Lost Necessary Economic Development

As the first half of 2021 ends, the time in which the United States Congress could renew the EB-5 program is now over. The EB-5 program was first created as part of the Immigration Act of 1990 and enabled immigrant investors to gain permanent residency through investing a minimum amount. This amount, which was $500k or $1 million, would be used to start up a business in the country.

However U.S. District Court dismissed the temporary passing of the rule to raise the minimum amounts from $500k for Targeted Employment Areas to $900k and the non TEAs from $1m to $1.8m putting the requirements back to their original amount in 2019, but with the Regional Center program lapsing, leaving just direct programs.

Why the Program Was Good

Not only were the immigrant investors allowed a chance at the residency, they were also providing Americans job opportunities through the businesses they were funding. Every business born out of the EB-5 needed to hire at least ten Americans, and they were mostly established in areas with high unemployment rates. In a nutshell, the program giving both domestic and foreign investments a boost for the country.

Over the years, the EB-5 program became one of the most acclaimed employment programs in the country. People interested in becoming participants of the program had the option to invest on their own or collaborate with regional enters and a group of larger investors. The centers were usually private entities, which added another layer of benefits to the industry as a whole: the private sector working with the state. Each center had to be approved by Homeland Security, and there were about 900 of them by 2019.

What Losing the Program Means for US

There is currently a bill filed in Congress for the continuation of the program, including reforms to improve the bill. Unfortunately, this bill, known as EB-5 Reform and Integrity, has not been approved yet.

EB-5 investments created a larger pool of job opportunities for many Americans. These were either through direct employment in the company funded by the immigrant investor or indirectly through the boosted economic activity in the area. Losing the program means that areas that have yet to experience an uptick in economic activity will have less of a chance to do so. For any entrepreneurs seeking to establish a business in areas outside the usual metropolitan circles, this is an obstacle as well.

In the past few years, several industrial zones were the result of EB-5 investments. For instance, the Regional Center Program was focused on creating more job opportunities for areas that were not deemed lucrative by the usual investors. Still, it was successful in attracting foreign backers for hotels, offices, manufacturing facilities, and storage centers. Of course, these generated employment opportunities all over the country.

Living proof of this is the Philadelphia Naval Base, located at the heart of Pennsylvania’s largest city. Now known as The Navy Yard, this area now houses over one hundred and thirty businesses. It is home to tens of thousands of employees, with businesses ranging from pharmaceuticals, clothing stores, maritime manufacturers, and automobile companies.

In New York, the Brooklyn area experienced EB-5 benefits when City Point was turned into a sprawling commercial complex. This area is now a promising medical and tourism complex, which will soon be the site of more jobs for many Americans. In Dallas, the KPMG Plaza was also funded by EB-5 investments and has since given 2,000 Americans an opportunity of employment.

Finally the creation of Pinnacles system’s with utilizing immigration investments for job creation alongside the opportunity zone sectors. Partnering with the nonprofit Empire For The Youth (EFTY) for proven proper area development in economic, environment, and culture sustainability. Giving us a hope as our youth positively impacts the future generations to come!

Bill Reauthorization

The bill filed in Congress allowed the program to be reauthorized for five years. It will allow Regional Centers and investors to recalibrate their efforts and focus on generating more business opportunities. The non-profit organizations and associations are coming together to rally behind the reauthorization of the bill, such as Invest in the USA.

IIUSA Executive Director Aaron Grau’s recent op-ed in Albany Times Union notes the critical importance of the EB-5 Regional Center Program to the U.S. as a whole and New York state in particular.

“The EB-5 Regional Program needs change, including increased integrity measures to help protect against the fraud and abuse brought on by one too many bad apples. It needs provisions to protect good-faith investors who, through no fault of their own, may find themselves in a terminated project. And the program needs stability — the kind of stability that only comes from a long-term, five-year reauthorization.”

Mr. Grau stated

Originally published in the Albany Times Union: “Since 2008, the EB-5 Regional Center Program has brought more than $6.5 billion in investment to New York and created more than 205,000 jobs. The program has provided more than $41 billion in capital investment from across the globe to fund various economic development projects and support American businesses since its inception in 1990 — at no cost to the taxpayer. This capital deployment and resulting projects created at least 820,000 job opportunities for U.S. workers, vital contributions especially following the 2008 recession.”

But this job-creating success story expired on June 30 short of one key yes in Congress’ reauthorization vote.

“The disagreement in Congress was not about whether it should be renewed, but about how. Not only are EB-5 regional centres big employers, but each investment brings in hundreds of thousands of dollars and creates ten jobs at no cost to the taxpayer,”

said Davies to Economic Times

Your Help

“A narrow subset of big-moneyed and corrupt interests has now shown that they would rather kill the program altogether than have to accept integrity reforms designed to clamp down on their bad behavior,”

Grassley said on the Senate floor

Grassley’s communications director, agrees that the bill Grassley and Leahy drafted has the support of the EB-5 industry. 

“The bill is probably the greatest chance of reauthorizing the program and addressing some of the concerns about it,” Foy said. “Lawmakers looking to reform the program are at a point where if we don’t reform it, then there’s no point in continuing, because we’ve seen the status quo continue for so long. It’s time to actually fix the program’s problems.”

Taylor Foy told Bisnow

The EB-5 Program is a gateway for qualified foreign investors who must meet specific capital and job-creation requirements to obtain permanent U.S. residency. In 1992, Congress created the Regional Center Program allowing designated “RC’s” to pool these investments and leverage them with other capital to create jobs through myriad successful economic development initiatives.

The program also adds value to current efforts to improve immigration policies within opportunity zone. Allowing more people to obtain US visas is something that the continued use of the EB-5 program can also achieve. Not only that, but it also continues to be a reliable source of income for the United States’ real estate developments sectors.

For everyone who want to help usher in an era of reliably sustainable economic and other development to more rural areas, the EB-5 program has been a gateway to accomplish this. It has also provided a platform for collaboration in both the non-profit and profit-driven industries, something that the country needs now more than ever. As more and more people become more open to diversity in the business sector, the last thing it needs is for a lucrative door to close…

So with your aid in supporting the program by contacting local government representatives to help support the program. Ask your member of Congress to cosponsor the EB-5 reform and reauthorization bills, S. 831 and H.R. 2901. Contact IIUSA for help!

IIUSA, its members, and a broader coalition of stakeholders continue efforts to secure long-term and last reform for the Program. Questions can be directed to advocacy@iiusa.org

Join the Coalition to Save and Create Jobs at saveandcreatejobs.org/join and invite all your project partners and local development entities to join as well (i.e., chambers of commerce, EDOs, state/local elected officials.)

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