www.youtube.com/.../watch?v=7kU9IGwANNY

PLEASE WATCH THE DISCLAIMER AT THE END OF THE VIDEO. [subtitles]

THE DVRC
THE DELAWARE VALLEY REGIONAL CENTER. [company logo]
SBL Strategies
Sullivan, Bradley, Loveng LLC [company logo]

INTRODUCTION & HOW DID THE EB-5 REAUTHORIZATION HAPPEN? [subtitles]

Hello, DVRC investors.

Welcome back.

Today we're going to be talking with the partners from SBL The partners from SBL Jeff Loving and Josh Novotney.

You know them.

You've seen previous videos where they were in and we discussed politics.

First off, we just want to say the bill for the reauthorization of EB-5 has passed.

It has been signed into law.

And in no small part, it's because of the efforts of these gentlemen that were talking to today.

So let's kick it off.

Hi Josh.

Hi, Jeff.

How are you both?

JOSH NOVOTNEY Doing great.

Thank you.

FRANK MANHEIM Congratulations on getting it through the Senate.

JOSH NOVOTNEY Happy to be back here talking to the investors

It's special episode.

FRANK MANHEIM It is.

JOSH NOVOTNEY Yeah.

FRANK MANHEIM Jeff, thank you to you for helping us get through the house.

How are you doing?

JEFF LOVING Feeling great.

Thank you.

Good to be here.

FRANK MANHEIM It is great to see you guys.

It would be great to hear, I think, from our investors, some of the twists and turns that happen at the last moment in the run-up to this reauthorization.

I'll remind you when we spoke to our investors last with you guys, it was in February and it was unclear what would happen.

I think the only thing you both could definitively say was that the crisis was reaching a fever pitch in EB-5.

Since crisis and consensus was Jeff's really elegant concept for understanding how Washington works, why don't we talk, start with Jeff?

Tell us how did it go from February to where we are today with the law passed?

JEFF LOVING Well, in addition to, you know, us getting to the crisis and, crisis or consensus, cresc, crescendo the, there was also attrition.

And it was attrition of some of the folks that were involved in the debate that wanted some things that were unreasonable and were willing to sacrifice the program, at least fake like they were going to sacrifice the program in order to get those things.

And one by my one, those that were in favor of getting this done, and getting a, a positive reauthorization program through both the house and the Senate stuck to their initial desires were willing to compromise, but within what was doable and eventually wore down the, the opposition.

And that combined with adding it to a piece of legislation that definitely had to pass and be signed into law was the last and final step.

FRANK MANHEIM Josh

JOSH NOVOTNEY Yeah, well taking a step back when we last spoke to everyone a couple of months ago in January, February, I guess we can talk now that we, we had a good feeling due to conversations that we had had in the, in Congress, that there was gonna be a legitimate attempt to reauthorize.

So we were not really allowed to talk about it as much then publicly, so we can talk about it a little bit more now.

But, you know, to Jeff's point that the folks that really weren't negotiating in good faith, so to speak, they were finally able to be cut out of the negotiations, which I think was really what moved it forward, which was a win for 99.9% of investors, regional centers and everyone involved in the program.

So it's, we can get into what's in the bill on a second but really really negotiation wise, I really have to hand it to some of the staff involved that really stayed on it.

And even though there was some, you know, some frustrating moments last year and the year before.

They stuck with it and they gave it another attempt and they were able to negotiate for 99.9% of, of the program.

FRANK MANHEIM Jeff, when we saw it passed the house, I know that we had talked previously that the pen was really being held in the Senate.

What were the dynamics in the house?

Was there, was it Ukraine?

Was it the must-pass Omnibus?

What was, what was going on in the house?

JEFF LOVING Yeah, I think it's a little bit of both of those.

The, you know, as we talked about a little bit before the house and the Senate are two very different animals.

The Senate, you know, does need for most things, 60 votes.

So getting to a consensus that's at least somewhat bipartisan is very important to get things through the Senate and the house.

It's majority rule and even though the majority is just one.

So it's really up to the speaker.

And in this case the EB-5 program was not something that the speaker was that engaged in.

There were the detractors that were engaged frankly did not have the ability to do any harm because they were not voting for the larger package, which was the omnibus in the first place, which definitely neutered their ability to be, to, to shoot at the EB-5 portion.

But yes, as far as the, the broader omnibus, which was the massive train pulling the legislation across the finish line, getting that done had a lot to do with a bipartisan desire by Congress to get something done as it relates to aid to Ukraine.

And also a capitulation to a certain extent by the progressives to allow for additional defense spending, which was one of the hangups.

And so combination of those things is what enabled that train to go to the station that was pulling the EB-5 along with it.

FRANK MANHEIM Right, so back to your point about crisis and consensus.

EB-5 reached a crisis in and of itself yet and at the same time there was consensus about the vehicle.

So because EB-5 was able to overcome the crisis, push it over the pump for lack, you know, mixing metaphors here.

Pushed it through to where you had four corners to remind everyone that's the leaders of both Republicans and the Democrats in the relevant committees or in the relevant body.

So that's the house or the Senate.

Those four corners on EB-5 crisis pushed it so one, the, the kind of stumbling block was removed and then consensus drove it through to legislation on the broader package.

Is that a correct summation?

JEFF LOVING Yeah, and I would just add one.

