2/11 House Hearing Detail

You can now review video, testimonies, and statements from today’s House Judiciary Committee Hearing “Is the Investor Visa Program an Underperforming Asset?” (FYI, I’ve also uploaded my audio recording.)

In the written testimony, IPO Chief Nicholas Colucci essentially reiterates his Senate testimony, GAO Director Rebecca Gambler discusses the GAO’s August 2015 study of the EB-5 program and USCIS’s slow progress toward implementing GAO recommendations for better risk assessment and reporting, NYU Professor Jeanne Calderon discusses her program research and the history and use of the Targeted Employment Area incentive, and Matt Gordon advocates for maximizing the social value of EB-5 and making program changes that would benefit his direct-EB-5-focused company.

The hearing began with opening statements by Committee Chairman Bob Goodlatte (R-VA), Ranking Member John Conyers (D-MI), and Zoe Lofgren (D-CA), who agreed that the regional center program has good potential but needs significant reform, particularly in practices that have departed from Congressional intent to incentivize investment in needy urban and rural areas. Targeted Employment Area issues were a focus throughout the hearing, including the question period that brought in Darrell Issa (D-CA), Louie Gohmert (R-TX), Jackson Lee (D-TX), Trey Gowdry (R-SC), and Judy Chu (D-CA). Most speakers deplored gerrymandering and TEA incentives for luxury real estate developments, and emphasized the need to increase the minimum EB-5 investment amount (focusing on areas of reform that were part of the Leahy/Grassley legislation but excluded from the Flake bill). Job creation was an additional focus area in this hearing, with Conyers, Calderon, Gambler, and Gordon regretting the limited data on regional center job creation, and Goodlatte and Issa questioning whether it makes sense to let EB-5 investors count the total jobs created by the project they invest in, even if their investment accounts for a small percentage of the capital stack. The issue of effective dates was raised several times, with Goodlatte arguing that reforms would need some retroactivity in order to be effective (considering that there are 6+ years of investors already in the backlog pipeline, and this could defer program reforms 6+ years if they only applied to new investors filing after enactment). Colucci indicated that regulatory changes being formulated by USCIS (to TEA procedures and the investment amount) would be forward-looking per tradition, not retroactive. He did not say when USCIS will come out with proposed changes to the regulations or how much USCIS would increase the investment amount (though he mentioned they are considering the legislative proposals as a reference point). The hearing brought up a number of questions that the witnesses lacked the background to answer, and I found myself wishing that the roster had included someone with direct regional center experience. Darrell Issa did request that a letter from IIUSA be included in the hearing record, and this may provide additional perspective.

In sum, the House hearing’s answer to the question “Is the investor visa program an underperforming asset?” seemed to be “Yes, it is underperforming Congressional intent to attract investment to and create jobs in areas of greatest need.” This hearing did not have much to say about anti-fraud/abuse measures or increased oversight (the focus of the Senate hearing), but expressed concern that EB-5 isn’t getting the best “bang for the buck” because investor funds aren’t being directed for maximum economic and job creation benefit.

About Suzanne (www.lucidtext.com)
Suzanne Lazicki is a business plan writer, EB-5 expert, and founder of Lucid Professional Writing. Contact me at suzanne@lucidtext.com (626) 660-4030.

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