02 Feb Senate Hearings on the EB5 Program
On February 2, 2016, the United States Senate Judiciary Committee held a hearing titled “The Failures and Future of the EB-5 Regional Center Program:
Can it be Fixed?” Senators Grassley and Leahy presided over the hearing, and two witnesses gave testimony during the hearing: Nicholas Colucci, Chief of the Immigrant Investor Program Office (“IPO”), and Stephen Cohen, Associate Director of the Division of Enforcement for the U.S. Securities and Exchange Commission.
During the hearing, Senator Grassley expressed frustration at Congress’ inability to pass a law reforming the Regional Center Program in December of 2015. Senator Grassley focused on USCIS and the IPO’s ability to make changes to the Regional Center Program without a new law being passed, which I.A. Donoso & Associates has reported on previously.
For example, Senator Grassley questioned whether the IPO could create new rules that increase minimum investment amounts, and whether the IPO would make new rules regarding Investors’ source of funds from gifts or loans. Senator Grassley also asked whether the IPO could change how a targeted employment area (“TEA”) is designated. In response to each of these questions, Chief Colucci suggested that the IPO is in the process of creating new rules regulating minimum investment amounts, source of funds issues surrounding gifts and loans, and how TEAs may be designated. I.A. Donoso & Associates predicted these changes in our last post regarding the Regional Center Program here.
The TEA issue, which was highly controversial during the last round of legislative drafting and negotiations, remains divisive. Senator Schumer used his entire speaking time to explain that previous drafts of EB-5 legislation were unfair and could not pass because the drafts included new TEA rules that would deeply harm urban areas where EB-5 investment is popular.
Even though the TEA issue has not been resolved, all Senators from the Judiciary Committee, except for Senator Feinstein, expressed support for the Regional Center Program. Many Senators, include Senators Cornyn, Blumenthal, and Tillis, stated their desire to pass a draft law that Senator Flake has written.
Changes to the Regional Center Program are on the horizon. In the short term, the IPO may make new rules regarding TEAs, source of funds, and minimum investment amounts. At the same time, Congress is still seeking legislation that will change the Regional Center Program over the long term.
I.A. Donoso & Associates is uniquely positioned to report on these changes because of our location in Washington, D.C. We will continue to monitor any legislative or agency actions that will affect the EB-5 Regional Center Program.
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