Many industry stakeholders are optimistic that a new administration will recognize the economic benefits of EB-5 and this will lead to reauthorization. Immigration lawyer Phuong Lee states, “The Biden administration has given the immigration industry a much needed infusion of hope.” Attorney Michael Harris agrees: “I believe we have a pro-immigration President who will see the good that the EB-5 Regional Center Program has brought to the U.S.” And immigration lawyer Andy Semotiuk adds that the recession only reinforces the urgent need for the program: “EB-5 is just too important of an investment and jobs-creating program for it to expire.”
A June 30 expiry date of the EB-5 regional center program has some potential EB-5 investors asking questions born of uncertainty. But a confluence of factors now at play point to the fact that EB-5 is more likely to survive and thrive then to expire for good: New immigration-friendly and EB-5 supportive leadership; an economy in dire need of stimulus and job creation combined with EB-5’s history of providing such stimulus after a recession; and new legislation that will only strengthen support for the program.
New leadership in the White House and DHS is good for EB-5
A change in the White House makes immigration lawyer Andy Semotiuk not only relieved but excited: “After four years of restrictions placed on immigrants by the Trump administration, it’s amazing what a change in political leadership can make. A new sense of optimism pervades Washington.”
It bears noting that even though the former administration was not supportive of immigration in general, Trump exempted EB-5 from the April 2020 immigration suspension. Clearly, that was an acknowledgment of the value of EB-5. However, with a much more immigration-friendly Biden in office, the appreciation of the program should only increase.
Beyond the change Biden is expected to bring, there is another political factor that plays very well in favor of EB-5 being extended: the appointment of Alejandro Nicholas as the secretary of the Department of Homeland Security. Mayorkas served in the past as director of USCIS and is seen as very EB-5 supportive.
Attorney Michael Harris speaks to the benefit of having Mayorkas leading DHS: “With DHS Secretary Alejandro Mayorkas we have a former savior of EB-5, who certainly knows the benefits of the program. I expect Secretary Mayorkas to step in to provide vital feedback that will help consumers, investors, and developers of the EB-5 program.”
The players are in place to support immigration and EB-5.
Economic conditions value EB-5 more than ever
While EB-5 can greatly benefit the U.S. economy during the best of times, its need has never been greater than now.
Semotiuk knows that investor immigration can be a great stimulus to the economy and sees “an urgent need for new investment and jobs given the pandemic.” He references a letter from U.S. lawmakers that recently pointed out that between 2008 and 2015, as the U.S. tried to rebound from the latest recession, the EB-5 Regional Center Program was directly responsible for $20.6 billion in economic investments and creating or saving U.S. 731,792 jobs.
“That’s a lot of investment and a lot of jobs with little cost involved since the program is self-funding,” declares Semotiuk. We are certain many politicians will agree.
The economic conditions are in place to embrace EB-5, with its historic evidence of helping the country rebound and rebuild from a recession.
The EB-5 Reform and Integrity Act of 2020 will erase many doubts about the program
Introduced by Senators Grassley (R-IA) and Leahy (D-VT) this legislation has, to quote IIUSA president Bob Kraft, “overwhelming bipartisan support.” It should go a long way to silence criticism of the program.
Senator Grassley has been perhaps the most long-standing critic of EB-5 and with him leading the charge behind this reform bill, we believe support for this program will only grow — not decline. The Reform Act would reauthorize EB-5 for five years as well as provide additional protections for investors.
IIUSA believes that the Reform Act is the answer for EB-5 and fully endorses the bill. While some industry stakeholders point out perceived flaws of the bill, it’s widely seen as the best reform legislation ever for EB-5. It should quiet critics, enhance protections for investors, and extend the program for half a decade.
And IIUSA Executive Director Aaron Grau believes the Reform Act must precede any other substantive changes to the program, like a higher annual visa count.
Semotiuk is vocal about his support for the Act: “There is good reason to believe that the efforts to get behind Grassley and Leahy and their proposal will lead to a revised program that will benefit everyone.”
The legislation is in place to galvanize political support for the program and extend it far into the future.
Thus the confluence of these factors — new leadership, economic conditions that need a proven stimulus tool, and new legislation that will grow the already strong support for EB-5 — all point to reauthorization happening sooner rather than later.
But, what if the June 30 passes without reauthorization?
Even armed with optimism and political and economic conditions that should value EB-5 more than ever, there may be some that ask, what if the Reform Act isn’t enacted before June 30? What if the program isn’t reauthorized? That’s certainly a fair question.
The first point to remember is that expiration does not necessarily mean the end of EB-5. The program has “expired” in the past — as recently as the the end of December 2018 when the government shut down for 35 days. The program was not dead, just lapsed, and it was subsequently reauthorized.
The same could apply if the June 30 date passes without reauthorization. Many feel that if that were to happen, the program would once again be part of an omnibus bill at the end of September and be reauthorized then.
But what if the program is never reauthorized?
This question strains credulity given the history of EB-5 as a substantial tool for economic stimulus, and an immigration-friendly administration seeking to rebuild the economy. But let us entertain this unlikely situation.
If EB-5 were to not merely expire for a time but actually die, the legal implications would be disastrous for the government. EB-5 industry expert Suzanne Lazicki says this about what would happen in such an event: “Surely Congress wants to avoid finding itself guilty of a fraud scheme that dangled possible visas as bait to invest in U.S. businesses and create U.S. jobs, only to — after successfully attracting billions of dollars and helping U.S. project finance and job creation through a recession – change the law to prevent the visa incentive from ever being granted.”
Instead of entertaining hypotheticals, let’s face facts. It’s a recession. Do lawmakers want to rebuild the economy — or eschew a tool that has generated billions of dollars of economic stems and created hundreds of thousands of U.S. jobs.? Do they want to give people jobs and hope — or invoke the legal ire of tens of thousands of affluent investors who were victims of a bait-and-switch scheme by the U.S. government?
Investment banker Kurt Reuss, who works exclusively in EB-5, summarizes such a contemplation of the end of EB-5 at this point in U.S. history: “It’s simply staggering to consider that the U.S. government would rather face countless lawsuits than build the economy and create jobs using the EB-5 program. EB-5 can and should be part of the solution right now. It’s all upside for the American economy.”
As a nation of immigrants — and a nation in need — we need EB-5
We strongly believe the answer is clear. At no cost to the government, the EB-5 Regional Center Program can be vital in rebuilding the U.S. History says so. And the present and the future demand it.
Immigration lawyer Phuong Le works with EB-5 immigrants and knows the value they can bring to this country: “I think I speak on behalf of the industry when I say we all look forward to working closely with this administration to go back to our roots as a nation of immigrants and effectuate positive change versus the negative enforcement mindset we’ve endured the past 4 years.”