To Boost Investment in Rural, Economically Challenged Communities. . . Small minority of property developers lead push to block bipartisan EB-5 reform bill with widespread EB-5 industry support
Vermont Business Magazine Senator Patrick Leahy (D-Vt.), Chairman of the Senate Appropriations Committee, and Senator Chuck Grassley (R-Iowa), Ranking Member of the Senate Judiciary Committee, Thursday condemned a blockade of their bipartisan bill to reform and extend the EB-5 investor visa program, which expires on June 30. The blockade was at the behest of a small group of wealthy real estate developers who reflexively oppose any efforts to improve accountability and transparency in the EB-5 visa program.
Leahy said: “It’s really unfortunate that a bipartisan bill supported by the overwhelming majority of EB-5 stakeholders was blocked at the behest of a small minority that blindly opposes much-needed accountability and transparency in the program. Senator Grassley and I have worked together for years to develop a thoughtful, careful compromise that would both keep the program alive and curtail the worst abuses of it. Now that our bill has been blocked, the EB-5 visa program is unfortunately going to lapse in the days ahead and have untold economic consequences throughout the communities that rely on the program for development projects. I remain committed to reforming the EB-5 program should there be another opportunity to do so.”
Grassley said: “A narrow subset of big moneyed and corrupt interests has now shown that they would rather kill the program altogether than have to accept integrity reforms designed to clamp down on their bad behavior.”
The EB-5 program was designed to encourage job creation and investment in rural and economically distressed areas of the United States. However, the program has long been riddled with fraud and national security vulnerabilities. It’s also been exploited by some wealthy urban developers who syphon investment money away from rural and economically distressed areas to fund projects in some of the nation’s most well-to-do neighborhoods. The blockade of the Grassley-Leahy reform bill effectively slams the door on all EB-5 projects, including those in rural America.
A History of Fraud and Abuse
The EB-5 program, established in 1990, provides visas to foreign nationals who invest $1 million in new U.S. private enterprises that create additional jobs. The investment threshold is reduced to $500,000 for projects in rural or economically-distressed areas known as Targeted Employment Areas (TEAs). The program later allowed for the establishment of EB-5 regional centers, which pooled multiple investments into a single project.
In 2015, Grassley and Leahy, then respectively chairman and ranking member of the Senate Judiciary Committee, introduced legislation to improve integrity in the program and restore congressional intent in creating the program. As they were Thursday, these bipartisan, consensus reforms have been repeatedly blocked by big-money interests that benefit from the status quo and their supporters in Congress. Thursday’s blockade not only killed the reforms, but also eliminated the program’s extension, leaving it to expire at the end of June.