Thinking about RC legislation (with comparison chart)

The Regional Center Program has just eight months before it needs another authorization from Congress. Significant EB-5 legislation may be unlikely this election year (I hear people hoping for another short-term extension by 9/30/2016), but we can foresee future directions in the flurry of reform proposals. To help visualize where we are, I’ve made a chart of EB-5 bills that are or were recently on the table. My chart is idiosyncratic (limited to provisions that particularly interest me as a business plan writer) and oversimplified, but it gives a handy overview. I’ve generously uploaded my original to Google docs, in case you’d like to enlarge the font or edit a new version with your own favorite nuances. (NOTE: the Google docs version linked above is now more updated than the chart image below.)

The comparison chart highlights areas of consensus and difference, and helps us think about what changes we should prepare to accept (or take action to forestall). Besides the rows dominated by “yes” (likely directions) and the rows full of differences (points of open debate), I’m particularly interested in the left-most columns: S.2415, because it’s the most recent proposal, and the Discussion Draft/S.1501 update, because it came nearest to enactment. These two bills are superficially very similar; S.2415 is a partially defused version of S.1501. S.2415 omits two of the most disruptive changes proposed in S.1501 – changes to TEA definitions and the qualifying EB-5 investment amount – and neatly clips difficult integrity measures by means of three simple terms: “affiliated,” “involved,” and “associated.” The integrity measures in S.1501 (and others) are hard because they would make regional centers responsible for the actions of parties often (in current practice) outside RC control. S.2415 reduces those proposed responsibilities by replacing “job-creating entity” in S.1501’s integrity proposals with the more limited “affiliated job creating entity” (with “affiliated” defined as controlled, managed, or owned by people involved with the regional center or new commercial enterprise) and by adding term definitions that limit who would count as “parties associated” or “persons involved” when it comes to compliance matters involving enterprises, agents, promoters, and attorneys. (To see for yourself, compare the term definitions on p. 29, 37, and 61 of S.2415 with those on p. 30, 37, and 76 of the Discussion Draft, and follow use of those terms.) S.2415 retains the basic shape of S.1501’s regional center integrity measures and program improvements, keeps the reforms that only inconvenience USCIS (additional reports and tasks) or that mainly hurt small regional centers (ie the annual fee), and cuts no corners when it comes to protecting against hypothetical national security threats. I don’t know whether S.2415 retains enough similarity to S.1501 to get any smiles from Senator Grassley (who is on the warpath, judging by quotes yesterday to RadioIowa in advance of his coming hearing on the EB-5 program), or whether it’s modified enough to have EB-5 community support broader than the interests represented by Senator Flake (and Cornyn and Schumer). I wait with impatience to hear legislative updates from people who know what’s happening right now on Capitol Hill. I’m also looking forward to 2/9 in San Francisco, where I’ll be part of a panel that NES Financial has organized to “discuss integrity measures and compliance requirements that have remained consistent through recent drafts of EB-5 legislation, and highlight solutions and strategies that will allow issuers to prepare for these changes.”