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