2015 was quite a year for the EB-5 Visa Program and a roller coaster for EB-5 stakeholders. Change seemed inevitable at the beginning of 2015 as the Regional Center Program was set to expire on September 30, 2015. The year kicked off with legislation introduced by Representatives Jared Polis and Mark Amodei that largely kept the main components of the Regional Center Program intact, while making the Program permanent. This early proposal would have effectively increased the number of visas available to investors (by stipulating that spouses and children don’t count towards the limit) while also providing key reforms to address security concerns within Regional Centers. Then, in June, Senators Grassley and Leahy introduced Senate Bill 1501, which sought to significantly reform many of the fundamental components of the Regional Center Program as a condition of its re-authorization, changing the minimum investment and TEA rules of the EB-5 Program as a whole. A full synopsis of the bill is the topic of a previous post of mine, which can be found here, but in summary, the bill represented a major shift from the current law and included a sharp increase of the minimum investment (to $800,000 in a TEA and $1.2 million in a TEA) as well as two changes that were to become sticking points for negotiations on reform in the ensuring months: a drastic change in what qualifies as a TEA, and a cap on indirect job creation for projects sponsored by Regional Centers.
In the run-up to the original September 30th deadline, lawmakers’ negotiations intensified. But as the deadline came and went, no new legislation was passed; rather, the Program earned a temporary reprieve as part of the Continuing Resolution passed by Congress. A new deadline (December 11, 2015) was established, and debates between Congress and EB-5 stakeholders raged on. As the 11th drew near, word came that a draft legislation from Leahy, Grassley, and Representative Bob Goodlatte was being fine-tuned and would likely pass with the omnibus spending bill. The new draft legislation retained many of the security reforms of the original Leahy-Grassley bill as well as the increase to the minimum investment. Notable modifications and additions to the legislation included an expanded definition of a TEA compared to the original Grassley-Leahy bill (though still more restrictive than the current law) and a provision that would earmark 2,000 of the available 10,000 visas for rural projects, urban/poverty areas, and non-TEAs, each. Despite attempts to find middle ground, there was no agreement in Congress (even with a second Continuing Resolution that bought another five days of debate!). On December 16, to the surprise of most observers, Congress reauthorized the Program through September 30, 2016 with no changes at all.
The most recent bill to emerge from the rubble promises to pave a path for reform and begin the negotiations anew. Introduced on December 17th by Senators Flake, Cornyn, and Schumer, S. 2415, the “EB-5 Integrity Bill” includes many of the oversight and integrity reforms at the Regional Center level that have long been supported by both sides of the debate, but does not address or seek to reform the current law related to TEA designation, indirect job creation, or minimum investments.
So here we stand at the beginning of the new year, exactly where we were at the dawn of last year… the sunset of the Regional Center Program is off in the distance in Q3 and there remains a resolve to reform the Program. What’s changed is that the blueprint for new legislation is in place, the debates have already been raging and now, ostensibly, it is only a matter of time before the middle ground – that sweet spot that protects the integrity of the Program without strangling the life out of it – is found and we have the new rules that will shape both the Regional Center Program and the EB-5 Program as a whole moving forward. Will 2016 be the year? Given the events of the past year, there is no guarantee. But, I’m betting it is.
Here at MasterPlans, we’ll be keeping an eye on how everything unfolds, and we stand at the ready to produce Matter of Ho compliant plans for both EB-5 direct and Regional Center projects looking to file before the law changes, or preparing a project for a filing post reform.