The EB-5 Visa Program: The Outlook for 2017
By Lynn K. Cadwalader Partner, DLA Piper | December 25, 2016
On September 29, 2016, President Barack Obama signed the Continuing Resolution, passed by Congress to avoid shutting down the Federal government by continuing to fund government operations and most of its agencies. The Continuing Resolution is a temporary solution, and continues funding at 2016 levels only through December 9, 2016. A number of programs are included in the Continuing Resolution, among them, the EB-5 Regional Center program.
The Continuing Resolution keeps the EB-5 Regional Center program running until Congress can reconvene and devote itself to sorting through all the budget issues, as it did last year at this time. However, this year, the surprises created by the Presidential election have led to some uncertainty on the EB-5 front. While there continues to be wide-spread support for EB-5 in Congress, a few senators and congressman would like to greatly restrict the program, or eliminate it altogether.
The good news is that Congress will probably extend the Continuing Resolution and thus extend the operations of the federal government at the current funding rate through March 31, 2017, and it is likely that this will be the vehicle for a short-term EB-5 program extension. However, a longer-term extension of the EB-5 program, as well as the terms of any such extension, will have to await the new Congress, which convenes on January 3, 2017.
As to the direct impact of the Presidential election, here are some thoughts: At one level, everything remains the same - the Republicans controlled the Senate and House before the election, and they still do. What has changed is that President Obama is being replaced by President-elect Trump. Although the Obama Administration has not been particularly pro-EB-5, it has always been assumed that President Obama would sign any EB-5 legislation that passes both Houses of Congress. While we all know Trump's views on many aspects of US immigration policy, these views do not generally affect EB-5. What we do know is that the Trump's Bay Street Project, a luxury residential rental complex in New Jersey built by Trump's son-in-law and advisor, Jared Kushner, has benefited from EB-5 capital. Still, it is not clear what role the White House or Kushner will play relative to EB-5. Here are a few possibilities:
Here are a few possibilities:
- It is possible that Congress will let the EB-5 Immigrant Visa Program lapse, but this is unlikely.
- We could see a replay of 2016, where the EB-5 Program is extended through September 30, 2017 without any substantive changes - this could happen for two reasons: first - the new Administration will have its plate full with other priorities during the first quarter of 2017, such as confirmation hearings for a Supreme Court Justice and other federal appointments, little leaving little time for a substantive debate on EB-5;
- If Trump plans on making immigration reform a priority, he might prefer that substantive debate on any immigration issue wait until the President's team has a chance to formulate its overall immigration policy strategy.
- The most likely scenario is that in the first quarter of 2017, Congress will finally agree on comprehensive EB-5 legislation, which would include a long-term (probably 5 year) extension, and likely much-discussed changes to the EB-5 Program, including increased investment thresholds.
Notwithstanding these possibilities, the biggest impact of the Presidential election may be to lessen the chances of a legislative fix to the substantial EB-5 quota backlog for Chinese investors, or "retrogression". Before the election, the hope for addressing the retrogression problem was comprehensive immigration reform which could increase immigrant numbers beyond the current annual cap of 10,000; immigration reform was likely to be one of the early initiatives of a Clinton Administration, even though a Republican Congress may have slowed the process down and altered it significantly. However, it is unclear whether the Trump Administration will support an increase in immigrant numbers, and any executive action to alleviate the problem is certainly off the table.