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| Dean of the U.S. House of Representatives John Conyers, Jr. |
Thank you Chairman Goodlatte. Last Congress, I had the honor of working with you, Chairman Grassley, and Senator Leahy in an effort to reform the EB-5 Investor Visa Program. While the proposed DHS regulations would go a long way toward addressing many of our longstanding and serious concerns with the program, there is no substitute to a meaningful legislative solution.
I remain confident that we can accomplish these important legislative reforms this Congress and I look forward to continuing to work with you.
I have taken a particular interest in the EB-5 Investor Visa program because I believe it has drifted far from the program initially envisioned by Congress. As a result the communities that need investment the most – specifically, rural and distressed urban areas – struggle to benefit from the program and are unfairly placed in direct competition with developed, affluent areas.
When Congress established the EB-5 investor visa program in 1990, the intention was to create jobs for American citizens and to bring new investment capital to the United States. To help encourage investment and job creation in rural or high unemployment areas, the EB-5 Program offered a reduced investment level of $500,000 for projects in designated Targeted Employment Areas (TEAs).
However, as reported by the GAO, academics, The Wall Street Journal, and many other news sources, the vast majority of EB-5 investment funds are going to projects in some of America’s wealthiest corridors. They qualify as TEAs, or economically distressed, only by aggregating census tracts across many miles, and often across natural boundaries such as rivers.
This practice has been criticized by the Leadership Conference on Civil Rights, noting that “the EB-5 Regional Center Program has dramatically deviated from its original purpose – to spur job creation and development in rural and high unemployment areas.” Steering investments to projects in our cities’ well-to-do neighborhoods comes at the expense of EB-5 funds for urban and rural communities.
According to the Center for American Progress, the Congressional District that I represent, for instance, is the second-most impoverished district in the United States. I am pleased to say that under the Obama Administration our economic environment began to improve. It is slow, and we have a long way to go. But for those Americans living in my city of Detroit, and in many other cities across the country, manipulation of Targeted Employment Areas has diverted a potential source of jobs and neighborhood improvement away from those it was intended to help.
The Department of Homeland Security’s proposed rules make a number of important reforms:
First, the rules would raise the higher investment level to adjust for inflation from 1 million to 1.8 million and would raise the lower investment amount from $500,000 to $1.35 million.
Second, the rules would reduce the difference between the statutory and Targeted Employment Area investment levels and would allow for conforming adjustments based on inflation beginning five years from the effective date.
Third, the rules would significantly reign in manipulation of targeted employment areas.
I am encouraged by this development from the Department of Homeland Security and consider the proposed rulemakings as movement in the right direction. However, I must reiterate, to achieve the necessary reforms to the EB-5 program there is no substitute to a meaningful legislative solution. And, absent significant reform – either regulatory or legislative – I will not be able to support continued authorization of the program.
In closing, I want to thank the witnesses for their willingness to appear before our Committee and I look forward to an open and honest debate about the proposed regulations and the future of the EB-5 Program.
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