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A Continuing Resolution has been introduced in the House that would push back the expiration of the appropriations act by a week and give Congress until December 18, 2020, to pass government funding and reauthorize various programs including the EB-5 Regional Center Program which is currently set to expire on December 11, 2020.
The EB-5 Reform and Integrity Act of 2020 is a measure proposed by Senators Grassley and Leahy that would reauthorize the EB-5 Regional Center Program through 2025 and strengthen program integrity.
The measure would add provisions to better prevent program fraud and protect qualified investors and lawfully operating regional centers.
While the EB-5 Direct Investment Program is permanent, the EB-5 Regional Center Program must be continually reauthorized by Congress. Both program pathways allow qualified foreign nationals to make substantial capital investments into U.S businesses that create or preserve jobs in return for green cards for themselves and immediate family members.
With Covid-19 causing small businesses across the U.S. to struggle to keep workers employed, revitalization of the EB-5 Program could result in a positive economic impact, especially in rural or high unemployment areas. EB-5 investors are incentivized to invest in U.S. business projects located in rural or high unemployment areas, also called targeted employment areas (TEA). EB-5 investors in TEAs may qualify for the reduced minimum investment amount of $900,000 rather than the $1,800,000 requirement for non-TEA investments.
But what are global investors looking for? According to the site Knight Frank, well-known for their annual Wealth Report, “In a world of low yields, commercial real estate attracted US$333 billion of private capital in 2019. Investors are seeking diversification opportunities, while becoming highly analytical, increasingly willing to partner for scale, and acutely attuned to the underlying sustainability of the assets they hold.”
Here’s why EB-5 may appeal to these global investors. EB-5 investors in the Regional Center Program benefit from being able to pool their investments and fund large projects, opening them up to new and diversified investment opportunities as well as projects that may better align with their interests.
EB-5 industry trade association, IIUSA, supports the measure, with IIUSA President Robert Kraft saying, “A long-term reauthorization can generate more than $9B annually of job-creating investment into our economy, just when our economy needs it most – all at zero cost to the taxpayer.”
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