On December 7, the EB-5 visa program featured prominently in a hearing of the U.S. Senate Judiciary Committee, an event during which prominent voices from the EB-5 community contributed testimony.
Leading the discussion was Committee Chairman Patrick Leahy (D-VT), who let it be known in his opening remarks that legislation to make the EB-5 Regional Center Pilot Program a permanent fixture of our country's immigration policy sat at the core of the day's discussions. Leahy has frequently lauded the EB-5 program and is one of its most vocal supporters in Congress.
Senator Charles Grassley (R-IA) also contributed to the opening discussion, stating his support for the EB-5 visa program with the reservation that Congress must "enact reforms that make the EB-5 Regional Center Program worthy of its goals."
Grassley mentioned rumors that overseas promoters were "mischaracterizing the program, luring investors here, and robbing them of the American dream" ? a fear that is completely valid and that available evidence suggests is happening more frequently than we'd all like to believe.
As for the witnesses, two EB-5 supporters and one opponent shared insight and responded to questions. The first was Bill Stenger, a principal at multiple regional centers, who noted that EB-5 has helped him create "over 2,000 jobs" in his region of Vermont ? a rural county with the highest unemployment level in the state.
"Unless this program is extended," Stenger argued, he and his partners wouldn't be able to continue creating jobs in northern Vermont. In addition to a ski resort they've been able to modernize and turn into a year-round operation, Stenger is also planning to build new commercial facilities, housing, and infrastructure in the region.
Ski resorts have become something of a favorite for regional centers. With almost zero chance of getting bank loans, EB-5 has turned into one of the only ways real estate projects can access low cost capital.
Attorney Robert Divine of Baker Donelson also testified before the committee and noted that the EB-5 program must be made permanent now rather than later so that investors won't be scared away from investing in projects. The idea that the program has to come up for renewal and be approved every few years makes investors hesitant, he said.
The only witness to voice opposition to the program was David North of the Center for Immigration Studies. And it isn't just the program's extension that North opposes. He unequivocally opposes the EB-5 Regional Center Program's very existence, calling it "a dysfunctional portion of a silly program which should be allowed to wither and die."
That certainly sounds harsh, but we've heard from David North before.
The EB-5 program "attracts sub-par investments and often scandals," he told the committee. "Such programs should be about creating business entities, not passive investments," he said.
Senator Leahy noted that the record included a statement from North which referred to Stenger's ski resort as "decaying" and a poor use of investor funds. Upon asking Stenger, whom Leahy earlier disclosed was a personal friend of his, whether his facility was, in fact, decaying, Stenger responded that it wasn't ? not at all.
"We're not decaying," he said. "We're thriving."
North's response: "I don't think the U.S. Senate should operate on anecdotes."
And the conclusion?
There wasn't one. Nothing concrete, at least.
In addition to Senators Leahy and Grassley, Senators Sessions (R-AL) and Cornyn (R-TX) offered statements that should be encouraging to the folks at IIUSA as well as other EB-5 supporters.
EB-5 investors will have "wealth to bring," said Senator Sessions. "They will be job creators."
With respect to Senator Grassley's initial concern regarding foreign promoters sending investors the wrong message, Divine closed by noting that EB-5 investments "are covered by U.S. securities laws." If promoters in China, for instance, are telling investors anything misleading, "it would be a violation of U.S. securities laws" as well as China's, he said.
In short, Divine believes it's an issue for the SEC to address.
If this hearing of the Judiciary Committee is anything close to a microcosm of the U.S. Senate's opinion of EB-5, things look good for the program whenever its permanent extension actually does come up for a vote. With the nation still deep in a recession, it would be hard not to support a program with a proven track record of creating new jobs.
Image credit: Center for American Progress