxury condominiums, retail, restaurant and office space.

Townsend’s Park Development affiliate EB5 Florida Real Estate Regional Center is USCIS-approved for EB-5 foreign investments and can raise $100 million for the Ocoee project.

But the short-term benefit will be followed by challenges after Nov. 21, Beshara said.

DHS estimates that over 95 percent of all EB-5 investment projects over the last three years were located in TEAs. Under the new rules, it will be more difficult for developers to get the TEA designation. The agency projects as many as 45 percent of existing EB-5 projects may not be eligible for the lower rate.

That’s because developers can no longer use a string of up to 10 contiguous census tracts to reach a location with the low enough employment numbers that qualify for the reduced investment. Now the administration will only allow developers to use census tracts that abut the tract where the project is located. The new rules will make the employment areas more compact, but also more realistic, Beshara said.


Roman Petra, attorney with Nelson Mullins, said the higher investment threshold and more stringent TEA criteria will narrow the pool of potential EB-5 investors. But there are enough high net-worth individuals who can afford the $1.8 million investment to make up the difference. And the benefit to developers is they now can raise the same amount of capital with fewer investors.

“It’s easier to get one investor at the higher dollar amount than to get four at the lower rate,” Petra said.

And even at $1.8 million, the investment threshold is still a bargain compared to other western nations like Australia ($3.9 million) and the United Kingdom ($2.7 million).

“The dollar amount is a challenge, but that $500,000 (minimum) has been around for 20 years,” Gupta said.

Another major change in the guidelines is that TEAs will no longer be designated by states. The U.S. Citizenship and Immigration Services, a division of the Department of Homeland Security, will now process TEA applications and apply the new census tract and employment data.

“There’s no pre-approval by DHS of TEA geographical areas,” Beshara said. “It will take longer, and now there is uncertainty or risk for investors.”


DHS has said it doesn’t anticipate delays, but if there’s a backlog of TEA applications it may raise the associated fees to hire more processing staff.

The national standard for TEA designations for 2018 are based on rural and high unemployment. In the past, the counties around Orlando were not rural, so the census tracts that would quality in our area were based on high unemployment: at least 150 percent of the national unemployment rate for a 12 month period. For calendar year 2018, the national unemployment rate averaged 3.9 percent, A non-rural area qualified as a high unemployment area if its 2018 annual average rate was at least 5.85 percent.

Petra said the new rules provide clarity to both developers and investors.

“What I expect now is with clarification on the guidelines, is that we’ll see more investment now,” Petra said. “A lot of people were sitting on the sidelines because they didn’t know if the program was even going to be around. It was important for developers, or anyone using EB-5 – it’s not necessarily tied to real estate – to see where this administration stood the program and what they wanted to do with it.”

Going forward, developers will have to disclose to investors that their project may not get the TEA designation, so they may have to give the choice to invest at the higher rate or return the money.

Garrett Kenny, CEO of Feltrim Group, said his developments in Haines City should qualify for the new TEA designation, but he likely won’t be using the program in the future. “I’ve become somewhat disillusioned with EB-5,” he said. “I don’t think the new rules are a problem. The problem is with the government bureaucracy that goes into processing the applications.”


Feltrim had targeted Chinese and British investors when developing its Balmoral at Water’s Edge resort, offering 35 lots for the EB-5 program. Three years later, nine of those applications still haven’t been processed.

EB-5 applications for Chinese nationals now takes up to 14 years to get approved, Kenny said. What that means is the investor’s children will most likely be grown and ineligible for the dependent green card by the time the application is approved.

“China for us has pretty much died because the business has gone away,” he said.

Another Feltrim investor from Holland has spent the last 15 months waiting for DHS to review his EB-5 application.

“A serious investor will not have a problem paying $900,000, but there’s no certainty on when their application will be approved,” Kenny said.

Orlando Sentinel Reporter Adelaide Chen contributed to this story. Have a tip about Central Florida development? Contact me at or (407) 420-6261, or tweet me at @LKinslerOGrowth. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.