Senate TEA Hearing

Update: the Senate hearing on EB-5 Targeted Employment Areas has been postponed.

The Senate Judiciary Committee is more serious about EB-5 than I expected, and already has another hearing scheduled for next week, on Wednesday March 2, with the provocative title The Distortion of EB-5 Targeted Employment Areas: Time to End the Abuse. Senator Grassley is making good on his vow in December for Continued Push to Reform EB-5 after Fixes Ignored in Omnibus Spending Bill. Senator Grassley is concerned that “the status quo will not benefit Middle America. It benefits New York City and other affluent areas at the expense of areas in Iowa, Kentucky, Wisconsin, and Vermont,” and he is disturbed by reports such as Wall Street Journal’s September 2015 article How a U.S. Visa-for-Cash Plan Funds Luxury Apartment Buildings. On the other hand, Senators representing coastal America are likely to point out that big cities also struggle with unemployment and economic distress, and that it’s not right to make the TEA issue into a regional fight or impose a rural model on urban areas. If you’d like to review arguments on various sides in advance of this hearing, consider Jeanne Calderon’s research on the history and current use of the TEA incentive and impact of potential changes, Carolyn Lee’s 2014 article on State Designations of EB-5 Targeted Employment Areas (explaining the logic of current practice), and Jeff Campion’s 2015 article Targeted Employment Areas: Where Are We Now (giving the urban perspective). The proposed new TEA provisions in last year’s draft legislation were awkward and confusing, probably the result of too many contradictory compromises, but maybe all these hearings can result in a more reasonable reform proposal.