Robert Kraft’s interview with Investment Migration Insider
What could you tell us about the substance of the bill currently tabled in the Senate?
Yeah! The bill that being looked at right now, that we’re hopeful will get passed before the end of the year, and it will be part of the appropriation package, which funds the government. It addresses the integrity reforms which are important to protect the investors. There’re some aspects to it that changed the ways the TEAs qualify. Currently, you connect census’s tracts, and then it’s approved by the State Governor’s office, and that’s led to something with respect to what we call “Gerrymandering”, and some projects that perhaps shouldn’t have been qualified, they legally did. And certainly, the law was applied properly. However, it was somewhat aggressive in issues that was a concern in Congress that we tightened that up. So, the new program, definitely eliminates “Gerrymandering”. It makes it very clear with respect to what projects will qualify in urban, distressed areas, and in rural. It will change some of the rules with respect to qualifying projects. That’s an important one. We’ve been working very hard and trying to eliminate derivative interpretation or in other words, originally when the bill was written in 1992, it anticipated investor units at 10,000, not investors and family members derivatives, and that’s created the backlog situation we have, in China and India and some other countries are reaching that number right now. So, we’ve been pushing for proper (in our opinion) derivative interpretation and going back to the original ten of the law which is 10,000 visa units (investment units), not family members. That will effectively increase the number of visas available by 2/3 and it will take away a lot of backlogs, especially for China. So, that’s been a united industry effort. We think that, there’s also another way to approach that. It’s called “parole”, and that would allow people who are backlogged to apply for the parole category and enter the United States. After 3 years and worked and have the benefits of a green card until their application is approved. So, at least they can come in the country and begin their lives and then it may be 10 years later or whatever it is, based on the country they’re from, less than that from countries that re not retro grass, and it would solve …they take a lot of pressure off, especially the China market. So, we’re very concerned about that, and we want to make sure we do what is right for the program, but also recognizing people that invest in the United States didn’t anticipate this kind of backlog, and it’s not good for the program.
Potential re-authorization will also have a bearing on minimum investment requirements. I understand that, that’s still not settled as in terms of what minimum investment requirements exactly it would be, in re-authorization. But can you tell us what you know about what stage that’s at, and what those minimum investment requirements would be.
Yeah, that’s a good question. In the regulations as we discussed, the minimum amount was $900,000 for TEA, and $1.8 million for non-TEA. Under the bill that’s being considered, right now, the minimum investment amount is $1,000,000 and the non-TEA is $1,100,000. We don’t know, if that number will hold. But, as an industry group unified, we’ve supported it, and will continue to support it. It may change a little bit, just like some of the other aspects of the law though, be negotiations within the Senate and within the House to make minor changes, but I think that the bill as written, is pretty well thought-out and although we do have some issues with minor tweaks, the industry in total is supportive of what’s on the table and will stay united, which I think will help move legislation forward.
So, if the legislation is introduced to reauthorize the program prior to November 21st, that would effectively obviate the modernization regulations. Where do you think we’ll become December for EB-5?
Well, I really think that the new bill is written, will get worked out. I do not think that it will be ready for the November 21st date or the 22nd date. It’s really when the appropriations bill would kick in. So, the government right now, from a spending standpoint, is authorized through the 22nd, which is one day after the regs go into effect. And, I do believe, they’ll probably be another extension of the appropriations bill till December 21st, similar to what happened last year, and our bill will hopefully ride along in an appropriations package. That would mean there’d be a month roughly of when the regulations would be in effect. But there’s been discussion of the possibility of holding off, on any regulation’s implementation, if there’s just a four-week period. It doesn’t make sense to put those regs into effect to create a lot of confusion, and so, what we understand, is that, if it’s a month, maybe Congress will say “let’s just stand down the regulations, until we get the bill passed”, because , a new bill will act actually eliminate the regulations. So, those regulations are tied to the current bill. So, a new comes in, then the old bill is gone and the regs are tied to the old bill, so then we just go forward with a clean new program. One of the major benefits of this program is a 6-year authorization, which will give surety to the industry. We haven’t had that in many years. We’ve been going month to month, in 6 months, 9 months and that’s disruptive for practitioners in the United States and investors from around the world. So, you know, there are a lot of moving parts, and I’m hopeful that, that’s what will happen, that we’ll get a new bill, and that when it goes in effect, we won’t have been impacted by the regulations. But who knows! You know, Washington has a lot of other issues they’re dealing with, and although we feel, our program is critically important in the overall scheme of things, it’s you know, a small issue.
Investment Migration Insider, November 18, 2019
Link to the YouTube video: https://youtu.be/HkOeearSxb4