Senator Mike Rounds isn’t alone in his wimpiness on reforming the EB-5 visa investment program that became just one more wreck in the junkyard of his gubernatorial legacy. Seth Tupper finds neither Senator John Thune nor Representative Kristi Noem can offer any bold vision or leadership on the program South Dakota so grossly corrupted:
Thune said, “The EB-5 program has provided beneficial investment in certain circumstances, but overall, it has a lot of problems and needs to be fixed. If it is renewed, it must be reformed.”
Noem said, “I will review any final reauthorization legislation once it is completed and make a determination at that time. As it currently stands, the program without reforms would not get my support” [Seth Tupper, “Lukewarm Support for EB-5 Among Congressional Delegation,” Rapid City Journal, 2015.11.08].
Thune hides in the passive voice; Noem talks about the reauthorization legislation as some product of distant, unknown forces. Neither speaks of specific reforms, and neither suggests that, given their home state’s troubled experience with the program, the South Dakota delegation might be uniquely qualified to participate in crafting those reforms.
It’s not like reforms are that hard to figure out. Here are six suggestions:
- Limit EB-5 investment in any single project to 40% of the total. That will require developers to offer projects that can secure traditional investment and thus signal to investors that the project is not a risky boondoggle rejected by the local market.
- Require all Regional Centers to operate under state or local government sponsorship subject to open record requirements.
- Cap EB-5 investor fees at 2% of the investment.
- Throw out the arcane multipliers that allow projects to include indirect economic effects in their job creation quota. When the USCIS says that every $500K invested must create ten jobs, those jobs need to be honest-to-goodness people whom we can count on the site of the EB-5 project and list by name and job title on reports to USCIS.
- Extend the period that those jobs must remain active from two years to five years.
- More rigorously define and enforce the requirement that EB-5 projects be developed in areas of true economic distress. Specifically, EB-5 sites must show unemployment higher than 5% (we can dicker about the number) for ten of the twelve months preceding solicitation of EB-5 investments.
If South Dakota had an effective Congressional delegation, South Dakota would be leading the charge for EB-5 reform. Instead we have Thune, Noem, and Rounds, sitting passively on the sidelines, letting someone else come up with the big ideas, and offering no leadership either in Washington or here in South Dakota’s political discourse.