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Unknown (00:00):
On this episode of
investing in the American Dream
podcast, we have II USAPresident and First pathway
partners CEO Bob Kraftdiscussing the recent decoupling
of the EB-5 regional centerprogram from the omnibus with
Emily Collins of first pathwaypartners. Let's get into it.
(00:25):
Thank you for joining us today,Bob, we're excited to get your
insight on the recent decouplingof the Eb-5 regional center
program from Omnibus. And Bob,we understand your long standing
involvement in the EB5 industryhas made you a very trusted
source for insight. So for ourlisteners who are not as
familiar with the history ofreauthorization, what does the
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process look like in the past?
And how is this reauthorizationdifferent? Yeah, thank you very
much, Emily. It's a pleasure tobe here.
Yeah, it's complicated. I mean,the, you know, the program, I
think those have been involvedwith it.
for any period of time, though,it was established as law in
1990. And then adjusted in 92.
To It was called the regionalcenter pilot program, which is
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basically what we're talkingabout today. The regional center
program allows for a lowerminimum amount, if it's in a
qualifying TEA. Over the years,the program had been
reauthorized many, many times,sometimes as long as five years,
sometimes as long as two months.
(01:34):
And the vehicle that it wouldwrite on typically was an
omnibus spending package, whichis the authorization for the
federal governmentto spend, spend money, so
Congress would meeton a regular basis, and then
sometimes they would authorizethe full fiscal year, which ends
in September 30. Sometimes,because there were
(01:57):
disagreements, they would have aextension for a couple months,
and then reconvene and thenanother couple months, and then
ultimately, they'd end up tillthe end of the fiscal year, and
then start all over again, theEB5 program
would many times be attached,like many other bills were to
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the omnibus spending bill.
Because once they agree onspending levels,
you know, it's easy to have thatattached, and people want to see
that get done. So we would kindof ride along. In this past
session.
We were decoupled. That's theword that's been used in
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Congress, because we have notbeen able to successfully
implement integrity reformchanges, which were driven by a
couple of very powerfulsenators, and felt necessary to
protect the investors to protectthe regional centers, and to
make the program better. Andthey decided this was Senator
(03:01):
Grassley, Senator Leahy havebeen the big proponents of
reforming the program, whichthey did partly through the
regulatory changes that wereimplemented last November, which
increased the minimum amountfrom 500 to 900,000. And also
changed how TEAs were viewed.
Those were major changes thatboth those offices felt strongly
(03:22):
about, they were unsuccessful ingetting them in a new reform
bill attached to an omnibus. Sowithout getting into too much of
the ins and outs of WashingtonDC. They decided along with some
of the other leaders in theSenate and in the house, that
maybe the best thing to do wouldbe to remove the EB5 program
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from the omnibus and create abasically a standalone bill
which all members of Congresswould have to argue and voice or
objections and or support of theprogram in session and be on the
record publicly. In the past,when the bill was attached to
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the omnibus, it only took onesenator or one representative to
block itin you really didn't know
whether they're going to blackat the last minute or not object
to it.
So you know, it made it easy tostop any substantial reform to
(04:25):
the program. So Bob, would yousay this decoupling is an
opportunity for widespreadsupport. So we're actually very,
very optimistic and excitedabout the opportunity to get
this thing finally passed. We'vebeen going through this short
term extension game for probably10 years. So finally, we're in a
(04:49):
place where we have anopportunity to kind of put that
all to bed, improve the program,have a long term runway that
everybody understands, and justbe great for the industry. It'd
be good for the investors.
Thank you very much, Bob. So youYou touched a little bit on the
Grassley, Leahy bill, regardingthat bill who is in support of
that and who is not. And inaddition, why is this bill EB5
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best path forward? And what canstakeholders or the public do to
help? Well, Senator Grassley,excuse me and Senator Leahy have
beenknown very front and center on
EB-5, and have been the leadersin initiating changes that would
protect the investors and theindustry. And it's really good
(05:34):
for the regional center as longterm as well.
They have actually written abill.
