根据美国SEC律师，Arnstein & Lehr LLP律所合伙人 Ronald Fieldstone表示，美国国土安全部部长Jeh Johnson在4月下旬呼吁参议院立法委员会对这个方案进行改革，他在控告TEA失业率计算方法时使用了“gerrymandering – 杰利蝾螈”这个具有强烈指控弄虚作假的词语，他表示有些地区为了达到TEA的要求使用了过多的人口普查区域。
（EB5Sir注：gerrymandering – 杰利蝾螈：乃指选区划分之方式是专为某方选举利益而设计的，用在这里表示在计算TEA时选取的区域都是有利提高失业率的地区）
“他们将人口普查区大片拼接相邻的土地接在一起，但是他们的项目地点可能是在10英里外的一个失业率只超过9.3%的地方，” Jeffer Mangels Butler & Mitchell LLP公司的融资专家Jonathan Bloch指出。
来自Gibson Dunn的Daniella A. Katzir表示，如果这个方案通过，那么它会对那些在城市地区的项目产生重大影响，这些地区可能不能再被认定为TEA地区。
一项关于就业计算必须和每一个投资挂钩的提议，将会限制可以使用EB-5资金的项目类型。目前，项目可享受区域中心试点计划方式下创造的就业，只要证明是此项目间接或衍生创造的就业都可以被计算 – 如供应商，某些建筑承包商和其他1099-paid（支付类型）的厂商。但是根据参议院新的提案，10%以上要求被创造的就业机会都必须直接和开发商相关联。
目前还不清楚，这些不同的投资资金将如何计算和分配就业，并且按照怎样的比例 – 对于EB-5作为唯一夹层贷款的大型项目来说将会是个威胁。
“在美国众议院的提案中，有一些十分积极的提议，我们希望可以增加到参议院的提案中，” Greenberg Traurig LLP.律所的移民合伙人Laura Foote Reiff在近期的一次播客中说道。“这些提案中最重要的几点是让EB-5区域中心变成永久法案，增加额外的签证以及消除对中国配额的限制。”
Law360, New York (June 16, 2015, 4:19 PM ET) — A recently introduced U.S. Senate bill to extend the EB-5 regional center investment-for-visa program has developers that rely on the financing tool optimistic about its reauthorization as the clock ticks down to a September expiration. But the latest proposal also includes at least five reform provisions that could cause trouble for future projects, experts say.
While many in the industry were already braced for reforms that would tighten regulation of the fast-growing EB-5 industry, several proposals in a Senate bill introduced on June 4 — from how target employment areas are calculated to new oversight that could drive up project costs — have developers calling for changes to the legislation, attorneys say.
Here are five ways the proposed bill could hurt developers looking to use the program.
Some Projects May Be a Tougher Sell
To score a visa through the EB-5 program, investors currently have to offer up $1 million — unless the project is in a special zone known as a target employment area. If the project is in one of these zones, better known as a TEA, an investor only has to put in $500,000 because the argument is that the funds are needed in these areas, which have to have unemployment rates that are 150 percent or more of the national average.
But when U.S. Homeland Security Secretary Jeh Johnson urged a Senate committee in late April to reform the program, he used the particularly strong accusation of “gerrymandering” when complaining about how TEA unemployment rates are calculated in some areas by using too many census tracts, according to Ronald Fieldstone, a partner with Arnstein & Lehr LLP.
States are allowed to come up with how they calculate TEAs and it’s no secret that some large states have taken fairly liberal positions on how tracts can be pooled together to come up with a calculation, according to experts.
“They stitch together census bureau tracts that are adjacent, but they might go 10 miles to come up with an unemployment area that exceeds 9.3 percent,” noted Jonathan Bloch, a capital-raising expert at Jeffer Mangels Butler & Mitchell LLP.
Under the Senate bill — dubbed the American Job Creation and Investment Promotion Reform Act of 2015 — this loophole would be closed and there would be a more regimented federal standard, which is likely to kick certain projects out of the lower investment tier.
“If passed as is, it will have significant impact on projects in urban areas that may no longer qualify for a TEA designation,” said Danielle A. Katzir of Gibson Dunn.
Currently, the legislation calls for only a single census tract to be used to calculate TEA, though Bloch expects that was a drafting oversight and that more than one tract will be able to be used, though it will likely be a conservative calculation.
