Written by David Morris and Carolyn Lee, AILA EB-5 Liaison Committee Co-Chairs
Part 1 – See more
The EB-5 “Regional Center” visa program again finds itself in an all too familiar place – unless Congress reauthorizes by September 30, the program will sunset. For better or worse, the EB-5 program remains connected with three other sun-setting immigration programs (E-Verify, Conrad and Religious Workers). AILA continues to be actively involved in the extension process and here are some updates:
Let’s start with a quick refresher. The EB-5 Immigrant Investor Visa classification has many street names, such as the “Entrepreneur” visa, the “Investor” visa and the “Jobs Creation” visa. By any name, the U.S. Congress created this program in 1990 with the goal of encouraging the infusion of foreign capital to benefit the U.S. economy. And to that end, it would offer the privilege of U.S. residency to an entrepreneur in exchange for creating 10 new jobs for American workers.
Ironically, Congress had to wait nearly 18 years to realize the major economic benefits they contemplated when enacting the EB-5 program. Why 18 years? 2008 was the beginning of the global recession which created frozen credit markets; and without access to capital, businesses could not operate. This resulted in millions of Americans losing their jobs.
With banks not lending to even the most creditworthy in 2008, the real estate industry began to embrace alternative capital sources to finance construction and development opportunities – including the heretofore underutilized EB-5 visa program.
Today, EB-5 funding is approaching mainstream recognition as a viable capital funding tool for economic development. It has helped finance large scale development projects in many major cities across the United States, including New York, Washington DC, Los Angeles, Miami, Las Vegas, and more.
Let’s just look at data from FY2014 – during this one-year period the U.S. Citizenship & Immigration Service (USCIS) approved 5,115 investor visa petitions (Form I-526). This represents foreign investment of a minimum $2.5 billion into the United States. From 2008-2014, the USCIS approved 17,000 visa petitions, representing an estimated $12 billion of capital investment into the United States.
But more than the huge inflow of capital investments, the EB-5 program is also supposed to be about jobs and job creation. According to a recent Brookings report, the EB-5 program has been credited with creating over 85,000 full-time jobs since 1990. And according to the FY2013 data, the EB-5 program has helped to create an estimated 30,000 jobs in the United States.
Almost all of this economic activity occurred since 2008 and exclusively through the EB-5 Regional Center (“RC”) Pilot Program, created in 1992.
It would be logical to believe that Congress is highly pleased with the performance of the EB-5 program. It has realized its legislative intent by creating thousands of jobs for Americans and infusing billions of new dollars into the U.S. economy, all without any cost to taxpayers. In fact, one would expect broad Congressional support to expand the program.
Part 2 – See More
In general, AILA and other industry stakeholders are finding strong bipartisan support in both the House and the Senate for the EB-5 program. And yes, Congress has extended the Regional Center (RC) program numerous times since 1992.
But, and this is important, the current legislative atmosphere is uncertain and complex – especially involving immigration issues. Many legislators, from both parties, want to address all immigration issues as part of a larger comprehensive reform package. Extending just the EB-5 program and other sunset immigration programs could be viewed as piecemeal and diluting a comprehensive approach favored by many.
In the past, all of the sunset programs received a clean extension – meaning they were extended without any changes to the program rules. But the EB-5 program has received significant negative criticism over the past several years; many believe the program needs major changes including increasing the minimum investment, addition of integrity provisions, and redefining the TEA provisions, among others.
Today, parallel efforts to extend the program are underway in both chambers of Congress. The goal is that these efforts will combine to fast track an extension which is critical given the shrinking time window.
In the U.S. House, Representatives Mark Amodei (R-NV) and Jared Polis (D-CO) introduced H.R. 616, the “American Entrepreneurship and Investment Act of 2015.” If enacted in its present form, this bill would, in part:
- Make the RC program permanent;
- Require EB-5 petition adjudication within 180 days;
- Exempt spouses and children of EB-5 immigrants from EB-5 admissions limits (This will save visa numbers and eliminate the China retrogression);
- Authorize concurrent I-526 and I-485 filing;
- Eliminate the per-country limit for employment-based immigrants and increase the per-country limit for family-based immigrants.
On July 30, 2015, U.S. Reps. Zoe Lofgren (D-Calif.) and Luis V. Gutiérrez (D-Ill.) introduced The EB-JOBS Act of 2015 which if enacted would:
- Extend and reform the EB-5 program;
- Create a new green card category for entrepreneurs who establish start-up businesses;
- Create a new green card category for certain treaty investors who have maintained their status for 10 years;
- Create a renewable reserve of 10,000 EB-5 visas upon exhaustion of the initial 10,000.
In the U.S. Senate, bipartisan legislation was introduced by Senate Judiciary Chairman Charles Grassley (R-IA) and Ranking Member Patrick Leahy (D-VT) through S. 1501, a bill called the “American Job Creation and Investment Promotion Reform Act of 2015.” If enacted in its present form, this bill would, in part:
- Reauthorize RC program for just 5 years;
- Increase minimum TEA investment from $500,000 to $800,000 and non-TEA minimum investment from $1 million to $1.2 million;
- Eliminate state authority to certify TEAs;
- Limit high unemployment areas/TEA to a single census tract; and
- Create several different restrictions on indirect job creation calculations.
Together, these three bills provide a critical first step forward in the campaign to extend the EB-5 program. Despite Congress now being on summer recess, legislative efforts continue and we expect there will continue to be significant progress made to find common ground. A wildcard to the legislative effort is the imminent release of a report auditing the EB-5 program published by the Government Accountability Office (GAO). AILA’s EB-5 Committee met with the GAO investigators and we shared our technical expertise.
AILA continues to meet with industry stakeholders and Congressional delegations to share our unique technical expertise in the EB-5 program and to analyze the impacts of any proposed legislation. Led by Co-Chair Carolyn S. Lee, AILA’s EB-5 Committee issued comprehensive comments to proposed EB-5 program legislation; these reports have been well-received by Congressional staff members by helping them understand the potential impacts of a bill’s language and, in several cases, identify language that creates unintended consequences.
Over the next 60 days and beyond, we will continue our engagement in this complex and fluid legislative process, and we will keep our membership updated.