Unless you take action, the EB-5 Regional Center Program will expire in: |
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State of the EB-5 Industry and Its Path Forward |
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As Executive Director of the EB-5 Regional Center Program’s only industry trade association, I am privileged to speak with authority about the EB-5 program reauthorization effort at the end of 2020 and the Association’s advocacy plan for 2021.
A Sincere Thank You
Before I begin, I would like to express my sincere thanks to the many groups and individuals who support a strong EB-5 industry. First is to thank Senator Grassley and Senator Leahy and their staff – without them, we would not have legislation to endorse. I would also like to thank our many strong supporters on Capitol Hill and among non-traditional EB-5 community members including mayors, chambers of commerce, and the travel and hospitality industries.
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IIUSA negotiated with Senators Grassley and Leahy to draft and enact the EB-5 Integrity and Reform bill. This included long-sought integrity reforms and a five-year reauthorization. Successful negotiations were completed but there wasn’t enough time to have it included in the omnibus bill.
Instead, the EB-5 regional center program was reauthorized only to June 30, 2021. We are now working with Senators Grassley and Leahy to have the Reform bill introduced and passed into law before June 30, 2021, when the EB-5 Regional Center program expires.
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MORE DETAIL ON THE LEGISLATIVE ACTIVITY CULMINATING IN LATE 2020 |
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Beginning in the summer of 2018, IIUSA began executing an extensive campaign to educate policymakers about the EB-5 program and bolster the association’s Capitol Hill profile. There were several “fits and starts” of legislative activity in 2019 and in early 2020. Months and months of meetings, phone calls, and “professional persistence” finally paid off toward the end of 2020 when Senator Grassley and Senator Leahy – the two Senators most invested in reforming and reauthorizing the EB-5 Regional Center Program – reached out exclusively to Invest in the USA (IIUSA) to help shape a good-government bill to 1) instill integrity reforms into the regional center program and 2) provide the program with a stabilizing long-term five-year reauthorization.
The only issues on the table for negotiation were: 1) integrity reforms and 2) long term reauthorization. At the insistence of the Senators, no other industry-related issues were ever on the table, i.e., targeted employment areas, investment amounts, cost differentials, rural set-asides, processing time, or new visas. The ground rules for this negotiation simply did not include the opportunity for IIUSA to include any other issues before integrity reforms were agreed upon.
Strategically IIUSA decided to seize the opportunity presented to us to solve one key issue – integrity reforms. Reforming the EB-5 program is necessary to achieve any other significant legislative goal. With integrity reforms enacted and a long-term reauthorization in place, the industry can be nimble and identify opportunities to pursue other legislative objectives, without having to then also negotiate integrity reforms.
Holding out on any negotiations until all issues are negotiated (a “grand bargain” of all EB-5 issues) assumes the industry has leverage to do so. It does not. We have seen the industry’s leverage in Congress wane as Members demand integrity reform. In fact, it was only after IIUSA agreed to work with Senators Grassley and Leahy that Senator Grassley lifted his objection to including EB-5 in S.386’s transition period – the time during which all other visas had the ability to slowly adjust to lifting the per-country-visa-limits.
Negotiating a grand bargain will drag the EB-5 community and Congress back into the mire of long-standing differences and fruitless time-consuming debate. Time is a luxury we do not have.
The late-2020 negotiations with Senators Grassley and Leahy culminated in the EB-5 Integrity and Reform bill. Its language reflects the best integrity package the industry has seen in all the years of negotiating with Congress on integrity reforms. The reform package protects good-faith investors. It protects lawfully operating regional centers and new commercial enterprises, and it provides reasonable oversight while allowing the industry’s business operations to continue. This language achieves the industry’s goal of sound integrity reforms in a workable environment.
The EB-5 program’s five-year reauthorization, good government, integrity bill was teed-up to pass along with the year-end federal spending bill when it was pulled from the package prior to the final vote. Unfortunately, the final text of the EB-5 reform bill was agreed to only days before the must-pass spending legislation was finalized. There wasn’t sufficient time to educate members and develop sufficient support to include the EB-5 reform and integrity bill in the federal spending bill.
It is very important to note that the federal spending bill decoupled the EB-5 Regional Center program from its traditional linkage to regular budget legislation. Instead of being reauthorized to September 30, 2021 (like the majority of the federal government as we have been in recent years), the Regional Center program was extended for only six-months to June 30, 2021. The EB-5 program now stands on its own and will need to be reauthorized by June 30, 2021.
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Be clear about this. If the EB-5 Regional Center program is not reauthorized before June 30th, it will cease to exist. Its elimination would leave thousands of good-faith investors uncertain as to their status at best and potentially without the immigration benefits they had sought in pursuing an EB-5 investment. Also significant for the future, the EB-5 Regional Center’s elimination would jeopardize funding efforts for economic development projects across the country – just when our country needs it most.
Be clear about this. Although the industry has confronted short-term extensions in the past, this is NOT a business-as-usual scenario in terms of reauthorization risk. Without its link to must-pass spending measures, the EB-5 Regional Center program must more clearly and emphatically advocate for its reauthorization. Historically, the EB-5 program has enjoyed the safe haven of being a part of bills that must, and always eventually do, pass. That is not the case anymore.
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SO THE TERMS ARE DIFFERENT AND STRONG ACTION IS REQUIRED |
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The EB-5 industry, along with other industries that benefit from EB-5 investments must:
1) Rally around the strategy of passing the Grassley/Leahy bill as the best and perhaps only path to reauthorization;
2) Acknowledge the best means to securing more program visas and other needed changes is by reforming the program and gaining long term reauthorization;
3) Work with IIUSA, as the industry representative, to advocate to the new Congress and Administration that:
- EB-5 program is a critical part of our nation’s economic recovery;
- EB-5 program is a proven job-creation engine in a time of record unemployment; and
- EB-5 program, under a new integrity initiative, will be free of fraud and abuse.
Now that the EB-5 Regional Center Program is decoupled from spending bills’ protocols the industry has the opportunity to place the program in the sunlight- for everyone to truly examine. Those opposed to strengthening its integrity and protecting good-faith investors will have to publicly explain why.
If the industry acts in a coordinated fashion, this crisis becomes an opportunity. We can re-establish our deserved reputation that the EB-5 Regional Center program operates in good faith. Reauthorizing EB-5 with this message and with integrity reforms will create the needed preconditions to focus on expanding the program with properly counted derivatives or additional visas.
If you have not already done so, get involved. Call IIUSA to find out how.
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Aaron Grau
Executive Director
Invest in the USA (IIUSA)
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Learn More on IIUSA's Government Affairs & Association Update Webinar |
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During this live and free webinar, attendees will hear from leaders and staff within IIUSA about the state of play on Capitol Hill, the EB-5 legislative outlook ahead of the June 30 "sunset date" and IIUSA's coalition-building efforts among other advocacy initiatives.
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