The U.S. Senate is moving forward with an extension of the EB-5 immigrant investor program as is and reforms to the program appear unlikely.
The provision to extend the program is included in the continuing resolution, a short-term budget bill that allows the government to keep running until early December.
Sen. Patrick Leahy says he will vote against the continuing resolution because it does not include a reform package to the EB-5 program.
“If this flawed program is not reformed, I believe it should end,” Leahy said in a press conference Thursday. “I can no longer support a straight extension of this program.”
Leahy has backed the reauthorization of the EB-5 program in years past and is considered to be a champion of the economic development tool, which was designed to infuse poor rural and urban areas with investment money that would otherwise be unattainable through ordinary lending channels. The program allows immigrants to invest $500,000 to $1 million in developments in exchange for green cards.
But in a speech on the Senate floor last week, Leahy declared that he will vote against the continuing resolution if it does not include the reform package he introduced with Sen. Chuck Grassley, R-Iowa. It would be the first time the Vermont senator has voted against a short-term budget bill. The deadline for the continuing resolution vote is Sept. 30 and a vote is likely in the next few days.
Leahy says the program should not continue without protections for investors and restrictions on where EB-5 developments are built.
Leahy said the EB-5 program was designed to be an economic development tool for distressed rural and urban areas, but it has become “an unintended boon for the wealthiest business districts in the country.”
“Affluent areas now dominate the program by exploiting incentives intended for underserved areas, a practice Department of Homeland Security Secretary Johnson has rightly described as gerrymandering,” Leahy said. “It has gotten to a point where a luxury hotel in Beverly Hills qualifies as a distressed urban area. Only in the world of EB-5 is Beverly Hills considered economically distressed.
“Far from being a tool for economic development and job creation, EB-5 now serves as a corporate subsidy for wealthy developers, allowing them to save tens of millions of dollars on financing,” Leahy continued. “It is no wonder these developers fight so hard against reforms that would restore incentives to invest in rural and poor urban areas.”
Leahy and Grassley’s reforms would restrict EB-5 developments to poor urban and rural areas. The provisions would also protect investors from fraud.
Leahy has said that fraud is “rampant” in the EB-5 program and his own state has not been immune. The developers of two ski areas and a biomedical facility in the Northeast Kingdom have been accused by federal regulators of misusing $200 million in immigrant investor funds. The developers collected $440 million from more than 700 investors from 74 countries for eight separate projects.
About 400 of those investors have not obtained green cards through the program because of the fraud and have had to seek temporary visa extensions. Under current law, the investors could be eventually deported. Leahy is seeking a loophole in current law that would allow defrauded investors the ability to use any recouped monies to finish current projects or to invest in other projects.
If reforms do not move forward with the temporary extension of the program this month, Leahy will press again in December when Congress takes up the omnibus budget bill.
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