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EB-5 INVESTOR VISA PROGRAM SHOULD BE PERMANENT, WITNESSES TELL SENATE COMMITTEE
Congress should make the EB-5 regional center pilot program for immigrant investors permanent as a way to increase job creation in the United States, witnesses testified July 22 at a hearing before the Senate Judiciary Committee.
"This program has been responsible for the investment of hundreds of millions of dollars, and the creation of tens of thousands of jobs in American communities since 1993," Sen. Patrick Leahy (D-Vt.), chairman of the Judiciary Committee, said.
"Making this program permanent is a critical first step to its continuing success," Leahy said.
The Senate July 9 approved a fiscal year 2010 homeland security appropriations bill (H.R. 2892) that includes an amendment introduced by Leahy to make the EB-5 regional center pilot program permanent ( 129 DLR A-1, 7/9/09).
The House June 24 passed its version of the appropriations bill, and lawmakers will have to hold a conference to reconcile to bills. If it is not extended in the final version of the appropriations bill, the EB-5 program will expire Sept. 30.
EB-5 visas, created by Congress in 1990, are awarded to immigrants who typically invest $ 1 million in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs for U.S. workers. Some EB-5 visas are granted under a regional pilot program to immigrants who nvest $500,000 if the investment is made in specific employment areas creating at least10 full-time jobs.
In addition to urging Congress to make the EB-5 program permanent, several speakers also outlined additional changes that would improve the program.
Economic Impact of EB-5 Visas.
"I strongly believe this program has the potential to grow as a meaningful source of positive economic development around the United States," Leahy said.
The core purposes of the EB-5 regional center program are to "generate capital investment and create jobs," Leahy said. "I want to underscore that both of these benefits are accomplished at no cost to taxpayers, and are not reliant
on what is currently a very restrictive credit market," he said.
Robert Kruszka, deputy chief of service center operations at the Department of Homeland Security's Citizenship and Immigration Services, said that approximately $ 1 billion has been invested in the U.S. economy through the EB-5 immigrant investor program since Oct. 1, 2006.
Based on the number of EB-5 approvals since Oct. 1, 2006, an estimated 20,250 jobs have been created for U.S. workers through foreign investment via the EB-5 program, Kruszka said.
William J. Stenger, the president of Jay Peak Resort, a ski resort in Vermont that utilizes the EB-5 program, said that the rural area of Vermont where the resort is located is seeing employment creation "in this terribly troubled
economy solely because of the EB-5 foreign investor program."
"Starting in 2005 this EB-5 pilot project has helped our company create and present to qualified foreign investors an opportunity to invest in job creating initiatives at Jay Peak Resort that are, and will, employ many hundreds of direct and indirect citizens of our Northern Vermont communities," Stenger said.
Speakers Call for Permanent Program.
"We are not anywhere near using the entire 10,000 visas allocated to EB-5," and Congress "envisioned this program to bring more investment into the United States than has been experienced to this point," Ron Drinkard, director of the
Alabama Center for Foreign Investment, an EB-5 regional center, told the panel.
The "primary impediment" to the program's success has been "the lack of permanency to the program," Drinkard said. Even with three-year program extensions, "business people are hesitant to invest without knowing if the law will expire before the goals of the investments can be achieved," he said.
"Recently, extensions have been tied to fiscal continuing resolutions of very short duration," which "conveys to potential investors that the government is not fully behind the program," Drinkard said.
Stephen Yale-Loehr, Cornell University Law School immigration professor and executive director of Invest in the USA, a trade association representing EB-5 regional centers and other stakeholders, said that short term reauthorizations of the EB-5 program "have suppressed investor confidence in the program and led to under utilization."
Yale-Loehr agreed that the program should be made permanent as a way to "show investors that the program is here to stay. More investors will invest, creating more jobs and boosting the economy."
Kruszka added that the lack of permanency of the program poses operational challenges for CIS.
"The uncertainty, as to whether or not the immigrant investor pilot program will remain a viable vehicle for immigration to the U.S. through investment,hampers marketing efforts by regional centers to attract prospective immigrant investors and also creates unease and apprehension amongst existing regional centers that their business plans will come to fruition," Kruszka said.
"If the program is not permanently extended or at a minimum, the president's budget request to extend the pilot program for three more years is not enacted, that would certainly create deep uncertainty among the EB-5 stakeholder community," he said.
Improvements Have Been Made.
Kruszka pointed out several steps CIS has taken to improve the EB-5 program.
