Grassley was on board with that measure too. “Chairman Goodlatte and Ranking Member Conyers have put forth a strong bill that will bring the EB-5 immigrant investor program back to its original intent,” he said at the time. “It will level the playing field for investment projects in states across the country while ensuring that the bad actors are held accountable, whether they are seeking a visa or managing a project.”

Once more, Congress kicked the can down the road re-authorizing EB-5 without any changes.

The program currently is set to expire on April 28, 2017 unless it is reauthorized.

However Grassley, it appears, is fed up.

Late last month he and Senator Dianne Feinstein introduced legislation that would end the EB-5 program.

“The EB-5 program is inherently flawed,” the Senators said in a joint statement. “It says that US citizenship is for sale. It is wrong to have a special pathway to citizenship for the wealthy while millions wait in line for visas.”

The measure would eliminate both the direct and regional center program and reallocate the visas to the EB-1, EB-2, EB-3 and EB-4 employment-based visa categories.

A Hopeful EB-5 Community

The EB-5 community, however, is hopeful that additional measures will be introduced in Congress in the coming days and weeks that will be similar to the earlier proposals put forth by Grassley, Goodlatte and Conyers.

“In December, Grassley expressed great frustration about getting his bill passed,” Jim Butler, head of the Global Hospitality and Chinese Investment Groups with Jeffer Mangels Butler & Mitchell, tells GlobeSt.com.

“Most people think this bill is an outgrowth that frustration. Grassley and other in Congress wanted to see reforms made to the program and they are getting tired of waiting. So they are staking out an extreme position to finally get things moving.”

Butler says that the EB-5 Advocacy Group, Invest in the USA, is working on a legislative proposal that builds on draft legislation that was circulated around the industry at the end of last year, but never formally introduced or endorsed.

“In the next few weeks I think we will see more proposals put forward by other Congress people that look a lot like Grassley's earlier proposals,” Butler says.

Getting Ready for the Worse Case

The wild card is President Trump. Will he sign the legislation? It has been assumed he will, but as Zev Gewurz, director of Goulston & Storrs tells GlobeSt.com, “Anyone who has tried to predict what Trump will do has learned not to do that. Nobody can really tell what he will do about EB-5.”

It is clear, however, that the EB-5 program will not continue in its current format. Whether that means the program will be tightened or completely revamped is an open question, in Gewurz's opinion.

Other developers have come to the same conclusion and are seeking replacement funds, he says.

The good news is that the capital is out there — foreign investors, in particular, have been showing a greater appetite for higher-yielding mezzanine funds that focus on debt, which is the most obvious substitute.

Foreign Investors Line Up for Mezz Debt

In Israel, as one example, Gewurz says that investors have been increasingly focusing on programmatic ventures to invest in debt higher up in the capital stack. Likewise in Asia, where, to name another example, Korean investors have been investing in mezz loans higher up in the capital stack.

The bad news is, such mezzanine debt will undoubtedly be more expensive than EB-5 money.

No doubt, developers will mourn the demise of EB-5 if it comes to that, Gerwurz says. “EB-5 was low-cost capital. Now that it may be threatened people are looking to fill the gap with other funds. Unfortunately, these funds are more expensive.”

WASHINGTON, DC–Remember The American Job Creation and Investment Promotion Reform Act of 2015? It was introduced by Senate Judiciary Committee Chairman Chuck Grassley and Ranking Member Patrick Leahy to reauthorize and reform the EB-5 Regional Center program.

As Grassley made clear at the time, he felt the EB-5 program was useful — but reforms were needed. “In many instances the program has helped combat a stagnant economy,” he said. “At the same time, though, we've seen too many occasions where national security has been put at risk and job creation has taken a back seat.”

Congress went on to reauthorize the program without any reforms.

Remember last year, when US Representative Bob Goodlatte, chair of the House Judiciary Committee and US Representative John Conyers introduced a similar measure?

Grassley was on board with that measure too. “Chairman Goodlatte and Ranking Member Conyers have put forth a strong bill that will bring the EB-5 immigrant investor program back to its original intent,” he said at the time. “It will level the playing field for investment projects in states across the country while ensuring that the bad actors are held accountable, whether they are seeking a visa or managing a project.”

Once more, Congress kicked the can down the road re-authorizing EB-5 without any changes.

The program currently is set to expire on April 28, 2017 unless it is reauthorized.

However Grassley, it appears, is fed up.

Late last month he and Senator Dianne Feinstein introduced legislation that would end the EB-5 program.

“The EB-5 program is inherently flawed,” the Senators said in a joint statement. “It says that US citizenship is for sale. It is wrong to have a special pathway to citizenship for the wealthy while millions wait in line for visas.”

The measure would eliminate both the direct and regional center program and reallocate the visas to the EB-1, EB-2, EB-3 and EB-4 employment-based visa categories.

A Hopeful EB-5 Community

The EB-5 community, however, is hopeful that additional measures will be introduced in Congress in the coming days and weeks that will be similar to the earlier proposals put forth by Grassley, Goodlatte and Conyers.

“In December, Grassley expressed great frustration about getting his bill passed,” Jim Butler, head of the Global Hospitality and Chinese Investment Groups with Jeffer Mangels Butler & Mitchell, tells GlobeSt.com.

“Most people think this bill is an outgrowth that frustration. Grassley and other in Congress wanted to see reforms made to the program and they are getting tired of waiting. So they are staking out an extreme position to finally get things moving.”

Butler says that the EB-5 Advocacy Group, Invest in the USA, is working on a legislative proposal that builds on draft legislation that was circulated around the industry at the end of last year, but never formally introduced or endorsed.

“In the next few weeks I think we will see more proposals put forward by other Congress people that look a lot like Grassley's earlier proposals,” Butler says.

Getting Ready for the Worse Case

The wild card is President Trump. Will he sign the legislation? It has been assumed he will, but as Zev Gewurz, director of Goulston & Storrs tells GlobeSt.com, “Anyone who has tried to predict what Trump will do has learned not to do that. Nobody can really tell what he will do about EB-5.”

It is clear, however, that the EB-5 program will not continue in its current format. Whether that means the program will be tightened or completely revamped is an open question, in Gewurz's opinion.

Other developers have come to the same conclusion and are seeking replacement funds, he says.

The good news is that the capital is out there — foreign investors, in particular, have been showing a greater appetite for higher-yielding mezzanine funds that focus on debt, which is the most obvious substitute.

Foreign Investors Line Up for Mezz Debt

In Israel, as one example, Gewurz says that investors have been increasingly focusing on programmatic ventures to invest in debt higher up in the capital stack. Likewise in Asia, where, to name another example, Korean investors have been investing in mezz loans higher up in the capital stack.

The bad news is, such mezzanine debt will undoubtedly be more expensive than EB-5 money.

No doubt, developers will mourn the demise of EB-5 if it comes to that, Gerwurz says. “EB-5 was low-cost capital. Now that it may be threatened people are looking to fill the gap with other funds. Unfortunately, these funds are more expensive.”