EB-5 Program: It’s Broken, When Will It Be Fixed?

“Mend it, don’t end it!” One Senator after another emphatically declared at the Senate Judiciary Committee hearing held on February 2, 2016 in response

to the question posed by Chairman Chuck Grassley (R-IA): “Should [the broken EB-5 Regional Center] Program be fixed or should it be nixed?”ii Senator Grassley chaired the hearing less than two months after S. 1501, the bipartisan reform bill he co-sponsored with Senator Patrick Leahy (D-VT), was unexpectedly killed by a few leading Senators who represent the interests of a small but powerful group of EB-5 stakeholders.iii

That bill sought to reform what had been for almost 20 years a sleepy immigration program that suddenly in the aftermath of the Financial Crisis was

transformed into a mainstream source of capital to provide funding for the development of the largest real estate megaprojects in the United States. Yet,

almost three years after the introduction of the initial reform bill, and a successive series of failed legislative reform efforts, the EB-5 Regional Center

Program (the “Program”) is in even greater need of repair today than when the reform process began in 2015.

In March 2018, the timing seemed ripe for the most recent reform effort, the March draft bill, to forge a compromise as the Omnibus Spending Bill could

serve as a convenient vehicle to drive the bill to passage.iv However, once again, a small, select group of powerful stakeholders- a handful of megadevelopers and regional centers based in Gateway cities - stymied the EB-5 reform efforts, even though the draft reflected concessions that the Congressional reformers would not have entertained even one year earlier.

Projects sponsored and developed by these stakeholders continue to dominate the use of EB-5 capital. Their goal is to maintain the status quo. The

strategy can be summed up in two words: “delay reform.” We sometimes refer to them as the “Status Quo Group.” On some issues, the Group is aligned with IIUSA, the trade association that represents the EB-5 industry. However, in the most recent round of negotiations, IIUSA demonstrated that, unlike the Status Quo Group, it is willing to compromise in exchange for a long-term extension of the Program.