EB5 Investors Magazine (English Edition) Volume 5, Issue 1 - Page 59

account prior to simply recycling the funds into a new, un-studied, illiquid investment. After all, every investment is subject to a range of risks, necessary disclosures and possibly, even, investor consent. WHAT DO THE RULES SAY ? USCIS has yet to issue concrete guidance on this issue, short of a brief non-agency binding comment during a stakeholder call and a USCIS Draft Policy Memo in 2015 (Draft Policy Memo), which generally state that the EB-5 investments must remain at risk, cannot be returned to investors prior to I-829 adjudication and which further contemplates that as long as the NCE undertook the commercial activities initially contemplated in the original business plan and that the requisite jobs were created, the NCE may redeploy capital to a new venture without cause for a petition denial or revocation. Such guidance also notes that there is no further requirement for job creation following a possible redeployment of the EB-5 investment proceeds. Nonetheless, given that such guidance has not been formalized, the industry awaits a definitive policy that will address basic issues such as the limitations on types of investments and the permissible time period between return of funds to the NCE and redeployment of such funds. its investors’ changing priorities as well as to minimize the cost and effort required to satisfy the redeployment requirement while creating the best-possible outcome for all concerned. NCE priorities include: compliance with EB-5 policies, ensuring investor success at the I-829 stage, preservation of capital/minimized risk associated with a redeployment investment, minimizing redeployment costs and efforts associated with its oversight; paying returns to stakeholders, and generating new minimal-risk redeployment revenue opportunities that are liquid enough to match the investors’ I-829 time horizon. MAKING REDEPLOYMENT PAY Once stakeholder priorities are taken into account, it quickly becomes clear that the ideal return may be beyond the reach of the safest investment opportunities available in today’s market. The “at risk” requirement creates a hazy picture. The Draft Policy Memo, when paraphrased, indicates that for capital to be deemed “at risk,” there must be a possibility of loss or opportunity for gain. As such, municipal bonds that are backed by the full faith and credit of, say, the U.S. government, may not be interpreted to fit in line with USCIS’s interpretation of the “at risk” requirement. So, what are the options? WHAT INVESTORS SHOULD PRIORITIZE In order to assess redeployment options, it is important to first understand what EB-5 investors might consider to be their priorities. 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. Once these requirements are met, however, it should be anticipated that investor priorities will shift if redeployment becomes necessary. At that point, the initial hurdle for I-526 approval has, hopefully, been overcome. Therefore, the investor’s risk tolerance/priorities are likely to be modified to align with the following formula: Preservation of immigration status by keeping investment funds at risk, preservation of capital contributions, maintenance of consistent returns on investment; and possibly, creation of an upside opportunity which is better than the originally anticipated returns. IMPORTANT ISSUES FOR THE NCE In a redeployment scenario, the NCE will be in a position where it must also reframe its priorities, both to reflect EB5INVESTORS.COM 58