A year ago it took CIS an average of 14 months to process a regional center proposal, the processing now takes about four months, Kruszka said. The average processing time for an individual EB-5 visa petition previously took seven months, but now takes about four months, he said.
However, Yale-Loehr told the committee that while EB-5 processing times have improved recently, they are "still erratic" as one investor in a regional center project may have their petition approved in two months, while another investor
in the same regional center project may have to wait six months for approval.
In addition, CIS has drafted informational guidance documents that will be posted to the CIS website to help EB-5 users prepare regional center proposals and serve as a reference tool, Kruszka said. These documents are in the final steps of internal agency review and will be available soon, he added.
Recommendations to Improve the Program.
Several speakers suggested ways that Congress and CIS can improve the EB-5 program.
Michael Dougherty, former CIS Ombudsman, said that the CIS Ombudsman's office submitted a March 18 report to the agency outlining recommendations to improve the EB-5 program ( 128 DLR A-4, 7/8/09).
The report included eight recommendations to streamline and update the program, Dougherty said. A key recommendation was that CIS initiate formal EB-5 rulemaking to advance a new set of rules to replace the inconsistency and ambiguity in the current regulations, he said.
While CIS has issued some new guidance to adjudicators about aspects of the program, no formal rulemaking has taken place, he said.
"It is undisputed that the EB-5 program needs updated and better defined regulations to allow the program to live up to its congressional mandates and expectations," Dougherty said. However, it is not clear when such regulations will be produced, due to the limited resources of CIS, he said.
"Given the current economic conditions and the benefits that EB-5 investors can bring to U.S. workers in targeted employment and rural areas, Congress may wish to fund staff positions within DHS' Office of General Counsel specifically
dedicated to rulemaking for the EB-5 program," Dougherty said.
In addition, Dougherty recommended that CIS work with representatives from the Departments of Commerce, Treasury, State, Labor and the Small Business Administration to create an inter-governmental advisory group to address issues that arise from the program and impact each of these departments.
Yale-Loehr urged that EB-5 petitions be processed faster and more efficiently and said EB-5 cases should be eligible for premium processing services.
CIS allows many employment-based green card petitioners to pay an extra $1,000 for faster processing of their cases, called premium processing. Yale-Loehr said such a service should be made available to EB-5 investors.
In addition, he recommended that already approved regional centers should be permitted to submit documents relating to a new project for pre-approval review so that the centers have an opportunity to work out any problems with the proposal before it is formally rejected.
"This program has been responsible for the investment of hundreds of millions of dollars, and the creation of tens of thousands of jobs in American communities since 1993," Sen. Patrick Leahy (D-Vt.), chairman of the Judiciary Committee, said.
"Making this program permanent is a critical first step to its continuing success," Leahy said.
The Senate July 9 approved a fiscal year 2010 homeland security appropriations bill (H.R. 2892) that includes an amendment introduced by Leahy to make the EB-5 regional center pilot program permanent ( 129 DLR A-1, 7/9/09).
The House June 24 passed its version of the appropriations bill, and lawmakers will have to hold a conference to reconcile to bills. If it is not extended in the final version of the appropriations bill, the EB-5 program will expire Sept. 30.
EB-5 visas, created by Congress in 1990, are awarded to immigrants who typically invest $ 1 million in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs for U.S. workers. Some EB-5 visas are granted under a regional pilot program to immigrants who nvest $500,000 if the investment is made in specific employment areas creating at least10 full-time jobs.
In addition to urging Congress to make the EB-5 program permanent, several speakers also outlined additional changes that would improve the program.
Economic Impact of EB-5 Visas.
"I strongly believe this program has the potential to grow as a meaningful source of positive economic development around the United States," Leahy said.
The core purposes of the EB-5 regional center program are to "generate capital investment and create jobs," Leahy said. "I want to underscore that both of these benefits are accomplished at no cost to taxpayers, and are not reliant
on what is currently a very restrictive credit market," he said.
Robert Kruszka, deputy chief of service center operations at the Department of Homeland Security's Citizenship and Immigration Services, said that approximately $ 1 billion has been invested in the U.S. economy through the EB-5 immigrant investor program since Oct. 1, 2006.
Based on the number of EB-5 approvals since Oct. 1, 2006, an estimated 20,250 jobs have been created for U.S. workers through foreign investment via the EB-5 program, Kruszka said.
William J. Stenger, the president of Jay Peak Resort, a ski resort in Vermont that utilizes the EB-5 program, said that the rural area of Vermont where the resort is located is seeing employment creation "in this terribly troubled
economy solely because of the EB-5 foreign investor program."
