About H.R. 5992 Reform Act proposals

As the 9/30/2016 deadline for regional center program reauthorization looms, we have so far (1) indication that short-term regional center program extension has been included in a continuing resolution to extend government funding through December 9, and (2) a new piece of EB-5 legislation to consider: H.R. 5992 American Job Creation and Investment Promotion Reform Act of 2016, sponsored by House Judiciary Committee Chairman Bob Goodlatte (R-VA) and co-sponsored by Ranking Member John Conyers (D-MI).

H.R. 5992 is basically Senator Grassley and Leahy’s S.1501 American Job Creation and Investment Promotion Reform Act of 2015 with additional content informed by the 2/11/2016 House Judiciary Committee Hearing “Is the Investor Visa Program an Underperforming Asset?” and the Jay Peak EB-5 disaster in Vermont. In the February House hearing, Goodlatte described his vision of what regional center EB-5 should be: a program that incentivizes a healthy percentage of EB-5 projects to locate in rural and depressed areas, and a program that attracts investors with entrepreneurial talent, not the merely wealthy. He expressed special concern about gerrymandering TEAs to benefit luxury projects, the fact that foreign investors can claim credit for all jobs created by their investment projects, and the deduction that, due to the backlog, “for [any reforms] to be effective, they would have to have some retroactivity if they are going to take effect in any way, shape, or form before 7 years from now.” Conyers, representing Detroit, likewise emphasized in the February hearing that “Steering investments to projects in our cities’ wealthiest neighborhoods at the expense of urban and rural communities that need it most is not what Congress intended when it established targeted employment areas and the lower investment level.” Conyers called for projects to locate within needy neighborhoods, not just in commuting distance of them, and for more clarity on the tangible job creation associated with regional center projects. We can sympathize with these genuine concerns, and yet they underlie the most counterproductive new proposals in H.R. 5992: retroactive application of new rules to petitions filed since 6/1/2015 (which would pull the rug from under at least $7 billion already deployed in US business), permanently accruing set-asides of already scarce visas for distressed urban and rural projects regardless of use, new requirements around direct job creation, and source of funds and age restrictions that would help change regional center EB-5 from a program that uses foreign investment to benefit U.S. entrepreneurs into one that asks the foreign petitioner to be both investor and entrepreneur. The Jay Peak fingerprints on H.R. 5992 are less controversial. We likely have Vermont to thank for pages of recourse options for innocent investors in case of project or regional center malfeasance, and for pages of new requirements for transparency and integrity in depositing and deploying investor funds.

It remains to be seen what will happen with H.R. 5992, which has no EB-5 industry support (in its current form) so far as I know. The bill has some good features, but eliminates most possible supporters by combining incentives that only really distressed players can use with administrative requirements and fees that only really wealthy players can afford, by promising USCIS a huge workload with impossible deadlines, and by proposing retroactivity that would harm a mind-boggling number of recent project and investors. H.R. 5992 was briefly scheduled for a committee markup session this week, but is off the Judiciary Committee calendar now and I haven’t noted either Goodlatte or Conyers talking about it. Don’t be too discouraged, Mr. Chairman and Ranking Member! We really could welcome reform legislation, just not quite this bill. I’ll update this post as I become aware of new developments related to H.R. 5992.

For additional reading:

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.

5 Responses to About H.R. 5992 Reform Act proposals

  1. wenzhengong says:

    Really having trouble understanding the wordings in Goodlatte’s draft. Does it mean if my I526 got approved before 06/01/2015, everything including investment amount, job creation methodology will be grandfathered when submitting I829 application? Please advise! Thanks!

    • I believe that is correct, and that Goodlatte only intended to target I-526 petitions filed since 6/1/2015 with his retroactivity provision. I agree that the language is confusing, though, and I have not studied the effective dates very closely — partly because I think/hope the retroactivity language has very little chance of ending up in an enacted law. USCIS and 99% of EB-5 stakeholders agree that all investors should be held to rules in place at the time they filed, not subject to backward-looking changes, and I’m sure that Goodlatte’s office is getting snowed under in advocacy messages to that effect. Also, be sure to read Lee & Yale-Loehr’s summary (linked above under additional reading), which is easier to follow than the bill language.

      • Marigotus says:

        Is it “got approved” or “got filed”? It seems to me that projects FILED before 06/01/2015 get grandfathered. Correct?

  2. Marigotus says:

    When I say FILED, I mean received date and/or priority date, since is all the same.

    • Yes, you are right. Wen Zhengong was concerned about a case approved before 6/1/2015, but the protection covers cases filed before 6/1/2015, and cases filed later but associated with an exemplar filed before 6/1/2015. But still, too many investors would be left vulnerable, were this suggestion to pass into law.

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