EB-5 – Where Are We? Where Are We Going?

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The dust has settled. And, we are in a similar place as we have been since September 2015 and thirteen short term extensions! Does anyone else think this is nonsensical? My understanding is that there are consensus issues and others that are not.

Consensus

I have heard that there is agreement in: eliminating TEA manipulation, increasing investments amounts (ensuring that downtown urban projects would be at the higher investment amount), providing set-asides for rural projects (ensuring that downtown urban projects would not benefit from set-asides), providing incentives for rural and urban distressed projects, promoting reasonable grandfathering/transition of existing projects, raising the bar for who can participate in the program through additional oversight and background checks, and providing for transparency and additional integrity measures.

Lack of Consensus

From the outside looking in, it appears as though there are some common sense issues that caused the negotiations to breakdown over lack of consensus. As I understand, these are issues that were not adequately addressed: ensuring that there can be concurrent filing (this helps those in the U.S. on a non-immigrant visa), defining what is “infrastructure,” inadequate or no judicial review (imagine the government taking your regional center and your having no judicial remedy!), ensuring the set-asides for rural projects don’t accidentally create an unnecessarily uneven playing field, ensuring that the correct entity (NCE, RC, JCE, etc.) is making SEC and other attestations so that the correct entity is held responsible for its actions (a common principle in our jurisprudence), defining when third party fund administration could be appropriate, correctly vetting when sovereign wealth funds and other foreign investment vehicles can be part of the capital stack, and the impact of regional center amendments. Of course, there are other items that could be of concern. Who could actually be in favor of a law that doesn’t adequately address most, if not all, of these issues?

So, we here we sit again. Fatigued. Waiting. This time, waiting for the regulations to kick in, waiting for the industry to unite. Wanting a law that makes sense. Wanting a law that adequately addresses unresolved issues. Wanting the different organizations in EB-5 to take the time to struggle through the issues. Wanting legislators to listen before they diagnose. And, truthfully wanting a long term extension the whole industry can be proud of.


About The Author

Publius The Author wishes to be anonymous. However, ILW is aware of the author's identity and knows that the author is knowledgeable and well connected in the EB-5 community. ILW does accept and run articles anonymously from time to time as long as we know who the author is and ILW will protect the identity of such anonymous authors.