IIUSA has reviewed that bill, wethought it was going to be
attached to the omnibus, but itwas separated. Because there are
a couple other changes thatneeded to be made. And there
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were some some groups that feltmaybe it was not in the best
interest of the industry. Butthat was a handful of people
versus a majority of the housein the Senate. So, you know,
that's kind of been the battle,the program over its history has
actually lapsed a couple times,but then be been reauthorized A
(06:17):
few months later. And we hopethat won't be the case now. But
in terms of subject matterexperts, that that rests clearly
with Senator Leahy and SenatorGrassley, the bill has been
written, there's no one elsethat is writing the bill.
Although in the past, there havebeen a number of efforts to
(06:37):
write bills. But they are allover this, and have assured us
and that's the IIUSA executiveofficers in our lobbying group
that a bill will be introducedhere shortly. They were awaiting
the course until the electionwas over. cabinet members were
appointed. And the executiveorders that we expected to be
(07:00):
issued would be issued, which isall very good for EB-5 long
term. So we feel actually prettygood about where we are right
now.
Awesome thank you for breakingthat down for us. Switching
gears a little bit, in light ofthe beginning of the Biden
administration. What would yousay their thoughts are on
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reform? And would you expect anyJudiciary Committee hearings?
With respect to judiciarycommittee meetings, I would
expect that's possible, but it'snot necessary.
The support for the program, youknow, across the both houses is
very, very, extremely strong.
And obtaining the majority voteto support the program, assuming
(07:46):
that everybody is in agreementthat integrity reforms are
required with chopping upagainst integrity reforms. So
we're, we're pretty confidentthe bill provides for a five
year reauthorization. It's it'llgive us some stability in terms
of the choppiness of the programin the past where we've been,
(08:08):
you know, living with, in somecases, one month extensions.
That's not good for the market.
And it'd be nice to clean theprogram up once and for all have
it on the table.
I am pretty confident that thisis going to get done. We've got
a date of June 30, when theprogram would lapse if not
(08:33):
reauthorized. Although I reallydon't anticipate that happening.
I think we'll get theretransitioning into the newly
appointed Secretary of HomelandSecurity joining the by that
administration, AlejandroMayorkas, could you discuss his
EB-5 program support and how hipast position as director of US
IS positively impacts with indstry?
(08:58):
Yeah, it's a it's a reallyimportant question and it's one
with a very positive answer toit. Mr. Marcus was director of
USCIS is during a period when cae processing was efficient as it
s ever been under ay administration. Over the la
t four years, we've seen a drp off in terms of case processin
(09:24):
, some some very troublingn consistencies with respect
o adjudication of files. Durig Mr. Marcus's term as USCI
is Director, he took a very acive involvement in EB-5 he wa
strongly supportive of thprogram. He liked it very much
He was accessible. And so wwere all in the EB5 in
(09:46):
ustry. Very excited when he wanominated to be a director of
Homeland Security and a cainet member. And we were ho
eful that he would be co firmedHe was with a strong majority,
that's going to be very good forthe program. He understands it
intimately. He knows howimportant it is. There are two
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other things that have happenedthat are really encouraging for
EB5, which I'd like to just sped a quick minute on.
Excuse me, the President signedan executive order that
everybody's trying to understandright now is recently released,
that addresses immigration. Andwithin that there's reference to
(10:29):
employment based immigration,and the need to provide more
visas to we're not sure exactlywhether they'll reach back into
unused visasor not in the importance of the
employment based category tohelp get the economy moving. The
third thing that's veryencouraging is there's been
(10:50):
recent, just within the last fewdays, communication, press
releases from the White House,stating the importance of
driving the unemployment rateback down to where it was, at
the end of 2019, before thispandemic hit, because they
(11:10):
understand that's, that's very,very critically important in the
employment based investmentcategories are going to play a
big part in that. So we'repretty optimistic, there was
also a reference to derivativetreatment differently. And
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that's something that IIUSA hs been lobbying hard for, to r
move the derivative piece as a cunt against the total visas a
ailable. Along with that there hs also been discussion in the a
ministration, that they may icrease the number of visas a
(11:52):
ailable. So there are a lot of tings to be
seen that may or may notdevelop, but the dialogue, and
the messages we're getting arevery positive, and that would be
huge for EB5. So we're prety confident that our pro
ram, which is an economic drier, in similar to the 200
(12:15):
2009, financial collapse, whih EB5 helped get the country
back going again, EB5 will ba big driver in recovery fr
m this pandemic.
