Current EB-5 issues on Capital Hill with Aaron Grau of IIUSA – Episode 112
What are the concerns that Congress has expressed regarding the EB-5 Program and how can the Program benefit the economy in the wake of the pandemic? On this episode, Mona and Mark are joined by Aaron Grau of IIUSA to discuss what is happening on Capital Hill as Congress considers the future of the EB-5 Program. Listen in to understand the integrity measures some lawmakers have recommended be implemented in the EB-5 Program and how IIUSA continues to emphasize the invaluable benefits that the EB-5 industry provides to the economy.
The value of a trade association lies in its ability to make a substantive impact on perception and policy. For the EB-5 program, IIUSA is the organization tasked with communicating stakeholder priorities and emphasizing the role the program can play in bolstering the economy, ultimately influencing EB-5 policy on Capitol Hill. So, what potential legislative changes to the EB-5 Program does IIUSA intend to support? What positive signs can be seen in congressional rhetoric and perspective on the EB-5 industry? And how does IIUSA play a part?
Aaron Grau is the Executive Director of IIUSA, the national membership-based nonprofit for the EB-5 Regional Center Program. Today, he joins Mona and Mark to discuss the current status of EB-5 and offer insights into the current congressional attitude toward the program. He shares the monumental impact that EB-5 has had on the U.S. economy and how, as we look forward to a world after COVID, the EB-5 Program can provide a variety of benefits.
Where is the EB-5 Industry Now?
- The EB-5 industry is dynamic and constantly evolving, which requires stakeholders to constantly stay abreast of the present status of the program. As reauthorization looms on the horizon, many wonder whether substantial changes will be in store for the EB-5 program.
- IIUSA continues to focus on educating potential investors, congressional leaders and EB-5 stakeholders on the intrinsic value and potential of the program. In the midst of the political turmoil our country is facing, it is encouraging to note that representatives from both sides of the political aisle have openly recognized the positive impact that the EB-5 program has had on the U.S. economy.
- Ramiro Cavazos, the President and Chief Executive Officer of the United States Hispanic Chamber of Commerce, recently stated that after the 2008 financial crisis, the EB-5 program generated $20 billion in foreign direct investments, creating more than 730,000 jobs.
Ongoing Discussions of Modification to the EB-5 Program
- Currently 10,000 visas are allotted to the EB-5 Program, but only about one third of those represent an individual investor. The rest are allotted to the family members of these investors, which has caused many stakeholders to request a new method whereby these “derivatives” are not counted. This would allow a substantial increase in EB-5 investments per year.
- Some experts recommend a bifurcation of the EB-5 program’s reviewal system, whereby the submitted project information would be reviewed by the Chamber of Commerce while the immigration portion of the petitions would continue to be reviewed by USCIS.
- Aaron refers to investment, or wealth, “workouts” as terminology used to refer to EB-5 projects working with investors to negotiate new terms as the projects struggle through the current economic reality during the pandemic.
Recent News and Impacts to the Industry
- A recent public discussion with Charlie Oppenheim, the Department of State’s Chief of Visa Control and Reporting Division, was organized by IIUSA. He revealed that India is now current, though stakeholders were repeatedly told there would be a five-year backlog for investors.
- Charlie Oppenheim also indicated that due to consulate closures as a result of the pandemic, there will be more visas available for adjustment of status (AOS), which will disadvantage investors who are overseas and require consular processing (CP).
- Though the President’s recent proclamation extended the suspension of several nonimmigrant visa categories through the end of the year (Presidential Proclamation 10014) in response to the pandemic, EB-5 was notably exempt. Potentially, visas that are or have been lost this year due to the proclamation may be diverted to the EB-5 program in the coming years rather than lost altogether.
- Letters have been written to the President by congressmen expressing concern over ongoing fraud in the EB-5 program, in addition to anti-Chinese sentiments, but notably these letters also lauded the program for its value as an economic stimulant.
What the Future May Hold for the EB-5 Program
- While most EB-5 projects are in the real estate industry, Aaron expressed hope that EB-5 investors with capitalist spirits would invest in more entrepreneurial projects that, while less risk adverse, are capable of providing higher potential returns.
- There exists the possibility of investing EB-5 capital in a troubled business, however USCIS requires projects to evidence an economic downturn of more than two years to be considered “troubled.” This conception of “troubled” does not benefit businesses currently struggling due to the pandemic, which might greatly benefit from an influx of EB-5 capital, until at least 2022. Might a COVID-related addendum to USCIS regulations be in the near future, enabling troubled businesses to seek EB-5 investments prior to the two-year mark?
- There continues to be speculation that new projects will be more commonly in countercyclical industries, such as technology or medicine. Another such possibility includes industries which directly assists the country in dealing with the pandemic, such as Personal protective equipment (PPE)-related manufacturing and distribution.