IIUSA Submits Comments on EB-5 Reauthorization Legislation
Industry trade association believes a bill can be ready for Congress to pass before the December 11 sunset date
Invest in the USA (IIUSA), the non-for-profit industry association representing more than 290 EB-5 Regional Centers, has developed detailed comments on draft legislation reauthorizing the EB-5 Regional Center Program. The comments were submitted to the House and Senate Judiciary Committee leaders currently negotiating legislative language. Without passage of reauthorization legislation, the EB-5 Regional Center Program will expire on December 11.
Under EB-5, a program created by Congress with broad bipartisan support, foreign nationals who invest at least $500,000 or $1,000,000 in approved U.S. businesses are eligible for permanent residency if the U.S. government confirms that their investment created at least 10 American jobs within two years of the investment.
“We greatly appreciate the leadership and hard work of Members of Congress to develop legislation to reauthorize and strengthen the EB-5 Regional Center Program,” said Peter D. Joseph, IIUSA Executive Director. “The EB-5 Program is an increasingly important tool for economic development and job creation across the nation. The latest draft bill is a significant improvement, and with the revisions outlined in our letter, we believe a bill can be ready for Congress to pass before the December 11 sunset date.”
IIUSA makes its recommendations after close and careful review of draft legislative language and consultation with its members who represent big and small projects, urban and rural areas and industry sectors ranging from real estate, manufacturing and energy to infrastructure and economic development. The comments build on a reauthorization and reform compromise proposal that IIUSA submitted to the Judiciary Committee leaders on November 2.
IIUSA’s latest comments and recommendations address a number of important issues including:
- Effective Dates: IIUSA supports a “date of enactment” effective date for reform measures that will enhance government oversight to deter, stop and prosecute fraud and protect national security. However, it is imperative that reforms related to investors – e.g. investment amount, sources of funds, and job creation – are applied only to I-526 petitions filed after the date of enactment; also critical is a transition period on any changes to permissible job creation methodologies and targeted employment areas (TEAs) in order to minimize unintended economic consequences of implementing reforms before regulations can be promulgated.
- Indirect & Direct Job Creation: In its November 2 compromise proposal, IIUSA recommended that there be no change to current policy related to job creation methodologies. In the interest of securing reauthorization before December 11, IIUSA does not object to language in the draft legislation requiring that at least 10 percent of job creation used by investors to meet EB-5 requirement be direct jobs, so long as the rules on compliance are grounded in standard economic modeling practices.
- Targeted Employment Areas (TEAs): IIUSA has recommended an approach to TEAs modeled on the State of California’s current policy which limits high unemployment TEAs to a geographic area or political subdivision consisting of no more than 12 contiguous census tracts. IIUSA appreciates the intent behind additional metrics to TEA policy, but we strongly believe that a simple and transparent TEA methodology is a superior approach that minimizes the opportunity for manipulation and abuse. Furthermore, IIUSA supports inclusion of “infrastructure” and “manufacturing” projects qualifying for TEA designation.
- Investment Levels: Consistent with its compromise proposal, IIUSA recommends a new minimum investment levels of $800,000 in TEAs and keeping the non-TEA investment level at $1,000,000. The smaller difference between the two amounts will create a competitive marketplace for both investment levels while providing sufficient opportunity to qualify for TEA designation by qualifying projects.
In addition to these core four issues, IIUSA provided detailed technical comments to other reform provisions included in the draft legislation.
“We strongly believe that these recommendations provide a path to long term reform and reauthorization with no lapse in the Program,” commented Joseph. “This outcome will allow the EB-5 Program to maintain – and grow – its positive impact. In fact, the Program will be even stronger thanks to a number of important improvements to Program integrity and effectiveness."
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