It’s almost certain that any legislation reauthorizing the EB-5 program will clamp down on how TEAs are calculated, but the uncertainty of where that formula will end up means that projects currently in the planning stage — but not yet in the pipeline — are uncertain how to raise money in the next fiscal year, Bloch noted.
“I’ve got projects where we’re in the process of doing the calculations right now. We’ve done economic studies and we know what the numbers were under the old program,” Bloch said. “We knew there would be a new program. The question is how do we just lock it down and raise money next year … and that is definitely to be determined.”
A proposal to change the job-creation requirements tied to each investment could also limit the types of projects that can use EB-5. Currently, projects can qualify for a regional center pilot program if they show indirect or induced jobs — such as suppliers, certain building contractors and other 1099-paid vendors — being created. Under the Senate bill, at least 10 percent of the requisite number of created jobs would have to be linked directly to the developer.
It is still unclear whether that means U.S. Citizenship and Immigration Services is going to require 10 percent of the project’s jobs to appear as W-2 employees of the EB-5 borrower and property owner, which could be difficult since most real estate companies aren’t in the business of having direct employees for the special purpose vehicle that owns a project, according to experts.
“Hotels are probably the asset class best equipped for this change, because with creative structuring you can attribute direct employees coming out of that kind of operating business to the new commercial enterprise,” Katzir said. “But if you’re just talking about residential or office building — in particular now because they have also excluded the ability to count jobs that are created by tenants — it’s going to be much harder to show.”
Job Counts Could Kill Senior Financing Options
Another proposal to change the job creation calculations could have ramifications for what kind of additional financing an EB-5 developer can secure. Under the Senate proposal, no more than 30 percent of the jobs can be attributable to non-EB-5 investment capital even if that capital represents more than 30 percent of the total project costs, according to Katzir.
It is unclear how jobs would be allocated to the varying classes of investment capital, and a proportional take — where the number of attributable jobs are divided proportionally to the various investments — could threaten the use of EB-5 as only mezzanine financing for larger projects.
“That would be challenging as we’re seeing more and more EB-5 being integrated into larger capital stacks where you may have a traditional senior construction loan in the first position,” Katzir noted. “What does that mean for meeting the job requirements if more than 30 percent of the jobs are attributable to the senior lender?”
Projects Could Become Costlier
A number of the oversight reforms proposed by the U.S. Department of Homeland Security could result in additional indirect costs for developers, according to experts. Among these are a new $20,000 annual fee that regional centers would have to pay to help establish a fund for new federal site visits and examinations — a fee that is likely to get passed on to the borrower in some way. There is also a concern that the current bill eliminates an often-used securities offering exemption — known as the Reg S exemption — that could result in more costs.
“If you start to pile on registration costs and reporting costs — plus potential cost to cover additional regulatory oversight, site visits and audits — it’s not to say it stops being a low-cost alternative, but those are real costs that will be presumably in some way directly passed on to developers,” Katzir said.
New Federal Oversight Could Add Risks
While many in the industry welcome some of the additional federal oversight that is being proposed in the bill, some note it could discourage certain developers from using the program.
“The proposed bill gives the Department of Homeland Security really broad oversight in some instances and in many cases it uses the language ‘sole and unreviewable discretion.’ I think it’s going to be very difficult for businesses to make major decisions when there are no standards and no review procedures to safeguard against arbitrary decision-making,” Katzir said.
Visa Counts Wouldn’t Change
While many of the reform proposals in the Senate bill were expected, what was unexpected is that the lawmakers did not address head-on highly public concerns that the program’s 10,000-visa cap needs to be adjusted in some way, according to Bloch.
Under the current program, an investor can score a visa not only for him or herself, but also for a spouse and any children under 21 years old. Due to this, the 10,000-visa pool gets eaten up fairly quickly. Industry players have been lobbying for a number of fixes to this issue, including raising the cap to around 20,000 or 30,000 or requiring that each investment only cover one visa.
“Raising the visa cap is one of several proposals in a U.S. House of Representatives bill to renew EB-5 that aren’t in the Senate bill.
“The current bill in the U.S. House of Representatives has some very positive reforms in it that we would like to have included in the Senate bill,” said Laura Foote Reiff, an immigration partner with Greenberg Traurig LLP, in a recent podcast on the topic. “These include, among other things. making the program permanent, adding additional immigrant visa numbers and eliminating the China country quota.”
–Additional reporting by Jacob Fischler. Editing by John Quinn and Kelly Duncan.