The Urgent Need to Reform and Reauthorize
the EB-5 Investment Program
Failure to reauthorize EB-5 regional centers – which facilitate capital investment and create jobs at no cost to taxpayers – will have negative economic consequences.
EB-5 Program Extended Through September 30, 2016
What is the EB-5 program? EB-5 brings foreign capital into the United States to help public-private partnerships finance myriad development projects in rural, suburban, and urban communities across the nation. The program puts Americans to work. EB-5 financing has assisted funding of infrastructure, charter schools, real estate development, energy production, health care facilities, ski resorts, hotels, and manufacturing plants, among others. According to The Hill, "... economists from the Harvard Business School-affiliated Institute for a Competitive Inner City found EB-5 funded projects nationwide – including our schools – are 'increasing employment and revitalizing urban areas.'"
As the EB-5 “regional center” investment program was scheduled to expire on September 30, Congress passed a short-term "continuing resolution" (CR) to keep the federal government open until December 11, effectively reauthorizing the EB-5 program for the same duration. The CR thereby allows some additional time for negotiations to continue on a multi-year EB-5 extension.
The Real Estate Roundtable supports legislative efforts to extend EB-5 regional centers and is a “Founding Member” of a broad-based EB-5 coalition that seeks to reform and reauthorize the program. (see EB-5 in the News)
An in-depth economic study released in June concludes that the federal EB-5 investment visa program has a “disproportionately large” and positive impact on net U.S. job creation and domestic investment — generating a minimum of $5.2 billion in private investment between 2005 and 2013. (see Roundtable coverage of EB 5 developments)
An Aug. 12 report from the U.S. Government Accountability Office provides a blueprint to rally Congress into action before the Sept. 30 expiration. This report focuses on measures — that have already received bipartisan support — to improve the integrity, administration, and transparency of the EB-5 regional center program, and should provide the basis for reform and multi-year reauthorization.
Failure to reauthorize EB-5 regional centers – which facilitate capital investment and create jobs at no cost to taxpayers – will have negative economic consequences:
• The U.S. will lose an estimated $6.8 billion in foreign investment dollars if the EB-5 regional center program is not reauthorized. (Based on the 13,663 pending EB-5 petitions as reported by U.S. Citizenship and Immigration Services (USCIS) at the end of FY’2015 Q2; assumes the minimum $500,000.00 investment for each pending petition.)
• Other countries have their own programs to capture international investment funds. The U.S. will lose its competitive edge for foreign capital – and lose jobs for Americans in the process – if it leaves $6.8 billion on the table for other nations to acquire.
• From 2005-2013, EB-5 brought in a minimum of $5.2 billion in private investment to the U.S. – with a minimum of $1.6 billion in 2013 alone. This is according to a June 2015 study commissioned by the EB-5 Investment Coalition (www.eb5coalition.org).
• Assuming all minimum requirements are met for each investment, investments through the EB-5 program in 2013 would create 31,000 American jobs, also according to the Coalition’s June 2015 study.
A June 2015 economic study concluded that the federal EB-5 investment visa program has a “disproportionately large” and positive impact on net U.S. job creation and domestic investment — generating a minimum of $5.2 billion in private investment between 2005 and 2013.
Congressional leaders have stated they do not want the EB-5 investment and job creation program to expire – not even for a single day. The Real Estate Roundtable agrees. We urge swift action by Congress to reauthorize the EB-5 regional center program. We respectfully urge Congress to consider a reasonable "path forward" for EB-5 reauthorization and reform, as follows:
• EB-5 should be included in any continuing resolution (“CR”) to fund the federal government after Sept. 30. A short-term EB-5 patch – that mirrors the duration of the CR – is needed to provide additional time to negotiate a long-term deal for responsible regional center reform.
• EB-5 reauthorization should include "integrity measures."
Broad consensus on Capitol Hill and within the EB-5 stakeholder community already exists regarding “integrity measures” designed to safeguard national security and deter potential investor fraud. These measures are contained in pending Senate and House bills (S. 1501, H.R. 616 and H.R. 3370) and address key concerns raise in an Aug. 12 report from the U.S. Government Accountability Office.
• EB-5 reauthorization should be packaged with other expiring programs.
Similar to past acts of Congress, EB-5 extension should be packaged with extensions of visa programs for religious workers and medical doctors, as well as the E-Verify Internet-based system to determine worker eligibility. They all expire on September 30 and should be extended together.
• Another multi-year extension is needed to optimize EB-5 regional centers’ purpose to create American jobs.
After the short-term patch on the CR (discussed above) is secured, EB-5 extension should span three to five years as aligned with prior bipartisan reauthorizations of regional centers. A multi-year extension is appropriate - and necessary - to enable greater American job growth, promote investor confidence and American competitiveness in the global marketplace, and accelerate economic recovery.
About The Real Estate Roundtable
The Real Estate
Roundtable brings together leaders of the nation’s publicly-held and privately
owned real estate ownership, development, lending and management firms with the
leaders of national real estate trade associations to jointly address key
national policy issues relating to real estate and the overall economy.
Collectively, Roundtable members' portfolios contain over 12 billion square feet
of office, retail and industrial properties valued at more than $1 trillion;
over 1.5 million apartment units; and in excess of 2.5 million hotel rooms.
Participating trade associations represent more than 1.5 million people involved
in virtually every aspect of the real estate business.
For weekly updates on the EB-5 program and other key policy issues affecting commercial real estate, see our eNewsletter Roundtable Weekly
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