Reform has been a major theme in EB-5 Immigrant Investor Program world for years, with the unresolved problems in the program becoming more and more aggravated each year. In January 2021, EB-5 industry leaders, including Invest in the USA (IIUSA), have made official calls on Congress to finally implement EB-5 program reform as well as permanently reauthorize the ever-popular EB-5 Regional Center Program.
The EB-5 World Narrowly Missed an Opportunity for Reform
Throughout its history of 30+ years, the EB-5 program—especially through the EB-5 Regional Center Program—has pumped billions of dollars into the U.S. economy, particularly into in-need communities in targeted employment areas (TEAs), and created tens of thousands of new jobs for U.S. workers. Despite this impressive track record, critics fault the regional center program for insufficient integrity measures, accusing those who make EB-5 investments as abusing the guidelines. In response, IIUSA has released a statement stressing the necessity of EB-5 reforms and the legislation needed to enact them.
According to IIUSA, an integrity-based reform to the EB-5 Regional Center Program is “necessary to achieve any other significant legislative goal.” Until integrity measures within the program are tightened, EB5 investment stakeholders have no room to address the mountain of other problems the program faces. At the end of 2020, the long-awaited reform almost came, but ultimately, it was too little, too late.
The EB-5 Reform and Integrity Act was presented by Senators Chuck Grassley and Patrick Leahy, who for years have formed a bipartisan partnership for the betterment of the EB-5 program. The bill addressed only a fraction of the issues that EB5 investment stakeholders have been pushing for years, but nonetheless, it offered an opportunity for strong reform and long-awaited chances. Promising integrity reforms to the regional center program and long-term reauthorization, the bill could have transformed the EB-5 landscape—but since it wasn’t finalized in time to be passed in conjunction with 2020’s year-end federal spending bill, the EB5 investment community must continue the fight for reform and permanent reauthorization.
Reform Needed Desperately to Ensure the Future of the Regional Center Program
As of January 2021, the EB-5 Regional Center Program is set to expire on June 30, 2021, the decision coming after a bumpy few months at the end of 2020 characterized by constant, short-term reauthorization. The reauthorization came alongside a wider government spending bill that included various government programs, as has been the custom for years. This time, however, Congress opted to give the EB-5 Regional Center Program a sunset date of June 30, 2021, as opposed to the normal September 30 date allocated to the other programs in the bill, effectively divorcing the regional center program from the consolidated bill.
This situation represents a rich opportunity for the EB-5 investment world, but it simultaneously presents a major risk—having been separated from federal budget legislation, the regional center program now needs to achieve reauthorization based solely on its own merits. The program has until June 30, 2021, to prove its worth, and then, if no legislation is passed, the program will become a relic of the past. IIUSA’s statement acknowledges the very real risk of termination, calling on the EB-5 industry to support Grassley and Leahy’s reform bill as “perhaps the only path to reauthorization.”
Other industry leaders have released similar statements, some elaborating on the type of reforms they would like to see realized. While Grassley and Leahy’s bill revolves around integrity—which indeed has been the focus of critics—calls have also been made to remove dependents from the yearly allocation of EB-5 visas, which would significantly clear up the backlogs and sufficiently meet EB-5 investment demand.
Reform Is the Way Forward for the EB-5 Program
As a temporary government program, the EB-5 Regional Center Program has dealt with short-term reauthorizations since its debut in 1992, so EB-5 investment stakeholders are no strangers to program uncertainty. The difference this time is the independence of the EB-5 program, having been released from the consolidated federal spending bill, as it faces a looming expiration date.
The EB-5 industry should not panic but rather work together to prove before the June 30, 2021, deadline that the program is beneficial to the United States. Industry stakeholders in all areas agree on the need for reform, and in light of the potential termination of the regional center program, it’s imperative for EB-5 leaders to work together to ensure a bright future for the EB-5 program and all the foreign investors looking to start a new life in the United States.