As the time ticks down to the deadline for passage of an Omnibus appropriations bill funding the federal government, Congress also has an opportunity to extend and strengthen an important program that supports the creation of American jobs. After lengthy negotiations, a bipartisan group of Congressional leaders from the authorizing committees in both the Senate and House - Senator Grassley, Senator Leahy, Representative Goodlatte, Representative Conyers, Representative Issa and Representative Lofgren - have crafted a compromise agreement that would extend the EB-5 Regional Center program for five more years and put in place a number of significant reforms.
Under EB-5, a program created by Congress in 1992 with broad bipartisan support, foreign nationals who invest at least $500,000 or $1,000,000 in approved U.S. businesses are eligible for permanent residency if the U.S. government confirms that their investment created at least 10 American jobs within two years of the investment.
After years of under-utilization, EB-5 became an important source of investment capital following the Great Recession, funding job-creating projects across the country at no cost to taxpayers. Since 2008, the Program has generated more than $13 billion in foreign direct investment that created tens of thousands of jobs, and there currently is more than $9 billion in EB-5 capital pending federal government approval. In the last quarter alone, more than 6,500 investors submitted petitions to participate in the program - a number nearly equal to what was submitted in the first three quarters of fiscal year 2015.
With this explosive growth comes a need for reform. U.S. Citizenship and Immigration Services, the federal agency with primary oversight of the EB-5 Program, has made significant improvements in how it administers the program - increasing staffing, enhancing expertise and improving interagency cooperation particularly in the areas of fraud and national security protections. But, Congress has not addressed needed statutory reforms since the early 1990s.
The legislative package that is now on the table is a thoughtfully crafted bill that will reauthorize the Program for five years while strengthening needed oversight, national security and securities enforcement activities.
Getting here wasn't easy. The EB-5 industry has, in effect, been negotiating this extension - and program reforms - ever since the last reauthorization in 2012. In the last two years, the primary focus has been on steps to enhance oversight, crack down on fraud, and maximize the economic impact of the program. In 2013, a number of reforms were included in a comprehensive Senate immigration bill, and five individual reauthorization bills were introduced in the last 18 months.
As the trade association representing more than 280 EB-5 Regional Centers, IIUSA has long supported and advocated for reform. Protecting the program from allegations of fraud or misuse is critical to maintain the confidence of investors around the world and project partners here at home.
That we now have agreement on a five-year reauthorization bill is a credit to the hard work of Congress and the dedication of the EB-5 industry. Members of Congress worked with a spirit of compromise and determination to achieve a Program that addresses a range of concerns - from allegations of special treatment of certain Regional Centers, securities law compliance and national security enhancements to job creation accountability, raising investment amounts and adjusting incentives for EB-5 investments in rural and high-unemployment urban areas.
There was ample opportunity for the industry to comment and provide input based on their real-world experience. With the amount of EB-5 capital in the pipeline - and the number of projects relying on funding from the Program, it is critical that reforms do not disrupt ongoing economic activity or undermine the Program's standing with investors in a competitive global market.
The EB-5 industry is extraordinarily diverse. Regional Centers operate in large, urban markets and small, rural communities. Some have been involved in the program from the beginning; others are just getting started. Projects funded with EB-5 capital include hotels and condominiums, senior living centers, manufacturing companies, energy production facilities and public infrastructure projects such as highways and subway improvements.
Negotiating a legislative package required a careful balancing of all of these interests - along with the concerns raised by Congress, federal agencies and other stakeholders.
At the end of the day, that's what the reform provisions achieve - a compromise that doesn't favor any one particular interest over another in order to achieve a shared goal of a stronger, more effective program. The EB-5 industry will need to adapt to the new statutory and regulatory requirements - and as that occurs, they will to continue putting investment capital to work and creating jobs in communities across the country at no cost to the taxpayer.