Thank you, Bob. And morespecifically, looking into the
future. How do you see thisindustry proceeding? And how do
(12:35):
you credit the consistentimprovement we've seen from
quarter to quarter four, afterthe regulations were introduced
in both actually, before the900,000, minimum, a number went
into effect in November of lastyear, there was what you would
expect a rush of people to getin at the $500,000 levels. So EB
(13:00):
5 is one of those programs tht people rightfully take a lo
g time to consider. Make sure thy're with the right regional ce
ter, make sure they unerstand the full impact of a de
ision to move to the United Sttes. You know, it takes a nu
ber of years, our experience habeen people, people look at it
for as long as five years beore they finally make a de
(13:20):
ision. So those people that habeen evaluating EB-5, and we're
on the fence, if you will,understandably rushed to
participate in the program atthe lower level. And that
cleaned out, you know, bignumber of people that have been
considering EB5 as a viable opton to come to the United Sta
es. So there was regardless ofhether a pandemic had hit or not
(13:43):
yet two things you had peole that had been looking at the
program a long time, finlly, you know, kind of dec
ded to move forward quickly toeat that increased date. And so
hat thattook away from the pool of
potential people considering theprogram, which you have to
reload as an industry. And thenyou've got the $900,000. That's
(14:06):
an increase that is significant,but it's also much lower than a
lot of other country programs.
But if you want to call it asticker shock, or just an
adjustment, mentally to nowyou've got to pay almost doubled
to what you could have paidbefore. It takes people a while
(14:27):
to think about that and getcomfortable with it. Then we had
the pandemic hit. So you hadthose two things that really
affected negatively the programparticipation last year. And
basically, there was no activityfor the first three quarters of
the year. But we began to see,in the end of the year, an
uptick now It wasn't a realstrong uptick, but it's coming
(14:50):
back. And I think that that willcontinue and then once we get
back to normal, hopefully soonerrather than later and people can
travelYou will see an increase in the
program and I believe the marketwill adjust to the 900,000 over
the next year, so in will stillstill see real strong interest
in the program, United States isstill a very desirable location.
(15:14):
In spite of all the challengeswe've had, I think, globally,
we've still done as well, if notbetter than anybody inhaling the
pandemic, and our healthcaresystems have done a really good
job of figuring out how tohandle cases. And you can see
that in the hospitalizationrate. And then now with the
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vaccines that are available,they seem to be kind of getting
their act together in terms ofaccelerating the number of
Americans that are vaccinated,that'll help. So there are a lot
of good things that arehappening, and that'll impact in
a positive way, EB-5, but were definitely, you know, go
ng through a rough patch hee, not just with EB-5, but just
he economy in general. But we'llbe back. Well, it's wonde
(15:59):
ful to hear that positive insigt. To conclude here. I'd like
o thank you, Bob, for beinghere with us today, and for s
aring your knowledge. And wouldyou like to add anything else
n this topic? Yeah, I guessIIUSA has been the leader in th
consistent leader in termsof support in both the House
(16:21):
and the Senate. And we havevery, very close relat
onship with Senator Grassey and Senator Lee's offic
s, and they've been absoltely terrific. With us, there
s a high level of trust. So wefeel the changes that are going
to be made, will be enhaned with some of the execu
ive orders that have recenly come through and the persp
(16:42):
ctive and objectives of the gvernment.
So we feel real good about it. IUSA has also just recently hired
a public relations firm out ofNew York City to publish good
strong articles in major metroareas around the country to help
support the program in terms ofits economic development to our
(17:04):
communities across the UnitedStates. So I'm very proud to be
involved with the organization.
We have a very hard workinggroup that represents the
industry and we haven't stoppedworking through this whole
pandemic. And the first pathwaypartners front. We just recently
launched another project we feelvery good about. We've continued
(17:24):
to work and we continue topromote EB5 and first pat
way partners and we've had gret success since we started in
008. We're very proud of our trak record. So we're looking for
ard to a return to normal, whaever that is here sooner rat
er than later, and will coninue to do the right thing for
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our investors and for our comunities that we operate wit in.
Well about thank you once againfor breaking everything down for
us. Your advice and projectionshave been very helpful. And
thank you all for listening.
Thank you.
(18:09):
If you would like to know moreabout first pathway partners,
and how they can help you with adirect EB5 investment or if you
re looking for other visa opprtunities such as an E2 visa,
lease contact them directy online at WWW.firstpathway.com