The following article was printed in the Bureau of National Affairs (BNA) on 12/8 about the 12/7 Senate EB-5 hearing on the reauthorization of the EB-5 Regional Center Program….
Bureau of National Affairs (BNA)
“EB-5 Regional Center Pilot Program Should Be Permanent, Senate Panel Told”
By Amber McKinney
Congress should make the EB-5 regional center program for foreign investors permanent because the program creates jobs and contributes to the U.S. economy, speakers said at a Dec. 7 Senate Judiciary Committee hearing. Congress “should be moving forward without delay to reauthorize this important program,” said Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.).
EB-5 visas are available to immigrants who invest between $500,000 and $1,000,000 in a United States business that creates 10 full-time jobs for American workers. A regional center pilot program that is part of the EB-5 program allows immigrants to invest through a regional center rather than running a new business themselves, and allows the immigrants to count indirect job creation toward the job creation requirement. The EB-5 regional center program is set to expire Sept. 30, 2012.
According to Leahy, in 2011 the regional center program is on track to create an estimated 25,000 jobs and provide direct investment of $1.25 billion dollars.
Meanwhile, Ranking Member Charles Grassley (R-Iowa) and David North, a fellow at the Center for Immigration Studies, questioned whether or not the program functions as intended to bring investment dollars and new jobs to the United States.
Leahy Bill Would Make Program Permanent
It is “critical that Congress support U.S. Citizenship and Immigration Services, which administers the program, along with the many men and women who are working hard to bring jobs to their communities, by enacting the permanent authorization legislation that I introduced in March of this year,” Leahy said.
Leahy’s bill, the Creating American Jobs with Foreign Capital Act (S. 642), would make the EB-5 regional center program permanent. Companion legislation was introduced in the House (H.R. 2972).
In a Dec. 7 statement, Sen. Charles Schumer (D-N.Y.), who is a co-sponsor of S. 642, said “we need to permanently reauthorize the EB-5 program as soon as possible, and we should not tie the reauthorization of the EB-5 program to any other program.”
In addition, during the hearing Leahy said he has been “working for many months with interested parties and U.S. Citizenship and Immigration Services to put together a legislative framework to make significant improvements to the overall program.”
This framework “will provide USCIS with additional authorities to ensure that this important program maintains the highest level of integrity and efficiency,” Leahy said.
Resort President Discusses Value of Program
The EB-5 regional center program provides “significant value” and should be made permanent, said Bill Stenger, the president of Jay Peak Resort in Vermont.
Jay Peak Resort, a winter ski resort, has participated in the EB-5 regional center program in an effort to expand facilities to year-round use, Stenger said. “Since 2005 Jay Peak has developed several EB-5 projects at the resort creating over 2,000 jobs in our region and over the next two years will create that number of jobs again,” he said.
Stenger said the EB-5 program is important because it provides small businesses, particularly those in rural areas, with needed equity capital. “Affordable capital is almost non-existent in this marketplace,” but the EB-5 regional center program has helped Jay Peak raise over $250 million in equity capital, he said.
Stenger recommended making the regional center program permanent, because “short-term extensions cripple the effectiveness” because projects can’t be planned correctly and potential investors don’t have the confidence necessary to join the program.
In addition, USCIS should “make every effort to be as efficient as possible with swift EB-5 case processing,” he said.
Pilot Program Has Been Extended Five Times
Robert Divine, an attorney with Baker, Donelson, Bearman, Caldwell, & Berkowitz, P.C. in Chattanooga, Tenn., told the committee that the time has come to make the EB-5 regional center program permanent.
“The pilot program has been extended five times for 19 years,” and has “gained ground in the last several years,” with more investors participating, Divine said.
However, the regional program “will not be able to draw the interest of larger institutional interests until it receives permanent extension,” he said. “Permanent extension will tend to improve the quality of the projects offered to EB-5 investors, whose experience with the program in turn will build confidence for future investors,” Divine said.
Grassley, North Voice Concerns
During the hearing, Grassley expressed concerns that the EB-5 regional center program is “simply selling visas to the highest bidder,” rather than allocating employment visas to people with special skills.
In addition, he said that there have been reports of abuse in the program and those problems need to be “rooted out.”
North agreed, calling the EB-5 regional center program a “dysfunctional portion of a silly program that should be allowed to wither and die.”
According to North, the program is plagued by problems that include giving away visas for too small an initial investment and allowing immigrants to create passive investments instead of direct job creation.
“If we are going to have an immigrant investor program at all,” we should “raise the stakes” higher than the current minimum investment of $500,000, he said.