This is a little bit technical, but folks might be interested in a little bit of the inside baseball in house as they have a procedure in the house that's a procedure called dividing the question.

And so when the house brought this massive Omnibus appropriations bill to the floor, which includes all 13 appropriation bills and fund the entire, entirety of the United States government, it also included a lot of re, reauthorizations.

What they did is they divided in two packages.

One consisted of defense, homeland security and Ukraine aid.

And then the other was a lot of the social spending programs that the progressives like.

And what that enabled them to do is the one with the defense funding and things like that a lot of Republicans supported that to make up for a lot of the progressives that did not want to support that.

And then on the other package, all of the progressives just supported that but very few Republicans did.

And they have what's called a self-executing rule.

So when both of those packages then pass the house, the bill was reemerged into one bill that would then went to the president's desk for signature.

FRANK MANHEIM Josh, what's, what's the bckground on, what's the story in the Senate?

JOSH NOVOTNEY So the Senate, as Jeff pointed out was more where the pin in the negotiations happened from the origin, right?

They agreed on the, the tax.

That's where the issue was last year and the year before, where they split perianal members, they split the program out of the normal appropriation calendar and, and, and CRs that were happening the, the temporary appropriation bills.

And then when it, you know, and to Jeff's point again, to the, the crisis, right?

The crisis happened because the program was not authorized at the end of June last year, and there was no program authorization.

But that was, you know, and we, we talked about a little bit and in previous interviews that was needed to create the crisis to get this done.

That created enough for lack of a better term pain amongst some stakeholders in the EB-5 community in industry that they were able to come together and agree on things that they may not have agreed upon 100% before, but it was to get the program reauthorized.

So that's really the, the dynamic that led to senators Grassley and Leahy which were pushing reforms, integrity, measures, and other reforms in a, in a reauthorization for, for jeez, seven-plus years now.

We're able to really get their bill across and it not blocked by some of the folks that wanted more status quo.

FRANK MANHEIM So let's turn to the bill now.

It would seem that there was an interesting something, which you had mentioned you weren't expecting, but at the, almost the final hour, the bill that was revealed from Grassley was one that included both the regulations that have been thrown out of, by the Beringer suit, as well as the integrity measures.

And, and in those regulations, we now saw the re-emergence and now the finalization and, and promulgation of a law that includes set-asides.

Talk about how the, the very final package came together from the nego, you know, this was Grassley Schumer, you know, Grassley and Leahy versus Schumer in the Senate side.

The house, as you said, Pelosi, wasn't that interested, but certainly Nadler representing the New York real estate interests.

And on, on the reform side you had in the house, I guess who, who, who in the house is really supporting Grassley and some of the, some of the Republicans?

Well, Jim Jordan, the, the chair, sorry, the ranking member and I'll let Jeff get into this more cause it's his wheelhouse, but he is more on the side of even, not even necessarily for reforms.

He's not a big fan of the program at all.

FRANK MANHEIM Right.

So why don't we start with you Josh, on the Senate.

How did that final negotiation, that final bill take, you know?

And I know we don't know cause we weren't in the rooms of the negotiations for the, for the leaders but we have a good sense.

JOSH NOVOTNEY Sure.

Well, I mean, it's easy to talk about now, as I said, some stuff we could not talk about because we did not want to undermine the sensitivity of the negotiations.

But we found out in early January that the reauthorization push with both the integrity measures would also have the, the regs as, as we put it, the regulations that were shot down in court last year.

They did not, so USCIS said that they would repromulgate the regulations once the program was reauthorized.

That's a lot of big words.

So in other words, they'd, they would eissue the regulations as they were.

Senators Grassley and Leahy did not want to wait for that.

They did not want the program to be reauthorized within a, you know, a one or two-year period and maybe even more of the regulations not being in place, which meant the investment levels we're not higher.

They're at the original 1990 levels, things like that.

So they decided to put it into the bill.

We got word of that in early January.

And, nd really we're working with them at that point.

And then when negotiations kind of pivoted to where Grassley and Leahy, the senators really wanted the, the reauthorization to look more like previous negotiations from about four years ago that we were involved with that had a lot of pro-public infrastructure language in it and a lot of pro rural and other language in it to really focus the program on the areas that it was being done right.

Like with DVRC, with public infrastructure, this is where senators Grassley and Leahy and even leader McConnell thought that this is the, the areas that should be emphasized.

So we were then in from going o, you know, going from defense to going to just getting it reauthorized to then crafting language that would make the program and it's a reauthorization more pro-public infrastructure, as well as, you know, the regulations and integrity measures so.

FRANK MANHEIM Jeff, do you have anything to add to that?

JEFF LOVING A lot of those discussions that we, you know, we were not in the room for, we were as good as in the room because we were at regular communication by phone, text, email with the key staff that we're negotiating, negotiating this right up until the 11th hour.

They were checking with us to make sure language worked, changes worked.

The infrastructure provisions were ones that would work for us and things like that.

And so I think Josh deserved a lot of credit for that.

And on the house side, ranking member Jordan what, made it very clear early on that he was not a big fan of the program, but if he was going to not stand in the way of it being reauthorized.

It needed a robust section dealing with, dealing with integrity.

And so, he kind of put that out there.

And as long as what came over from the Senate had that, he didn't even make any noise.

And along with Schumer's, you know, negotiating this with Republican leaders and Senator Grassley, Nadler really didn't have much of an option at that point in time.