EB-5 Visa Reform Needed in 2021January 18, 2021
It is Time for a Bipartisan Effort to Reform, Reauthorize and Restore Congress’ Intent for the EB-5 Program
CMB Founder, Pat Hogan Discusses The Reforms Needed For the EB-5 Program.
The EB-5 Immigrant Investor program was created to stimulate the U.S. economy and create U.S. jobs through foreign investment, at zero cost to the U.S. taxpayer. The EB-5 Program operated for decades with many rules that were up for varying interpretations, which led to significant abuses within the program. Many EB-5 industry stakeholders, including CMB Regional Centers, knew that the EB-5 Program was a valuable tool for the U.S. economy when used properly, and urged Congress and the USCIS to take the necessary steps to reform the program and add strict integrity measures and oversight.
Over the years, Congress and USCIS have made significant attempts (and some notable progress) toward improving the EB-5 Program, although there is much left to be accomplished. In November 2019, USCIS implemented new regulations for the EB-5 Program, wherein, among other things, the minimum investment amount in a Targeted Employment Area (TEA) was increased from $500,000 to $900,000, and the USCIS took back the authority to declare what qualifies as a TEA from state and local authorities. USCIS through the regulations provided clear requirements for what qualifies as a TEA thus eliminating the previous abuse.
However, the USCIS was unable to accomplish everything through regulation that is necessary to establish improved integrity and transparency requirements for regional centers and regional center operators that align with established industry best practices. These integrity measures, which can only be accomplished through legislation, should:
1. Ensure that bad actors are properly sanctioned,
2. Provide clear rules and reporting obligations on all entities involved in the EB-5 program
3. Eliminate foreign control and ownership of regional centers and regional center projects, especially involving sensitive industries,
4. Provide a level playing field to allow those in EB-5 who are adhering to the rules to create new American jobs and investment in needy communities
5. Continue Congress’ original intent for EB-5, adding to visa availability, increased adjudication of petitions, for program participants thus creating new jobs and new investment for America
Senators Grassley and Leahy first introduced bipartisan legislation to improve the EB-5 Program as far back as 2015. Since that time, a number of subsequent pieces of legislation have been introduced by Senators Grassley, Leahy and others. Most recently, the EB-5 Reform and Integrity Act of 2020, sponsored and co-sponsored, by Senators Grassley and Leahy, was proposed. Senator Grassley has now taken the stance that it is time to either reform or end the EB-5 Program. While CMB does not agree with ending the EB-5 Program, we agree that the time for reform is now.
A Summary of the bill can be found here on Senator Grassley’s website.
The appropriate actions taken by USCIS in 2019 by implementing new regulations have created a clear and level path forward for all participants in the EB-5 Program. Once additional ethics and integrity reforms have been approved by Congress, the EB-5 Program should be given long-term extension, which is needed so that the benefits of the EB-5 Program can be felt by the communities and neighborhoods that are in need of rejuvenation, much needed job creation and investment. Finally, after Congress implements the appropriate integrity measures and long-term authorization for the EB-5 Program, the next necessary step will be to increase the availability of visas for the EB-5 Program.
EB-5 Costs and Challenges
The original intention of Congress in creating the EB-5 program was to create jobs and bring investment to communities that otherwise have a difficult time attracting private investment. 10,000 EB-5 investors each investing $1 million (now $1.8) or in the case of specific targeted needy communities or Target Employment Areas (TEA’S) $500,000 (now $900,000) are allowed under the strict requirements of the program to obtain a permanent visa for themselves and their immediate family members. However, under the current implementation of the EB-5 Program it only allows approximately 3,500 to 4,000 individual investors to enter the country per year, as their family members are being counted against the number of allocated visas.
As a result of this disparity, there are literally thousands of families who may wait for many years to receive a visa through the EB-5 visa category, even though they have already made the investment and created new American jobs all within the job creation requirements of the EB-5 program. The job creation and investment impacts to the U.S. economy from the EB-5 Program have been more than impressive and could be multiplied by more than 2.5 times at no cost to the U.S. taxpayer the benefit to the entire country could be very significant if the original intent of Congress were reemphasized and the State Department implemented the policy of not counting “derivatives” or family members against the original cap of 10,000 investor visa’s.
Removing the dependents towards the 10,000 visa cap will allow for a reduction in the backlog of petitioners waiting for adjudication due to current oversubscription. This would allow for the expansion of the EB-5 visa category within the original parameters set by congress to meet the demand from prospective immigrant investors from around the world. This would also provide for an EB-5 Program that continues to fully provide the envisioned benefits of job creation and foreign investment. Today more than ever we need a robust EB-5 program that can also help businesses that are in “trouble” due to covid-19 as this program has provisions for providing investment into those suffering American businesses.
If you would like to learn more about becoming a lawful permanent resident (green card) using the EB-5 Investor Visa, or CMB’s current EB-5 offerings, please contact us to schedule a free initial consultation with a CMB Investor Relations Manager.
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CMB engages Prevail Capital, LLC, a broker-dealer registered with the SEC and a member of FINRA and SIPC, to be the administrative placement agent for all CMB EB-5 partnerships.