A comprehensive legislative overhaul of the EB-5 investment program was introduced in the Senate on Tuesday – as both the program’s expiration and the effective date for new agency regulations are expected on November 21.
- The Immigrant Investor Program Reform Act (S. 2778), sponsored by Senators Mike Rounds (R-SD), Judiciary Committee Chairman Lindsey Graham (R-SC), and John Cornyn (R-TX), would extend the EB-5 regional center program until September 30, 2025. The bill includes a comprehensive suite of long overdue measures to deter fraud and optimize national security protections, in the context of inbound foreign investment capital that helps finance U.S. economic development and spur American job growth.
- Key elements of S. 2778 include provisions to:
- Establish an EB-5 Integrity Fund to provide rigorous program oversight, to be funded by regional center participants;
- Provide DHS with improved investigative tools to ensure that an investor’s funds are derived from legitimate and lawful sources;
- Clarify DHS’s authority to deny or revoke immigrant investor petitions for reasons including fraud, misrepresentation, or national security concerns;
- Allow bona fide sovereign wealth funds to co-invest in projects supported by EB-5 capital;
- Provide visa “set asides” to help direct EB-5 capital to projects in rural areas and census tracts designated by the U.S. Treasury as “opportunity zones”; and
- Establish new investment levels to $1 million for projects in rural and opportunity zone Targeted Employment Areas (TEAs); and to $1.1 million for non-TEA projects.
- Compromise reform principles set forth by a coalition of rural and urban stakeholders in May reflect a number of provisions in the new bill. (Roundtable Weekly, May 17, 2019)
- The rural and urban business interests recommending EB-5 modernization have consistently urged holistic reforms from Congress, as opposed to piecemeal regulatory changes by the Department of Homeland Security (DHS). (Roundtable Weekly, March 8, 2019) The imminent agency regulations – scheduled to take effect on November 21, unless they are superseded by Congress – do not accomplish important objectives set forth in the Rounds-Graham-Cornyn bill, such as the fraud deterrence provisions, national security enhancements, and visa set asides for investors in rural and distressed urban area projects. (Roundtable Weekly, July 26, 2019)
November 21 is also the date that the underlying legislative authorization of the program expires, as connected to the current continuing resolution (CR) that keeps the federal government running. For the past five years, Congress has consistently extended the EB-5 regional center program concurrently with spending measures that continue federal operations. The timing of the DHS rules’ effectiveness and the program’s expiration on November 21, along with S. 2778’s introduction, are expected to spur new rounds of legislative negotiation for long-term EB-5 reform in the coming weeks.
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