At one time there were over 1,000 regional centers in the US. Now there are around 600 remaining. Some are giants in the industry with billions raised and invested over the years and some are small and lean with a few million raised and invested over the years. Some are centers that own and operate their own projects and some, like ours, lease their license for others to use.
Those of us who are left standing reminds me of a story, one that has always impacted me, about one vendor and one hot dog stand.
There was a man who lived by the side of the road and sold hot dogs. He was hard of hearing so he had no radio. He had trouble with his eyes so he read no newspapers. But he sold good hot dogs.
He put up signs on the highway telling people how good the hot dogs were. He stood by the side of the road and cried. “Buy a hot dog mister?” or “Buy a hot dog miss?” And people bought. He increased his meat and bun orders. He bought a bigger stove to take care of his trade.
He finally got his son home from college to help him out. But then something happened...
His son said, “Father, haven’t you been listening to the radio? Haven’t you been reading the newspapers? There’s a big recession. The European situation is terrible. The domestic situation is worse.”
Whereupon the father thought, “ Well, my son’s been to college, he reads the newspapers and he listens to the radio. He ought to know.” So the father cut down on his bun orders, took down his advertising signs and no longer bothered to stand out on the highway selling hot dogs. And his hot dog sales fell almost overnight. “You’re right, son,” the old man said to his boy. “We’re certainly in the middle of a great recession.”
Am I that hot dog vendor? Are you?
Who are the experts we allow to impact us? Social media? News shows? Associates? Attorneys? Legislators?
Because the Palm Beach Regional Center dared to persist, here we are — at the crossroads of legislation that will either kill or advance the regional centers. I am optimistic about the future. Here’s why:
EB-5 INTEGRITY AND REFORM BILL (LEAHY-GRASSLEY)
The EB-5 program now stands on its own and will need to be reauthorized by June 30, 2021. It no longer would be tucked into other bills as it has been historically. The new legislation will authorize the program for five years and will include the needed integrity sought for years by Congress. The reform package protects good-faith investors. It protects lawfully operating regional centers and new commercial enterprises, and it provides reasonable oversight while allowing the industry’s business operations to continue. I believe this legislation will pass because it provides transparency for the public who will come to understand that this is a private economic development engine that is NOT paid with taxpayer money. They will also come to understand that their communities will grow new businesses and there will be new employment opportunities for families who are American-qualified workers.
BIDEN ADMINISTRATION PROMISES IMMIGRATION REFORM FAVORABLE FOR EB-5 (EXCERPTED WITH PERMISSION FROM WWW.EB5AN.COM)
Although the EB-5 Immigrant Investor Program is not likely to garner any significant attention from the president (it isn’t specifically addressed in the bill fact sheet), its measures clearly favor economic immigration. This means participating investors in this residency-by-investment program stand to benefit greatly as well.
There are five pivotal items in the bill that could remarkably enhance EB5 investment prospects:
Removing visa caps based on investors’ country of origin
Exempting eligible family members from employment-based visa quotas
Recapturing unused visas instead of recycling them through other programs
Shortening elongated processing wait times
Clearing backlogs for employment-based visas
EB-5 investors should monitor the U.S. Citizenship Act of 2021 eagerly, as its enactment could bring radical changes that significantly improve the outlook of an EB5 investment. The EB-5 program offers the Biden administration an excellent opportunity to fulfill its stated goal of immigration-driven economic growth, considering that the program has contributed billions in EB-5 investment capital to the U.S. economy over its three-decade history. The proposed bill would allow the EB-5 program to more efficiently stimulate the U.S. economy, attracting more investors and their EB5 investment capital.
Palm Beach Regional Center (PBRC) has seen the supply of EB5 investments plummet due to a change in determining targeted employment areas (a criteria for the lower investment level) and a mandatory increase in investment amounts (and, of course, Covid-19). Supply creates demand. When supply goes down, new projects in which to invest goes down.
PBRC believes that there is pent-up demand. For us, we will focus on projects looking to raise between 10 million and 25 million dollars. These smaller investment amounts funding smaller projects will account for as much as 10% of the total EB5 market according to ILW. We believe these investors will be found in South Africa, India, Vietnam, Korea, and Russia. It’s possible that we will develop a fund able to grant “ready-money” to qualifying projects.
Palm Beach Regional Center is optimistic about the future.
ABOUT THE AUTHOR: Louis Haddad, a senior executive and labor-management relations professional with a wealth of international trade consulting experience. LEARN MORE ABOUT LOU