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Understanding How the New Congressional Bill Impacts the EB-5 Program

On Behalf of | May 2, 2016 | EB-5

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In a recent letter posted on The Hill, industry expert Jeff Campion reports that the media has been misrepresenting the impact of recent EB-5 Program reform efforts. The biggest misunderstandings revolve around the ‘at risk’ clause, which keeps the money unsecured to obtain the biggest potential economy boost in the U.S. from foreign investor participation. Despite media claims, the ‘at risk’ clause has largely remained the same in letter and spirit since its original draft.

Original Complaint

In the article, “Senators working against the public interest,” Andrew Raptis argues that congress is backhandedly attempting to strengthen the ‘at risk’ clause with their newly proposed bill, SB 2415. Raptis claims that the bill would disallow local and state government agencies to utilize the funds for various improvement projects. Instead, the funds would only be available as unsecured capital for private real estate development projects, not secured municipal bonds for public infrastructure improvements.

Raptis worries that preventing the money from going to municipal bonds will decrease the number of jobs created with ongoing city and state projects. Furthermore, the article implies that congress pushed the bill through to satisfy the needs of their main campaign donators, which just happen to be developers in the private real estate industry.

Claim Response

Campion argues that SB 2415 does not actually change the program limitations in any way. He points out that the ‘at risk’ clause has always limited the funds to keep them from becoming a loan. Otherwise, the process would transform from a system of proving oneself in the marketplace to an exchange of money for an EB-5 visa.

The EB-5 program, as it stands, tests the mettle of investors as they attempt to provide a valuable commodity to the United States in the form of job creation. Allowing the money to fund secured bonds alters the spirit of the program. Therefore, the bill presented by congress only serves to protect the program’s integrity, not do the private real estate developers’ bidding. Perhaps most importantly, the program does have the ability to fund city and state level, or public and private, projects, the funds just have to remain at risk to qualify.

For individuals in need of help understanding the ‘at risk’ clause, or any other sections of the program, it is important to seek assistance from an EB-5 attorney. You can obtain assistance from David Hirson & Partners, LLP by calling 1- to schedule a consultation appointment.