+1-800-997-1228
Questions & Answers

What happens if a project is fully completed before I-526 approval?

I am interested in setting up a regional center and using EB-5 to fund a 17-unit subdivision (single family house) development. It may take 2-3 years to complete all the construction work and sell all the houses. Is that OK if the project is completed even before I-526 approval? To keep the funds at risk, do I need to reinvest them in another project? In that case, do I need to prepare all new economic analyses and legal documents for the new project?

Answers

  • Avatar

    Charles Foster

    Immigration Attorney
    Answered on

    Your questions raise a number of technical issues. The funds must be at risk throughout the time it takes to complete the EB-5 project, but more significantly during the time the foreign investor remains in conditional status. If in fact you complete your project even before the I-526 approval, at the very least there could be a serious question raised at the time each investor files his petition to remove conditional status on Form I-829. So yes, you may need to reinvest your funds in a similar project within the scope of your original business plan. Yes, you may need to file new documentation and even likely an amendment. Clearly, you should consult with experienced immigration counsel with significant experience in representing EB-5 projects and regional centers.

  • Avatar

    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    The money that is invested must 100 percent go to job creation, so if the building is completed, EB-5 can only be used if the following guidance from the May 30th Memo is met: Generally, the replacement of bridge financing with EB-5 investor capital should have been contemplated prior to acquiring the original non-EB-5 financing; however, there are exceptions. See below: Since it is the commercial enterprise that creates the jobs, the developer or the principal of the new commercial enterprise, either directly or through a separate job-creating entity, may utilize interim, temporary or bridge financing - in the form of either debt or equity - prior to receipt of EB-5 capital. If the project commences based on the interim or bridge financing prior to the receipt of the EB-5 capital and subsequently replaces it with EB-5 capital, the new commercial enterprise may still receive credit for the job creation under the regulations. Generally, the replacement of bridge financing with EB-5 investor capital should have been contemplated prior to acquiring the original non-EB-5 financing. However, even if the EB-5 financing was not contemplated prior to acquiring the temporary financing, as long as the financing to be replaced was contemplated as short-term temporary financing which would be subsequently replaced, the infusion of EB-5 financing could still result in the creation of, and credit for, new jobs. For example, the non EB-5 financing originally contemplated to replace the temporary financing may no longer be available to the commercial enterprise as a result of changes in availability of traditional financing. Developers should not be precluded from using EB-5 capital as an alternative source to replace temporary financing simply because it was not contemplated prior to obtaining the bridge or temporary financing.

  • Avatar

    Irina Rostova

    Immigration Attorney
    Answered on

    The projects may be completed before an I-526 approval, but you will need to keep the funds "at risk." If you chose to redeploy the funds into a new project, you will not have to show job creation in the new project.

Add your comment

Use a Facebook account to add a comment, subject to Facebook's Terms of Service and Privacy Policy. Your Facebook name, photo & other personal information you make public on Facebook will appear with your comment.