For one moment there, I honestly believed that the input of the handful of EB-5 Regional Centers who operate in true Targeted Employment Areas (TEAs) to economically transform America's poorest comminties (as Congress always intended) would FINALLY be heard in Washington. Not so.
AVS Counsel Laura Callava and I were thrilled and ready for our OMB meeting, given that to date the government has met only with the wealthiest EB-5 groups which rely on "gerrymandering" and oppose TEA reform and those who represent them. Yesterday, our long awaited meeting to give our input on pending EB-5 reform regulations was abruptly canceled without explanation. This meeting would have been the first and only opportunity for the USG consider input from an EB-5 Regional Center which operates exclusively in true TEAs and has been transforming poor communities for 9 years . Laura and I were going to Washington to convey the critical importance of :
- Ending TEA abuse, so giant urban condo developers would be required to find investors at the $1M level, permitting projects in truly needy parts of the U.S. to compete on fair playing field at the $500,000 level, as Congress intended;
- enforcing existing SEC rules prohibiting the payment of illegal finders' fees to unlicensed agents (which virtually the entire EB-5 industry flagrantly continues to ignore);
- Remind the government of what EB-5 was intended to be before it was permanently hijacked by giant developers to feed their insatiable appetite for cheap, risk-free capital.
Well, it's not going to happen and we are not going to get a chance to tell the government about our version of EB-5, the one which helps communities, not the folks who brought you the argument that Central Park is in a poor urban area (seriously, check it out...you can't make this stuff up!) I was somewhere over the Pacific, coming back to the US after a non-stop week at our Vietnam office, when this arrived:
Uh..."Since the rule is no longer under review"...really? Yes, really: not only were we being dumped like last week's guacamole, but on the same day and without any warning, the OMB decided to stop accepting comments and send the final rule for publication. Think about it: 3 days before the OMB is to meet with the ONE party with an opinion diametrically opposed to that of the Manhattan EB-5 monoliths, that meeting is cancelled and the conversation about EB-5 reform is OVER. Helluva coincidence, right?
The OMB's whirlwind actions on Thursday have left the entire immigration bar and EB-5 community wondering what happened. At this point, no one - not even The National Law Review - has any idea of what the final rule actually says and does to advance the purported "reform". All we know is that yesterday, June 27, the government web site was updated to reflect that consideration of the rule has concluded . The link says that the final rule is NOT "economically significant";I beg to differ. EB-5 is a billion dollar industry and VERY "economically significant". But sadly, since the only voice OMB heard was that of the giant, NYC based EB-5 outfits, the billions involved will indeed be significant as they continue to flow into the deepest pockets building condos in America's priciest neighborhoods.
When the EB-5 category was enacted in the Immigration Act of 1990, I was still a U.S. visa officer. I followed the Congressional debate very carefully and while a minority of xenophobes cried (and STILL cry) about "selling citizenship" -- it isn't citizenship, it's conditional residency for those brave souls willing to take a financial risk in investing in America, and it only converts to permanent residency AFTER 10 new full time jobs have been created -- I never bought that point of view. In reality, when Congress came up with the EB-5, it was (and remains today) far more demanding than any other residency investment program offered by developed nations in that REQUIRES economic risk on the part of the investor. The program became law only when it was made clear that there was no downside; paraphrasing the famous Field of Dreams line, the EB-5 program's thinking was genius: "if we let them come and invest, they will build American jobs".
It is a GREAT program, but it has been absolutely corrupted by our own industry. According to Citylab , as of March of this year, the Related Group's giant Hudson Yards project (the one which successfully argued that NYC's Central Park area is economically distressed) ALONE has raised over $1.2 BILLION in EB-5 Capital. Ponder what $1.2 billion could do in rural America or in poor urban areas. What could that do to create opportunities and usher the most impoverished Americans into our booming economy? We'll see what the final rule looks like, but it's a shame the U.S. government hastily slammed the door shot on their ONE converation with a Regional Center that has actually proven how how EB-5 can transform a poor U.S. community.
I will leave you with the recent (and, incredibly, bipartisan) quote from U.S. Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.) regarding the need for EB-5 reform: