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Wednesday, March 3rd, 2021

Support grows for inclusion of EB-5 reforms in FY2021 omnibus appropriations bill

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Congress should include integrity reform measures and a long-term reauthorization of the EB-5 Regional Center Program in the fiscal year 2021 omnibus appropriations bill, according to almost a dozen congressional lawmakers in a letter sent to federal lawmakers.

One existing piece of proposed federal legislation contains such provisions: the bipartisan EB-5 Reform and Integrity Act, S. 2540, introduced last year by U.S. Sens. Chuck Grassley (R-IA) and Patrick Leahy (D-VT). The senators this week proposed an amendment with compromise language from the bill, which, if enacted, would reauthorize the EB-5 Regional Center Program through Sept. 30, 2024, and offers several integrity provisions designed to prevent fraud and promote and reform foreign capital investment and job creation in American communities.

Invest in the USA (IIUSA) — a national trade association representing more than 200 regional centers that account for billions of dollars in EB-5 capital formation — is on board with the bill. 

The organization recently assembled a broad coalition of more than 425 supporters of EB-5 Regional Center Program reauthorization, including those who represent the hotel and lodging industry, the real estate industry, national and local chambers of commerce, economic development organizations, and mayors from across 19 states. 

“They all want Congress to reform and reauthorize EB-5 to help local economies across the nation struggling from a COVID-induced economic recession,” wrote IIUSA Executive Director Aaron Grau in a Dec. 11 letter sent to House and Senate leadership, adding that “the Grassley/Leahy bill achieves the coalition’s common goal of integrity and reauthorization.”

The coalition recognizes the positive impact EB-5 investment can have in creating and saving jobs in their communities, Grau wrote.

Similarly, a bipartisan contingent of 10 members of the U.S. House of Representatives sent a Dec. 9 letter to House appropriations leaders noting that EB-5 investments will leverage other financing to further projects that otherwise would stay dormant.

“When domestic financing sources are difficult to secure, as during the 2008 Great Recession, EB-5 funding steps in to meet businesses’ capital demand,” wrote the lawmakers. “When capital is scarce, available EB-5 capital is critical to catalyzing and leveraging traditional funding sources.”

While not specifically citing S. 2540 in their letter, the 10 lawmakers also said that a growing number of industry stakeholders have come together and agreed upon instituting the necessary integrity reform measures to safeguard the program and enhance its economic capability.

“The EB-5 Regional Center Program has been, can be, and should be a powerful tool for the nation’s economic recovery,” they wrote. “While Congress has rightfully extended this program for the last nineteen appropriation cycles, the program needs reform and a long-term authorization.”

The members who signed the letter were U.S. Reps. Dwight Evans (D-PA), Brian Fitzpatrick (R-PA), Tom O’Halleran (D-AZ), Mike Doyle (D-PA), French Hill (R-AR), Glenn Grothman (R-WI), Christopher Jacobs (R-NY), Doris Matsui (D-CA), Marc Veasey (D-TX), and Susan Wild (D-PA).

In their letter, they pointed out that over time, the regional center program has suffered setbacks because bad actors have abused its opportunities. “Industry stakeholders agree with congressional priorities for increased oversight and additional protections against fraud and abuse,” they wrote.

Among the necessary changes needed to rectify that situation, the lawmakers suggested that integrity reforms for the Regional Center Program be included in the omnibus bill, such as third-party audits; clear information to investors about the progress of any projects; definitive records illustrating an investor’s source of funds; and scrutiny for and protections against threats to national security, among others. 

“This program, devised by Congress as an economic development driver, is a proven success and we need it now more than ever,” wrote the members. “We request that you include the EB-5 Regional Center Program’s reform and long-term reauthorization in the next appropriation measure.”