EB5 Investors Magazine (English Edition) Volume 5, Issue 1 - Page 58

Redeploying EB-5 Investments: Finding the Opportunity to Create a Win-Win Situation Pros and cons for EB-5 investors when it comes to shifting funds around to new opportunities. By Phil Cohen and Rohit Kapuria T o paraphrase Heraclitus of Ephesus, the one constant within the EB-5 world is the perpetual evolution of the program’s policies and interpretations of its regulations, particularly over the last few years. One such evolution stems from the explosion of the EB-5 Program’s popularity in China, which accounts for at least 85 percent of all EB-5 investors. investment proceeds. The challenge with this situation is partly caused by the absence of definitive guidance and final policy pronouncements from USCIS and par tially from the obstacles associated with finding and managing new “at risk” redeployment opportunities. "Investors understand that the investments they make in EB-5 projects have a degree of risk that is inherent in the creation of a new business." With the ever increasing United States Citizenship and Immigration Services (USCIS) adjudicatory times and retrogression concerns sliding into daily break room laments, one issue that has been a source of grievance relates to the EB-5 program’s requirement that an investor’s funds remain “at risk” until his or her I-829 petition is fully adjudicated. When a new commercial enterprise (NCE) loans money to a job creating enterprise (JCE) or related affiliate, the JCE, typically, successfully completes the project and is in a position to repay the loan to NCE within 4 to 5 years of an investor’s I-526 petition filing. Given the current retrogression climate, when dealing with investors from mainland China, the question arises as to how the NCE should go about keeping the funds “at risk” when the current, lengthy, adjudication/retrogression process prevents an investor, from mainland China, from becoming eligible for an I-829 petition for at least another 4 to 5 years. Enter the opportunity to redeploy such repaid EB-5 57 EB5 INVESTORS M AGAZINE Indeed, in discussions about redeployment with regional center operators and NCE managers, it can be found that many had not given this issue much thought. It might be argued that with appropriate guidance and planning, redeployment could turn into an opportunity. REDEPLOYMENT TO ANOTHER ‘IN-HOUSE’ PROJECT Some NCEs view the need for redeployment as an opportunity to recycle early-repaid funds with a borrower’s subsequent development project. However, such approach may face resistance from investors given the likelihood of a new, illiquid venture that has its own un-reviewed risks. In the absence of language contemplating such a ‘recycling' possibility, investor and broker consent may be required. There are also a large number of corporate, securities and reputational considerations to take into