EB-5 Legislation – Where Are We Now?
by Jeff Campion
There are now two bills that have been introduced to reauthorize and reform the EB-5 regional center program which is set to expire on September 30, 2105. The first bipartisan legislation was introduced into the House by Representatives Mark Amodei (R-NV) and Jared Polis (D-CO). The second bipartisan legislation was introduced on June 4, 2015 by Senate Judiciary Committee Ranking Member Patrick Leahy (D-VT). Senator Leahy introduced the measure with Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa). Both pieces of legislation are a good step in creating a workable framework so that the regional center program can thrive as it matures.
As a member of the EB-5 Investment Coalition (EB-5IC), I have been fortunate to meet with Senators Grassley, Cornyn and Corker as well as with Representatives Amodei, Polis, and Bob Goodlatte (R-VA) who is Chairman of the House Judiciary Committee.
Moreover, EB-5IC has had the opportunity to have several meetings with the staff of Senators Grassley and Leahy and Chairman Goodlatte among others. These have proved to be invaluable. In fact on Wednesday night we received some good news at our meeting with Chairman Goodlatte. He indicated that the House will draft a bill with a goal have it passed prior to September 30, 2015. Thereafter the House bill would be sent to the Senate for its approval. I asked Chairman Goodlatte if there was sufficient time for passage, and he indicated that there was. Moreover, he indicated that the Senate bill was very helpful in defining the framework under which a House bill could be passed and then sent to the Senate.
Given the current state of legislation, there are some measures that can be taken to ensure that the legislation protects the stakeholders it is mean to protect while not accidentally adversely affecting them. Below, I address the measures I believe are most important.
Authorize USCIS to Quickly Act on Criminal and Security Concerns. USCIS should have right to terminate regional centers for criminal activity or national security concerns and deny (or revoke) regional center applications (or already approved regional centers) when there is a significant risk of fraud and/or abuse. The same rules should apply to EB-5 petitions. However, there must be due process safeguards in place including the right to appeal such decisions. Moreover, with respect to investor related applications or petitions, if the investor is a victim of the regional center’s activity, the investor should be permitted to either: (a) continue with the project provided that the project’s associating with another regional center is plausible or (b) preserve his priority date and invest in another project within a certain timeframe along with other safeguards to protect an innocent investor.
To provide the resources for enforcement actions, USCIS should be permitted to charge a fraud fee just like in the L-1 and H-1B context. This fee should not be a per regional center fee. Rather, it should be a more reasonable per project fee of $5,000 or a fee tied to the number of I-526 petitions. This ensures that the regional centers responsible for creating more work also are responsible for carrying the costs associated therewith.
Targeted Employment Areas (TEAs). There should a be fair and balanced application of TEAs. It is important to note that a project does not only have an impact at the project’s job site or the census tract associated with it. Workers commute to perform services at the project site from areas that may not be located within the project’s census tract. In fact, many employees commute from TEAs to the project site. Legislation that minimizes the possibility of urban TEAs is harmful to EB-5. I would be happy to see USCIS: eliminate TEAs, make one investment amount for all projects, and require urban projects to create more jobs per investor than the other TEAs.
Lastly, a TEA designation once issued should remain in effect until the project is fully subscribed. To do otherwise, puts a developer in a precarious situation in which it begins the project in reliance on EB-5 funds with a TEA designation and could later require the developer to either (a) amend documents for a project no longer in a TEA, or (b) worse yet not finish the project due to an inability to fund the project at the Non-TEA dollar amount.
Requiring Business Plan Filings in Advance of Investor Filings. Requiring an I-924 (accompanied by the business plan and other organizational documents) to be filed prior to an investor filing the I-526 is reasonable. However, requiring approval prior to an investor filing is not workable under the current USCIS processing times. Many projects release funds upon filing of the I-526 so that the project can proceed. Thus, approval of those documents prior to investor filing is simply not workable and will cause many projects to stall or fail.
One solution is to require an abbreviated project filing such as: a summary business plan that includes the principals (this allows USCIS to do background checks for bad actors), the TEA designation letter, and the initial economic analysis. USCIS could adjudicate in thirty (30) this type of documentation and then allow the project to begin its marketing and subscription process for investors. Thereafter, once the complete set of project documents are finalized, USCIS could require the project to file the I-924 exemplar petition. And, as a requirement for the investor to file the I-526, the investor would be required to include proof of approval of the abbreviated project filing and the I-924 filing.
Grandfathering of Projects Already in the Marketplace. The legislation must address the fact that there are projects already in the marketplace now and others that will be launched before the legislation is passed. The legislation should have a liberal grandfathering provision that freezes: the investment amount, the TEA determination, and other components of the EB-5 raise that could be affected by the new legislation provided that the project has either: (a) an I-924 actual or exemplar filed or (b) an individual I-526 associated with the project has been filed.
Though meaningful dialogue with stakeholders and other governmental agencies the EB-5 regional center program will continue to gain momentum by creating jobs while maintaining program integrity. I remain very hopeful, especially in light of Chairman Goodlatte’s comments Wednesday.
Reprinted with permission.
Jeff Campion is an attorney that specializes in representing foreign high net-worth clients and their businesses. His firm continues this representation before the US Citizenship and Immigration Services (USCIS), U.S. Departments of Labor and State, and state employment agencies. His clients include individuals and families that have or currently appear on the Forbes List for the wealthiest individuals in Latin America. He regularly travels to Latin America to speak on complex immigration-related issues, including citizenship and immigration operations. Mr. Campion received his J.D. with Honors from the University of Florida College of Law in 1997. While in law school he also completed the coursework for a Masters in Arts Latin American Studies. He received his B.B.A. in International Finance and Marketing in 1993 from the University of Miami graduating Cum Laude with Departmental Honors and from the Honors Program. Mr. Campion speaks conversational Spanish and Portuguese.
He is a member of the American Immigration Lawyers Association and was a board member for the Miami Chapter of the United States-Mexico Chamber of Commerce. Mr Campion is also a member of the IIUSA Best practices committee, a board member of the AILA Mexico chapter and is "EB5 verified" by EB5investors.com