Bob Kraft, newly elected for his fourth-consecutive term as president of IIUSA, the national trade association for the EB-5 Regional Center Program, has ambitious priorities: the long-term reauthorization of EB-5 by the next expiry, September 30. Another “main objective” is to eliminate investor derivatives from the annual 10,000 visa quota; family members, rather than principal investors, currently use about two-thirds of the visa numbers made available.
First, kudos to Bob for his fourth-straight election as IIUSA president. Bob has been president of the organization since 2017 and a member since 2008.
Bob has shared his vision of a significant extension for the program, as it has been operating on a series of short-term extensions for years. “In 2020, our priority is reauthorization of the EB-5 Regional Center Program,” says Kraft. “We’re looking for long-term reauthorization and our board and executive director are hard at work to achieve that. We are optimistic that by September 30th when the current program expires, we will have an acceptable long-term reauthorization for the program.”
How meaningful would a long-term reauthorization be? When we look at the history of the program, it is clear that for years EB-5 has lacked the security such an extension would provide to both stakeholders and investors.
The Regional Center Program, introduced in 1992 and first authorized for five years, has had a history of reauthorizations. Here are the significant extensions (not including the short-term ones):
Since 2015, the program has only been extended for several months at time. With yet another program “sunset” date approaching at the end of September 2020, if IIUSA and the industry could spearhead a meaningful extension, that would be huge for those who work and investing in it.
A second goal of Bob Kraft in leading IIUSA is to eliminate derivative family members from the annual quota: “Another main objective we are working on is the elimination of derivatives, which would expand the program by two thirds, effectively increasing the amount of capital that will come into the United States. It is especially important right now during this time of global crisis when American jobs have been hit hard and are so desperately needed.”
Given that investor family members account for about two-thirds of the 10,000 visas available to EB-5 each year, not counting derivatives would actually triple the amount of principal investors — from about 3,300 investors to 10,000 investors a year — and thus triple the amount of job creation and capital infusion into the U.S. economy.
Prior lawsuits challenging the Department of State policy of counting derivatives against the quota have cited this quote from October 26, 1990, of Senator Kennedy (D-MA) addressing the original EB-5 direct visa program: “Mr. President, 10,000 employment generating visas are provided for investors who invest in enterprises…. This one provision will generate over $8 billion annually in new investment in small and independent U.S. businesses and provide up to 100,000 new jobs for Americans…. We have an investor program that will permit up to 10,000 people to make investments here, to come to this country and create jobs.”
Such language seems indisputable that lawmakers involved in the creation of EB-5 intended the program to have 10,000 annual investments a year to create 100,000 jobs. Once again, this can only be achieved by counting principal investors — and not family members — against the quota.
If Mr. Kraft and IIUSA can help the program make the original Congressional intent of the program a reality today, it would be a huge accomplishment.
For more information on why EB-5 should not count derivatives read the AILA white paper “Solutions to the EB-5 Visa Waiting Line”
For an in-depth analysis of the history of EB-5 reauthorizations, see Suzanne Lazicki’s blog
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