"Starting in 2005 this EB-5 pilot project has helped our company create and present to qualified foreign investors an opportunity to invest in job creating initiatives at Jay Peak Resort that are, and will, employ many hundreds of direct and indirect citizens of our Northern Vermont communities," Stenger said.
Speakers Call for Permanent Program.
"We are not anywhere near using the entire 10,000 visas allocated to EB-5," and Congress "envisioned this program to bring more investment into the United States than has been experienced to this point," Ron Drinkard, director of the
Alabama Center for Foreign Investment, an EB-5 regional center, told the panel.
The "primary impediment" to the program's success has been "the lack of permanency to the program," Drinkard said. Even with three-year program extensions, "business people are hesitant to invest without knowing if the law will expire before the goals of the investments can be achieved," he said.
"Recently, extensions have been tied to fiscal continuing resolutions of very short duration," which "conveys to potential investors that the government is not fully behind the program," Drinkard said.
Stephen Yale-Loehr, Cornell University Law School immigration professor and executive director of Invest in the USA, a trade association representing EB-5 regional centers and other stakeholders, said that short term reauthorizations of the EB-5 program "have suppressed investor confidence in the program and led to under utilization."
Yale-Loehr agreed that the program should be made permanent as a way to "show investors that the program is here to stay. More investors will invest, creating more jobs and boosting the economy."
Kruszka added that the lack of permanency of the program poses operational challenges for CIS.
"The uncertainty, as to whether or not the immigrant investor pilot program will remain a viable vehicle for immigration to the U.S. through investment,hampers marketing efforts by regional centers to attract prospective immigrant investors and also creates unease and apprehension amongst existing regional centers that their business plans will come to fruition," Kruszka said.
"If the program is not permanently extended or at a minimum, the president's budget request to extend the pilot program for three more years is not enacted, that would certainly create deep uncertainty among the EB-5 stakeholder community," he said.
Improvements Have Been Made.
Kruszka pointed out several steps CIS has taken to improve the EB-5 program.
A year ago it took CIS an average of 14 months to process a regional center proposal, the processing now takes about four months, Kruszka said. The average processing time for an individual EB-5 visa petition previously took seven months, but now takes about four months, he said.
However, Yale-Loehr told the committee that while EB-5 processing times have improved recently, they are "still erratic" as one investor in a regional center project may have their petition approved in two months, while another investor
in the same regional center project may have to wait six months for approval.
In addition, CIS has drafted informational guidance documents that will be posted to the CIS website to help EB-5 users prepare regional center proposals and serve as a reference tool, Kruszka said. These documents are in the final steps of internal agency review and will be available soon, he added.
Recommendations to Improve the Program.
Several speakers suggested ways that Congress and CIS can improve the EB-5 program.
Michael Dougherty, former CIS Ombudsman, said that the CIS Ombudsman's office submitted a March 18 report to the agency outlining recommendations to improve the EB-5 program ( 128 DLR A-4, 7/8/09).
The report included eight recommendations to streamline and update the program, Dougherty said. A key recommendation was that CIS initiate formal EB-5 rulemaking to advance a new set of rules to replace the inconsistency and ambiguity in the current regulations, he said.
While CIS has issued some new guidance to adjudicators about aspects of the program, no formal rulemaking has taken place, he said.
"It is undisputed that the EB-5 program needs updated and better defined regulations to allow the program to live up to its congressional mandates and expectations," Dougherty said. However, it is not clear when such regulations will be produced, due to the limited resources of CIS, he said.
"Given the current economic conditions and the benefits that EB-5 investors can bring to U.S. workers in targeted employment and rural areas, Congress may wish to fund staff positions within DHS' Office of General Counsel specifically
dedicated to rulemaking for the EB-5 program," Dougherty said.
In addition, Dougherty recommended that CIS work with representatives from the Departments of Commerce, Treasury, State, Labor and the Small Business Administration to create an inter-governmental advisory group to address issues that arise from the program and impact each of these departments.
Yale-Loehr urged that EB-5 petitions be processed faster and more efficiently and said EB-5 cases should be eligible for premium processing services.
CIS allows many employment-based green card petitioners to pay an extra $1,000 for faster processing of their cases, called premium processing. Yale-Loehr said such a service should be made available to EB-5 investors.
In addition, he recommended that already approved regional centers should be permitted to submit documents relating to a new project for pre-approval review so that the centers have an opportunity to work out any problems with the proposal before it is formally rejected.