Since big-city, big-money interests have blocked congressional reform of the corruption-ridden EB-5 (immigrant investor) program, the Trump administration should implement the administrative reforms proposed in the final days of the Obama administration, according to three key members of Congress.
The trio are Sens. Chuck Grassley (R-Iowa), Patrick Leahy (D-Vt.), chairman and ranking member, respectively, of the Senate Judiciary Committee, and Rep. Bob Goodlatte (R-Va.), chairman of the House Judiciary Committee. They conveyed those thoughts in a letter to the new Secretary of Homeland Security, Kirstjen Nielson.
The letter carried three hidden or subdued messages:
- These very senior legislators admitted defeat in their own arena, and are seeking to solve the very real problems of EB-5 through administrative channels.
- Two solid Republicans, Grassley and Goodlatte, asked that a Democratic administration's proposal be adopted.
- A position that had previously been supported by the four corners (Washington lingo for the chairs and ranking members of both sets of committees, normally a powerful combine) was now supported by only three of them.
In prior pronouncements, EB-5 reform also had the support of the ranking member of the House committee, Rep. John Conyers, Jr. (D-Mich.); the news was not that Conyers had changed his mind, but that he resigned his seat following various charges of sexual harassment by members of his staff.
Conyers was replaced as the ranking member by Jerrold Nadler (D-N.Y.); Nadler, though he does not say much about EB-5, represents the lower part of Manhattan, and the island gets a remarkably high percentage of all of the nation's EB-5 investments. One of Nadler's home state allies, Senate Minority Leader Chuck Schumer (D-N.Y.), is a dedicated and skilled supporter of EB-5; he likes it just the way it is.
Substance. The main changes in the EB-5 regulations, as I noted in testimony before the House Committee last year, were three in number:
- The minimum investment that now produces a family-sized set of green cards for the alien investor, would be more than doubled from the current $500,000.
- The current gerrymandering of locations of the investments, which Congress originally intended to be in depressed and rural areas, had been used to place many of the EB-5 funded projects in prosperous places like Park Avenue and Wall Street; the new regulations would push many of these projects into less urban and more depressed regions.
- A number of changes in the process — a so-called "integrity package" — would discourage the widespread abuse of the program and theft of EB-5 investments.
Manhattan and other big-city real estate interests are opposed to the changes, I think primarily because of the second of the three items noted above. There is also some resistance among EB-5 users to the higher initial price for the pooled investments routinely used in the program, on the grounds that the market will not support that sum. My sense is that the price, much less than that charged by other nations for somewhat similar programs, would not be a problem, and that raising it would be a major benefit to the developers — but they do not see it that way.
The president's in-laws, the Kushners, are deeply involved in the EB-5 program, as it now exists, and cannot be expected to welcome the changes; whether that is a factor in what DHS does or does not do with the proposed regulations is not known, and perhaps cannot be known.
The letter from the three powerful members came after the trio were outmaneuvered by the big-city real estate interests time after time, as the EB-5 program's main component, its usage of pooled investments, has been extended repeatedly in must-pass spending bills, as we have reported repeatedly.