With Aaron L. Grau
Executive Director of IIUSA, the EB-5 Regional Center Program’s advocacy group, writes about the program’s legislative prospects.
For nearly 30 years, the EB-5 Regional Center Program created jobs and bolstered US communities by accepting investments from qualified immigrant applicants.
The bi-partisan program was routinely renewed until it wasn’t on July 1, 2021, when Congress failed to pass legislation to extend the Program. This failure to renew created two major problems:
First, regional centers that would have leveraged foreign investments to create US jobs are now unable to further economic development. Second, EB-5 investment-based projects still underway are thrown into limbo, jeopardizing their completion and their immigrant investor’s citizenship status.
While it may be tempting to wave off these concerns, the reality is this is a major blow to many communities, not to mention the tens of thousands of lawsuits that could stem from the Program’s lapse.
Perhaps the most visible ramification of the Program’s continued lapse is the impact on capital investments and jobs created. It is estimated that over $15 billion in capital investment has been committed by investors impacted by the Program’s lapse.
[Editor’s note: EB-5 data analyst Suzanne Lazicki estimates that more than 40,000 regional center investors are at the pre-conditional green card stage, i.e., they have yet to receive approvals for their I-526 petitions, which the USCIS will not accept or act upon as long as the regional center program is closed.]
Beyond the money, there are the thousands of jobs to consider. The average EB-5 investment project creates 16 jobs, according to the Department of Commerce. Between the pending and approved EB-5 investments, there are roughly 487,000 American jobs that could be filled right now, giving good work to those who need it. Instead, they are lying dormant – for now.
The majority of projects that leverage EB-5 capital also include other financing such as bank loans and developer equity. This means these projects hinge on piecing together funding from varied places and if the EB-5 brick falls out of the “Jenga” capital stack it risks much greater loss if all the other financing falls away too.
Additionally, EB-5 investors are required to pay federal, state, and local taxes based on their worldwide income.
Risking EB-5 investments’ role in projects’ capital stacks and losing investors’ tax revenue for local, state, and federal coffers demonstrate far-reaching economic consequences for communities across the country.
Add to that the opportunity cost of unfilled jobs and the overall price tag of allowing the Program to remain unauthorized could be in the tens of billions of dollars. There is far more at stake than meets the eye. EB-5 plays an important role in many communities’ economic development. Congress and EB-5 ecosystem advocates must continue working assiduously to reestablish the Program, protect investors, and avoid calamitous economic loss.
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Aaron Grau, Executive Director of Invest in the USA (IIUSA), is a former Majority Counsel on the U.S. Senate Health Education, Labor, and Pensions Committee, where he developed Senate hearings and negotiated and drafted several pieces of federal legislation and was part of the Senate team that created the Workforce Investment Act.