As a stakeholder of the EB-5 Regional Center industry, we support the comments submitted by the industry trade association, Invest in the USA (IIUSA). We also respectfully submit the following comments:The Notice of Proposed Rule Making (NPRM) and Advanced Notice of Proposed Rule Making (ANPRM) published in the Federal Register by the Department of Homeland Security (DHS) in January 2017 pose many threats to the life and vitality of the EB-5 Regional Center Program and these measures must be carefully looked at as their repercussions would be at the detriment to thousands of American jobs and the families and communities that rely upon them all across our nation. We support reasonable and responsible reform of the Program to deter fraud and provide oversight while ensuring the Program is able to thrive for many years to come, providing capital to regional economic development projects.
Raising the minimum investment amount, as proposed in the NPRM, to $1.8 million for non-TEA investments and $1.3 million for TEA investments will destroy the program. It will reduce the number of investors down to levels not seen since the 1990s and would result in dramatically lower EB-5 investment and job creation in the U.S., hurting the very communities that rely upon it. Furthermore, as state in IIUSA’s comments, we believe that a dramatic 360% increase in investment amount will make the EB-5 program less competitive with other programs around the world which require little to no risk to the investor, unlike the U.S. program.
Given these points, it is important to keep the U.S. program competitive in the international market by not over-inflating the increased investment amount. It is also important to keep in mind that with any targeted employment area (TEA) reform, a majority of investors would likely be moving from TEA-qualified investment amounts (or the lower amount) to non-TEA-qualified amounts (or the higher amount). The proposed rule would result in a 360% increase for most investments. It is difficult to imagine a dramatic increase in the investment price would not result in a dramatic decrease in demand for the American EB-5 program, thus, cause a significantly negative impact on EB-5 jobs and investment in America.
TEA reform is needed in order to help enhance the Regional Center Program as an economic development tool and allow for a more even playing field that eliminates the “gerrymandering” criticism of the current statute. A TEA policy mapping tool is available that visualizes the impact of various TEA policy reforms that have been introduced over the course of reform discussions. It is available at iiusa.org/eb-5-tea-policy-proposals-analytic-mapping-tool/
We are supportive of measures that increase program integrity, deter fraud, and overall make the Program a stronger, more sustainable economic development tool and making these reforms through the legislative process. We encourage DHS to use the tools available to them, including working with industry stakeholders and Congress, to ensure a viable and sustainable future for the EB-5 Program.
DISCLAIMER
The information within this post represents my opinions only. This information does not reflect the opinions and/or policies of NMS Capital Advisors, its affiliates or any other firm I am contractually employed.
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Vivek Tandon, Vice President
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