EB-5 Extension Situation Likened to Three-Dimensional Chess

By David North, April 25, 2017

The main part of the EB-5 (immigrant investor) program is due to expire on April 28 and the questions are: Will it be extended unchanged, and/or will either Congress or the executive cause it to be reformed? This is like three-dimensional chess because:

  • The "Four Corners" in D.C. parlance — the Republican chairmen and the ranking Democrats of both the Senate and House Judiciary committees — want it extended, but only if reformed; otherwise they want the program to die;

  • The leaders of the Senate and the House want the program to survive, and seem indifferent to proposed changes; they are cheered on in this posture by Sens. John Cornyn (R-Texas) and Chuck Schumer (D-N.Y.), the deputy GOP leader and the minority leader of the Senate, respectively; meanwhile,

  • The now-departed Obama administration suggested a series of new regulations dealing with the minimum payment for the program and where the EB-5 money is to be invested, a package that the Four Corners like; but the decision on regulations will be made by...

  • ...the Trump administration, which has been pretty quiet on the issue; perhaps at least partially because...

  • ...the family of its favorite in-law, Jared Kushner, is deeply embedded in the program.

Then there is the hard-to-fathom question of how much will the worried Chinese businessmen, whose investments dominate the program, be willing to pay for the family-sized set of green cards that currently reward those making half-million-dollar investments, usually in big-city real estate deals. My personal sense, without any first-hand information, is that the levels of both riches and anxieties among the wealthy in China are so high that a dramatic increase in the minimum investment would still bring more visas than the 10,000 yearly limit allows.

The industry does not want the minimum raised to the $1,350,000 level proposed by the Obama administration, on the grounds that the number of buyers might shrink, nor is it enthusiastic about a compromise, said to be acceptable to the Four Corners, at $800,000.

The figure could be set either by the Congress, acting directly, or by the administration.

One possibility, worrisome to the Four Corners and others who want the program reformed, is that a straight extension (for the life of its legislative vehicle, the continuing resolution) will be passed, but that the Trump administration will do nothing with the proposed regulations.

Then there is the question of timing. Congress faces a deadline of April 28 for its part of the action, while the administration cannot be expected to adopt the new regulations as they stand, or a different version thereof, for a number of months. The comment period on the Obama regulations just closed on April 11. Sorting through the often detailed comments is a time-consuming process.

Insiders tell me that it is likely that the speaker and the majority leader will push through yet another straight extension (without reforms) and leave the proposed reforms up in the air, perhaps to be adopted (in part or whole) by the Trump administration.

Meanwhile, as I have suggested earlier, there is the continuing irony that a GOP White House, together with a GOP House and a GOP Senate, will continue to support a program that spends about two-thirds of its funds in states carried by Hillary Clinton, and pours a huge fraction of the money into Manhattan, which voted nine-to-one against Donald Trump.