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By Erika Morphy

WASHINGTON, DC—Last week Senate Judiciary Committee Chairman Chuck Grassley and ranking member Senator Patrick Leahy introduced bipartisan legislation to reauthorize and reform the EB-5 Regional Center program.

This did not come as a surprise to the commercial real estate industry, which has been watching the approaching Sept. 30, 2015 deadline with a mixture of dread and anticipation.

Simply put, the program has become an increasingly popular funding source for projects, David Cohen, a shareholder at Brownstein Hyatt Farber Schreck in Washington DC, tells GlobeSt.com.

“As the popularity of the EB-5 program has grown in the last few years, so too has the scope of the deals its being used to fund,” he says. “There is far more money at stake than there was even a few years ago.”

The changes proposed in the bill — officially called the American Job Creation and Investment Promotion Reform Act — touched upon some of the more controversial parts of the program. It proposes strengthening oversight by Department of Homeland Security and Securities and Exchange Commission oversight and putting in place measures that would discourage fraud. Overall, national security would have a greater focus this time around.

“While the exception rather than the rule, the program is not without controversy and the few high-profile incidences of fraud have attracted attention,” says Andrew Lance, a New York-based partner at Gibson, Dunn & Crutcher’s Real Estate practice.

“In the current political climate, and with conservative Chuck Grassley – who has vocally expressed several concerns with the EB-5 program, including national security – replacing fervent supporter Patrick Leahy as head of the Senate Judiciary Committee, Congress is expected to revisit several hot button topics as part of any program reauthorization.”

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