Continued from page 47
“On a transaction combining EB-5
financing and LIHTC, the EB-5 financing
portion is generally removed from the
capital stack by funds generated from a
refinancing transaction five to seven years
after the closing of the EB-5 financing.”
On a transaction combining EB-5 financing and LIHTC, the
EB-5 financing portion is generally removed from the capital
stack by funds generated from a refinancing transaction five to
seven years after the closing of the EB-5 financing. At such time,
the project would be completed and in operation, therefore
reducing the lending risk for the refinancing institution, which
should provide a more attractive interest rate.
Other Tax Credits
In addition to LIHTC, projects incorporating other tax credit
programs into their capital stack, such as new markets tax credits (“NMTC”) or historic tax credits (“HTC”), can also benefit
from incorporating EB-5 financing as a portion of their source
of funds. As described above with respect to LIHTC projects,
EB-5 financing can also become source of gap financing for
projects taking advantage of these other tax programs.
48
Public Use of EB-5
States and municipalities have realized that EB-5 can be
an important source of funding for high priority projects,
including the development of affordable housing projects. Just
in the last year, Michigan, Miami, and Puerto Rico have moved
forward in establishing their own public regional centers,
showcasing a growing trend in publicly owned and operated
centers. A publicly owned regional center can be a great tool to
complement existing public and private financing sources for
private and public uses.
For example, the Commonwealth of Puerto Rico Regional
Center Corporation – the third state-owned and operated EB-5
regional center in the United States--was recently approved
by USCIS to serve the Commonwealth of Puerto Rico. The
regional center will focus on infrastructure and public-private
partnership projects and it plans is to provide EB-5 funding
to high priority projects, including affordable housing projects
being allocated LIHTCs. Given the diminishing availability
grants and subsidies for the development of affordable housing
projects at the federal and state levels, combining EB-5 funding with LIHTC equity would provide the much needed gap
financing required in the market.
EB5 INVESTORS MAGAZINE
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