As we move forward into President Biden’s new term, one of the areas of concern in immigration is the matter of the EB-5 investor immigration program. The special reason for the concern is that the program has a sunset provision that will lead to its expiry by June 30th, 2021 unless it is renewed. For many years this was not a problem because the sunset requirement was attached to the process where Congress renewed certain programs, including the EB-5 program, automatically when an omnibus bill approving a new budget was passed.
Decoupling the EB5 Program from Omnibus Funding
But in the last such omnibus appropriations bill that was passed while Donald Trump was president, the EB5 program was decoupled from automatic approvals leaving the program standing on its own to gain re-approval before it sunsets. In other words, in June of this year the entire EB-5 program is going to meet a moment of truth - it will either be extended by Congress or it will die. Some members of the investor immigration community welcome this as a challenge that they are up for, but others consider this a danger that could have long term negative consequences for the United States.
What is the EB-5 Program?
The EB-5 program is not simply an immigration program. More appropriately, it is a jobs and investment program. Each year, through the approval of investors coming to the United States, each investing either $ 900,000 under the regional center option or $ 1.8 million under the direct investment option, 10,000 visas are made available to investors and their family members to come to the United States. Since its first inception in 1991, the program has brought millions of jobs and billions of dollars to the United States. The EB-5 program has been the most successful of all the immigration programs in the United States in terms of the economic benefits it has introduced into the country.
Dead End Ahead
To date, both investors and their family members were counted in terms of the cap on the number of immigrants allowed into the country under the program. Recently, Biden sent an immigration bill to Congress that will recapture unused visas and not count family members against the cap in investor immigrants per year. In addition, the proposal will eliminate country limits in the allocation of green cards. But this bill will need to be debated and amended before it is passed. What is more, Congress will be in the middle of the impeachment hearings in the Senate, so the chance of Senate passing either the Biden immigration bill or any EB-5 legislation by the end of June will be limited. And that brings us back to the central problem of the EB-5 program, that to be renewed it will need to be passed as an independent measure apart from appropriations.
Enter the bipartisan EB-5 Reform and Integrity Act introduced by Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.), leading members and former chairmen of the Senate Judiciary Committee. This bipartisan legislation would:
1) Extend the program through September 2024;
2) Provide increased authority to the Department of Homeland Security to deny or terminate applications where there is fraud, criminal misuse, or a threat to public safety or national security;
3) Establish an “EB-5 Integrity Fund”in which regional centers and investors would pay fees to be used by the Department of Homeland Security to conduct audits and site visits to detect and investigate fraud in the United States and abroad;
4) Require background checks of regional center and project principals;
5) Require more disclosures to investors regarding business risks and conflicts of interest;
6) Require more oversight of projects and closer monitoring for securities compliance;
7) Improve how jobs are calculated to ensure that EB-5 projects truly create the statutorily required 10 jobs per investor;
8) Improve accountability and transparency by requiring that Department of Homeland Security employees document certain communications and by prohibiting preferential treatment; and
9) Decrease petition processing times, which have been plagued by massive delays, by providing premium processing and requiring fees be adjusted to the rate necessary to achieve efficient processing.
Support for the bill is growing
Invest in the USA — a national trade association representing more than 200 EB5 regional centers that account for billions of dollars in EB-5 capital formation — backs the bill and recently assembled a broad coalition of more than 425 supporters for the package. Included among the supporters are representatives of the hotel and lodging industry, the real estate industry, national and local chambers of commerce, economic development organizations, and mayors from across 19 states. These efforts are growing. But will they be enough when the time comes?
To summarize, there will be a showdown in Congress in June and the EB-5 investor immigration program will either be renewed, or fall by the wayside as a casualty of Congressional gridlock. A lot is riding on the result. Much work needs to be done between now and June to ensure that the program survives. This is particularly important as China recently surpassed the United States as the leading destination in the world for foreign investment.
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