EB-5 Investment Voice
MSA Global (Mona Shah & Associates Global) Podcast Series
Reported by Hermione Krumm, Esq.
EB-5 Investment Voice is the only Podcast series that focuses on the United States immigrant investor visa, EB-5 and foreign direct investment. Mona Shah welcomes guests from the industry including: developers, regional center operatives, attorneys, legislators and politicians.
On September 8, 2017, the US government once again extended the deadline for the EB-5 program from September 30th to December 8th. EB-5 Investment Voice welcomes its first returning guest, IIUSA Executive Director Peter Joseph, to discuss the most recent EB-5 extension and to give us the most current information on Congress’ progress toward a long-term legislative solution for the EB-5 program. (Peter was a guest on last year’s podcast to give us an update on what was happening on Capital Hill.)
Peter has led Invest in the USA, the national trade association for the EB-5 Regional Center Program, since 2010. He has been quoted by major media outlets such as ABC News, Bloomberg Businessweek, The Hill and the Wall Street Journal, among others.
As Mona stated, “until we have a reform package that is passed by both chambers of Congress and signed into law, we shouldn’t take anything for granted.” Will this be the last deadline extension? And how close are we to a deal?
The Role of IIUSA
Invest in the USA (IIUSA) is the national trade organization for the EB-5 Regional Center Program. The organization includes members from all facets of the program, including developers, attorneys, financial service providers, and the Regional Centers themselves. IIUSA’s diverse membership from across the country affords the organization a national platform through which to advocate for maximizing the economic impact and benefits of EB-5. IIUSA also seeks to educate industry players and to realize the job creation at the heart of the program.
The Progress Toward a Long-Term Legislative Solution for EB-5
A great deal of work has been done in Congress to move towards compromise. Several important stakeholders represented by congressional offices, both in judiciary leadership and congressional leadership, report progress toward an agreement. Congressional leadership including Senator Cornyn, Majority Leader McConnell, and Speaker Ryan has spent time working with judiciary committee leadership in coming to an agreement. The fact that these parties continue to dedicate time to a legislative solution is a very positive sign showing they are ready for the next round of the process, which will hopefully be a new drafted legislation or other substantive issues for us as an industry to deal with. The upcoming months are going to be busy for the Congress. Mona points out that most overseas investors are worried that the program will close; however, she believes that the odds of that happening is extremely slim. Although Congress at times is a rather unpredictable body, EB-5 is broadly supported. Mona also states that another concern of investors and developers every time there is an extension is whether the $500,000 minimum investment amount for TEAs is going to increase. Mona emphasizes that since it is a “Continuing Resolution”, the $500,000 would continue as it is until December 8, 2017. We don’t know the details of what might come out of a Congressional agreement. Investment amounts and other key issues are part of a fluid conversation, and negotiation will continue until there is enough agreement to move to the next stage. Once the framework of a deal is introduced in the form of new text or the introduction of legislation, IIUSA will be ready to comment as an industry.
The DHS’s Proposed Regulations
The final action date on the proposed Department of the Homeland Security regulations has been updated to April 2018. Rebecca asks what this entails. Are we going to get a deal before December 8 or are we looking at next April? It is hard to predict exactly when legislation will move to the next stage. The signal from the DHS including EB-5 regulatory action in April as a final action date is a good reminder that internally the acting leadership of DHS and USCIS, where the positions of Secretary of DHS and Director of USCIS remain unfilled, intend to move on regulations as quickly as possible. The White House would also have some voice in how the regulatory action would fit into their own regulatory agenda. Unless we find a legislative solution soon, Peter fears that Congressional support of regulatory action is likely. Mona also believes that it is imperative that the industry pursue a deal with Congress, as the DHS regulations proffer a far worse outcome, requiring investments of $1.2M and $1.8M. USCIS is implementing oversight to enhance credibility and confidence in the program, i.e.: bringing bad actors to justice. But Peter argues that a legislative solution is the only answer in some challenging areas such as visa numbers, capacity relief, and failed projects. Mona stresses that although there have been some failed projects –which have attained considerable publicity, there are also plenty of successful projects which do not receive any attention. The failed projects are more popular with the media—who just love to gossip!
IIUSA’s Influence on Congress
The EB-5 program enjoys bipartisan support due to its reach in the post-recession economy, creating jobs and spurring economic development. IIUSA has positioned the program for long-term support via communication with other federal agencies and industry partners. IIUSA’s influence continues to grow by consistently delivering data analysis and unbiased information regarding the effects of policy reform proposals. The organization takes pride in employing the best lobbyists and public affairs team in the business to lend credibility and credentials to the EB-5 industry. Rebecca pointed out that China now has a huge EB-5 backlog with a possible 10-year wait for investors. Vietnam is also believed to hit retrogression by the end of 2018, with India following in their heels, facing backlog by 2019. Mona commented that the backlog hurts the industry, more so considering that adjudication of petitions already takes a long period of time. To address the backlog problem, Mona Shah and Associates Global (“MSA Global”) initiated a petition on Change.org based on the AILA White Paper, asking Congress to “correct” the visa allocation. So far, the petition has received more than 250 signatures. Once there are more than 100 signatures, the petition is automatically sent to Congress. IIUSA’s platform addresses the backlogs in China, Vietnam, and India via a focus on processing issues at USCIS, visa capacity, targeted employment areas, and ensuring the feasibility of compliance requirements. Billions of dollars in investment commitments to EB-5 are at stake due to regulatory and legislative as well as processing and backlog uncertainty, and IIUSA is working to address the issues operationally and through the documentation of job creation and economic activity generated by the program.
The Benefits of Joining IIUSA
Beyond supporting EB-5 advocacy efforts, being a part of IIUSA affords its members the opportunity to connect and to make informed business decisions based on relevant data. IIUSA also works to develop best practices that protect the industry from bad actors and to provide educational opportunities like the upcoming 2017 EB-5 Industry Forum in Miami. Membership in IIUSA is not required to attend events or share relevant information with the association. The IIUSA website has a wealth of information and resources that are available to anyone who is interested.
What a Long-Term Legislative Solution Might Look Like
Mona mentions that President Trump has given a deadline to DACA, receding it until next March, along with border security. Will EB-5 be included or attached on one of those two vehicles, especially considering it is so hard politically at the moment? There is no way to predict whether EB-5 reform will be attached to legislative action on border security or deferred action or part of its own broader appropriations package. What is important is that we do all we can to work out the details of a legislative package so that we are ready for any opportunity that comes our way. Mona stresses that reaching a deal is not the end of the story. Legislation must be written, reviewed and rewritten multiple times. Until an EB-5 reform package is passed by both chambers of Congress and signed into law, the industry cannot take anything for granted.
Please see the link below for access to the podcast episode: http://mshahlaw.com/legislative-update-with-iiusa-featuring-peter-joseph/ .
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About the Author:
Hermione Krumm, Esq. is an associate attorney with Mona Shah & Associates. Hermione works with EB-5, corporate, merger and acquisition (M&A), intellectual property and foreign direct investment (FDI) matters involving China, the UK and the US. Hermione received her LL.B. (Hons) from the University of Manchester School of Law (UK), and obtained her LL.M. from Cornell Law School. Hermione speaks fluent English, Mandarin and Cantonese.