Congress in 2015 tried to tackle new EB-5 reform legislation, but instead chose to extend the program without any changes until September 30, 2016. This was a result of an impasse on issues relating to increase in the capital threshold amount and the change in the metrics used to determine what is a (“TEA”) targeted employment area. The contentious debate on these issues provided both developers and regional centers one more year of status quo in the program.
What will happen this year is anyone’s guess. What we do know is that Congress is holding hearings on EB-5 reform. These hearings provide the opportunity for individuals in the EB-5 industry to voice their opinion as to the future of the program.
On Wednesday April 13th 2016, the Senate Judiciary Committee held its second hearing of 2016 on the EB-5 Program titled, The Distortion of EB-5 Targeted Employment Areas: Time to End the Abuse. The Senate Judiciary Committee heard from several witnesses including the Executive Director of IIUSA, Peter Joseph. IIUSA is the national non-profit trade association representing EB-5 developers, regional centers and other professionals that are in the EB-5 space. Peter Joseph in his testimony pointed to several critical issues that the Committee should consider in the long term reauthorization of the EB-5 legislation. Those issues include:
- Increase visa capacity to enhance economic impact of EB-5 and address the backlog of
investors currently waiting for visas to be available.
- Staff commercially viable processing system at USCIS that addresses existing backlogs
and prioritizes predictability and length of processing times for EB-5 related petitions and
- Avoid retroactive application of new law and reform to protect the existing EB-5
investors and their families and the billions of dollars in financial commitments and
- Ensure all EB-5 investors with petitions currently filed, or at a later stage in the EB-5
process, are guaranteed adjudication (not approval) and eligibility for immigration
benefits throughout the entire EB-5 process (I-526 petition, EB-5 visa issuance, and I-829 petition)
regardless of future reforms, lapses, or expiration of the program.
- Continue to allow economic impact models including indirect/induced job creation to
count for EB-5 purposes (using the same econometric models that are generally accepted
as economic policymaking tools by government, academia, and business).
- Improve program integrity, including through enhanced oversight and reporting
requirements of Regional Centers that are not unduly burdensome, such as site visits
funded by user fees.
- Clarify geographic (including targeted employment areas (TEAs)), structural, and
industry project characteristics that enable consistent adjudication of EB-5 petitions and
The issues that Peter Joseph mentioned in his testimony on Capitol Hill clearly mirror the position that most in the EB-5 industry have taken on EB-5 reform. The program has been largely a success with a substantial amount of foreign capital being invested in job creating projects in the United States. Everyone in the EB-5 space would like to see an extension of the EB-5 legislation for at least a five (5) year period.
Since 2008, the Program’s annual contribution to foreign direct investment inbound into the U.S. grew over 1,200% to total almost $5 billion in fiscal year 2015 alone. This investment capital is creating tens of thousands of jobs for U.S. workers in diverse communities by funding projects in a wide variety of industry sectors across the country.
Will Congress take any action this year to reform the current EB-5 legislation? I believe not.
This is a Presidential election year. It is very likely that Congress will defer on making any substantive changes to the EB-5 program until 2017. Immigration reform legislation has never passed both houses of Congress in an election year.
The economic benefits of the EB-5 program are not in dispute. The major issue that Congress needs to address is improving the compliance portion of the legislation. This will provide transparency to the program. Something that is much needed.