As you know by now, Senators Grassley and Leahy have introduced the bipartisan EB-5 Reform and Integrity Act of 2020. IIUSA has subsequently called on House and Senate leadership to support the measure’s inclusion in the forthcoming FY 2021 omnibus appropriations bill.
While we know the measure is a significant step in the right direction, one which is unanimously supported by our Board of Directors, we thought it would be beneficial to breakdown the key benefits of this measure for the industry’s consideration.
We hope you find the below summary to be beneficial and we hope you will help IIUSA by calling on your members of Congress to support the measure as well.
Key Benefits for EB-5 Stakeholders Include:
1) 5-year reauthorization
2) Reasonable reform measures enabling Industry to operate with reasonable oversight
3) Good faith Regional Center and NCE protections where the JCE is barred
4) Innocent investor protections for debarred projects including:
- Age-out protection for children
- Priority date retention
- Use of recovered funds for another investment
5) No retroactive application to investor petitions
6) Regional Center oversight under a reasonableness standard
7) No strict liability of Regional Centers for third party acts
In short EB-5 Reform and Integrity Act of 2020 has less burden on Regional Centers and more investor protections than even in the industry-supported 2015 Flake-Schumer integrity-only bill.
Answering Some Key Questions
Q: By agreeing to reform-only, aren’t we giving up leverage to get more visas?
A: The EB-5 industry suffers from declining support and shrinking leverage because of high-profile fraud and a lack of reform. Some Members of Congress, upset about the lack of reform to date, are slowly chipping away at the program. With the EB-5 Reform and Integrity Act of 2020, rather than lose leverage, we will gain the leverage we currently lack.
Q: How can I support the bill when the legislation doesn’t get more EB-5 visa numbers?
A: There are no additional visa numbers offered by any viable bill at this time. With the EB-5 Reform and Integrity Act of 2020, the EB-5 program is in a stronger position to seek more visas in the next administration. Without reform, hope for visas in return for a promise of reform is not possible because legislators will oppose such a measure without reform which has been promised since 2015 but never realized.
Q: Doesn’t the bill just create burdens and costs?
A: The EB-5 Reform and Integrity Act of 2020 is the most industry-friendly of all the integrity measures in prior bills, including the Flake-Schumer from 2015. The industry will not get a better deal in terms of reasonableness of oversight than this bill.
Q: Isn’t it true that the bill gives nothing to good actors since they don’t defraud their investors?
A: Reform is an industry-wide priority because it is a predicate to more visa numbers and long term authorization. The deal the industry has under this bill is far more in favor of investors and industry than prior bills; it is not likely that we’ll get a better deal in the future.
Q: Shouldn’t we wait for the right deal?
A: There is no perfect legislation. As it stands, the EB-5 Reform and Integrity Act of 2020 is the best legislative package industry has been able to negotiate with legislators in the Judiciary Committee.