OZ Renewal Could be a Lifeline for EB-5 Projects

Thanks to a recent extension, EB-5 projects that fall within designated Opportunity Zones can combine both types of funding, helping impactful projects achieve financing.

Many EB-5 stakeholders were understandably disappointed when the One Big Beautiful Bill Act (OBBBA) was passed without including an extension of the RIA grandfathering deadline or reauthorization of the Regional Center Program. But while we must continue the fight for reauthorization, another provision of the bill is worth looking at: the extension of Opportunity Zone (OZ) tax incentives.

Originally created as part of the Tax Cuts & Jobs Act of 2017, Opportunity Zones offer tax incentives when realized capital gains are reinvested in Qualified Opportunity Funds (QOFs) for deployment in census tracts designated as OZs for being low-income, high-poverty communities. Originally set to expire at the end of 2026, the OBBBA made OZ tax incentives permanent.

Why should this matter to EB-5 stakeholders? In the fall 2025 edition of the IIUSA Regional Center Business Journal, JTC Director – Institutional Capital Services Edward Smith and William P. Gresser, President & Founder, EB-5 New York State, explain how EB-5 and OZ can work together to help bring investment to underserved communities.

The article, “The EB-5 Program & Federal Opportunity Zones: Together Driving Economic Impact,” talks about EB-5’s success as an impact investing initiative as well as an immigration program, as demonstrated by data from IIUSA’s recent EB-5 impact study. OZ has similarly had success as an impact initiative with a “stated purpose of promoting economic growth and job creation in low-income communities.”

According to the article, from 2017 to 2022 “over $89 billion in OZ investments have been made in over 5,600 communities across the U.S.,” resulting in wages for workers and the creation of affordable housing in areas that desperately need it. Though OZ does not have job-creation requirements like EB-5, the OBBBA added impact reporting requirements to help investors and lawmakers better understand which projects are having the greatest impact. The bill also established Rural Opportunity Zones that offer greater incentives for investors in order to drive OZ investment to rural areas.

“Though both of the EB-5 Program and Federal Opportunity Zone have stimulated job creation and economic activity throughout the U.S.’s most under-invested communities, each program has their unique investment objective,” the article explains. “In Federal Opportunity Zones, the investor is seeking the capital gains tax benefit that results from the investment, while EB-5 investors are seeking an investment that will yield a U.S. green card for themselves and their families.”

This is important because it gets us closer to understanding why the renewal of OZ can be good for EB-5: these are two completely different groups of investors. Because the goals of the two initiatives align, both sets of investors will be interested in the same types of projects, and there is a lot of overlap between EB-5 Targeted Employment Areas (TEAs) and Opportunity Zones.

“Given that Federal Opportunity Zones and the EB-5 Program share the goal of promoting economic growth and job creation, and that Federal Opportunity Zones often overlap with ‘Targeted Employment Areas’ under the EB-5 Program,” say Gresser and Smith, it is therefore possible to combine OZ capital and EB-5 capital as part of the same capital stack.

The article contains a case study on how this can be done, detailing a project from Ellavoz Impact Capital with “the Federal Opportunity Zone incentive used for the equity (approximately 45% of the capital), and the EB-5 program providing the debt (approximately 55% of the capital), with a first-priority position mortgage, and no other debt or equity.”

By incorporating EB-5 and OZ capital, developers can find ways to finance projects that may otherwise not have been feasible, potentially bringing investment, jobs, housing, new industries, and the subsequent economic activity that results from these things, to areas that desperately need them. But as Smith and Gresser caution, “doing so requires a careful understanding of the investment objectives and regulatory requirements of each program.”

As experts in fund administration and impact reporting for Opportunity Zones, we hope EB-5 developers and Regional Centers will learn more about OZ and how it can be used to help projects achieve funding, especially in rural areas that can benefit from the new OZ incentives and EB-5’s reserved rural visas. To learn more, check out the full article and read some of Ed’s recommended content on Opportunity Zones and EB-5.