Resetting the Table for Negotiations

This is not to say that after Dec. 9, the program will continue unchanged. Rather, the Real Estate Roundtable said, the CR “re-sets the table for what are expected to be more rounds of contentious negotiations this fall to reform the program.”

The investment program was widely expected to be overhauled at the end of last year. Instead, Congress extended it until Sept. 30 with the understanding that debate and decisions about the program's reform would be made in the interim.

Now that deadline has been pushed to Nov. 9 — as of right now at least. Congress could eventually pass a CR that does not mention the EB-5 program, at which point it would expire on Sept. 30.

Grassley, Leahy Would Rather Kill It

Sens. Chuck Grassley (R., Iowa) and Patrick Leahy (D., Vt.) can be counted among those who favor the latter option.

The chairman and ranking Democrat on the Senate Judiciary Committee, respectively, have both declared they are against extending EB-5 as part of the CR. Their thinking, reportedly, is that it would be easier to reform the program if it is dead.

SEC EB-5 Enforcement Actions

If the CR does contain an EB-5 program extension, it then must navigate a reinvigorated post-election Congress. One of the concerns opponents have about the current version is that it is prone to fraud, they say. Now with the program under scrutiny again, they have more proof of this, courtesy some recent Securities and Exchange Commission enforcement actions.

In July, the SEC secured a $63.8 million judgement against oil company Luca International Group that was targeting investors in Asia with unregistered offerings of securities. In June, the agency charged Ireeco LLC and Ireeco Limited with illegally brokering more than $79 million of investments to EB-5 investors.

Also, a new piece of legislation aimed at reforming EB-5 has emerged: H.R. 5992 American Job Creation and Investment Promotion Reform Act of 2016, sponsored by House Judiciary Committee Chairman Bob Goodlatte (R-VA) and co-sponsored by Ranking Member John Conyers (D-MI).

The measure does not have the support of the EB-5 industry in its current form, according to the EB-5 Blog, written by Suzanne Lazicki. She writes:

The bill has some good features, but eliminates most possible supporters by combining incentives that only really distressed players can use with administrative requirements and fees that only really wealthy players can afford, by promising USCIS a huge workload with impossible deadlines, and by proposing retroactivity that would harm a mind-boggling number of recent project and investors.

$11B in Investment at Stake

That particular measure, though, is something for the next legislation session to digest. Now, all eyes are on the continuing resolution. An EB-5 extension made it into the CR, which will hopefully pass with little fireworks.

The EB-5 industry association, Invest in the USA, makes clear what could happen if it doesn't.

New proposals to reform the program will take time for stakeholders and lawmakers to examine and the shutdown deadline is fast approaching,” it said in a statement last week. “If the program lapses, a minimum of $11 billion in community investment and 220,000 local jobs will disappear immediately.”

“The CR will provide a needed continuation of the EB-5 program while this deliberation process takes place.”

More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.

WASHINGTON, DC–Congress is working mightily to avoid a government shutdown before the US presidential election by passing a six-week continuing resolution, or CR as it is called, that the US president will sign. The deadline is looming this week — without a continuing resolution the US federal government will cease functioning at midnight on Sept. 30.

Last Thursday, Senate Republicans released language for such a resolution. Devoid of controversial riders, this CR must now survive warring inter and intra party factions in both the full Senate and the House of Representatives before it can be signed by the president — who has signaled he won't be pressured into signing a flawed CR.

In short, it is going to be an action-packed week for Washington and the observing public.

The commercial real estate community will also be watching intently. Besides avoiding the economic trauma of a government shutdown, if the Senate's suggested CR were to get passed it would keep in place the EB-5 EB-5 Regional Center Program until Dec. 9, the Real Estate Roundtable reports.

Resetting the Table for Negotiations

This is not to say that after Dec. 9, the program will continue unchanged. Rather, the Real Estate Roundtable said, the CR “re-sets the table for what are expected to be more rounds of contentious negotiations this fall to reform the program.”

The investment program was widely expected to be overhauled at the end of last year. Instead, Congress extended it until Sept. 30 with the understanding that debate and decisions about the program's reform would be made in the interim.

Now that deadline has been pushed to Nov. 9 — as of right now at least. Congress could eventually pass a CR that does not mention the EB-5 program, at which point it would expire on Sept. 30.

Grassley, Leahy Would Rather Kill It

Sens. Chuck Grassley (R., Iowa) and Patrick Leahy (D., Vt.) can be counted among those who favor the latter option.

The chairman and ranking Democrat on the Senate Judiciary Committee, respectively, have both declared they are against extending EB-5 as part of the CR. Their thinking, reportedly, is that it would be easier to reform the program if it is dead.

SEC EB-5 Enforcement Actions

If the CR does contain an EB-5 program extension, it then must navigate a reinvigorated post-election Congress. One of the concerns opponents have about the current version is that it is prone to fraud, they say. Now with the program under scrutiny again, they have more proof of this, courtesy some recent Securities and Exchange Commission enforcement actions.

In July, the SEC secured a $63.8 million judgement against oil company Luca International Group that was targeting investors in Asia with unregistered offerings of securities. In June, the agency charged Ireeco LLC and Ireeco Limited with illegally brokering more than $79 million of investments to EB-5 investors.

Also, a new piece of legislation aimed at reforming EB-5 has emerged: H.R. 5992 American Job Creation and Investment Promotion Reform Act of 2016, sponsored by House Judiciary Committee Chairman Bob Goodlatte (R-VA) and co-sponsored by Ranking Member John Conyers (D-MI).

The measure does not have the support of the EB-5 industry in its current form, according to the EB-5 Blog, written by Suzanne Lazicki. She writes:

The bill has some good features, but eliminates most possible supporters by combining incentives that only really distressed players can use with administrative requirements and fees that only really wealthy players can afford, by promising USCIS a huge workload with impossible deadlines, and by proposing retroactivity that would harm a mind-boggling number of recent project and investors.

$11B in Investment at Stake

That particular measure, though, is something for the next legislation session to digest. Now, all eyes are on the continuing resolution. An EB-5 extension made it into the CR, which will hopefully pass with little fireworks.

The EB-5 industry association, Invest in the USA, makes clear what could happen if it doesn't.

New proposals to reform the program will take time for stakeholders and lawmakers to examine and the shutdown deadline is fast approaching,” it said in a statement last week. “If the program lapses, a minimum of $11 billion in community investment and 220,000 local jobs will disappear immediately.”

“The CR will provide a needed continuation of the EB-5 program while this deliberation process takes place.”

More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.