EB-5 Redeployment: “An opportunity for NCEs and JCEs to stand out from the pack”
EB-5 business plan writer Phil Cohen is the founder of Strategic Element.
“We have always focused on quality and credibility when it comes to helping others who want to raise funds within the program,” he said. “In the long run, we think that not only does that approach serve to facilitate easier approvals, but it also serves investors well. A happy, functioning ecosystem is the best way to ensure the long-term success of the program.”
Cohen has high hopes for the renewal of the EB-5 program.
“We want to actively participate in efforts to renew the program and help to get the word out about redeployment, so that industry participants can better understand how to manage it effectively and to the benefit of all stakeholders,” he said.
How and why did you get involved in the EB-5 industry?
Strategic Element has been involved in the EB-5 industry since 2010. At the time, we recognized that the program was becoming increasingly popular and as it turned out, that time was the beginning of a boom period for the program. From an altruistic perspective, EB-5 was remarkable because of its ability to increase foreign direct investment in a way that was targeted towards job-creating activity. We found that there was room to raise the standard for business plans and how they were presented.
What are some current trends you are seeing in the EB-5 market?
Certainly, the last administration, long wait times and the COVID-19 pandemic all came together as a sort of perfect storm to affect the industry in a negative way, but as of spring 2021 there seems to be renewed activity as headwinds start to abate. There is still some trepidation as the regional center program’s renewal is coming under question, but we believe that the program will be renewed, and for a longer period, which will increase stability.
How do you think the pandemic has impacted the EB-5 industry?
Negatively overall, but in part because it came at a time when other negative influences were already having an impact on the program, so its individual impact is hard to assess.
What achievement in the EB-5 industry has been most rewarding? Why?
There is no one achievement that stands out, but our overall participation in the industry has been a part of deals that have raised (or are raising) over $3 billion in EB-5 capital. We can’t take credit for all that the regional centers and entrepreneurial project companies have achieved, but in terms of being an important part of large and small projects, our overall impact as a member of different EB-5 teams is something we are very proud of. As a company, that stands out as our single-most important achievement since we were founded.
What are your thoughts about the redeployment situation and the best strategy to deal with it?
We have spent a lot of time studying redeployment and there is much to say. In short however, we believe that the requirement doesn’t have to be a burden. By considering third-party alternatives, there is an opportunity for NCEs and JCEs to make money for relatively little effort, while at the same time delivering better returns to investors. Not only is it an immediate financial opportunity, but in the medium term there is an opportunity for NCEs and JCEs to stand out from the pack, by showing future investors how redeployment decisions taken now, delivered maximum benefit to current investors: in other words I believe that investors will put a high value on regional centers and NCEs who can show that they looked after its investors’ best interests when they were faced with difficult choices.
What do you think needs to be reformed with the EB-5 program at the time it is up for renewal in June?
I think it is very likely that the program will be renewed, the bigger question is what will change? Certainly, the redeployment issue needs to be clarified, and overall the Reform and Integrity Act is a good start.
What would you change or do if you were president for a day?
If I were president for a day with unilateral authority to make changes to EB-5, I would make the program permanent with checks and balances to allow for annual adjustments that were in line with economic needs of the day. For example, creating jobs is a priority now, but the program should be able to pivot to other priorities when unemployment becomes less of an issue at a later stage in the economic cycle. I would also impose tougher penalties on EB-5 cheaters.
What is your favorite quote and why?
Not quite a quote but I loved the articles that came out during the pandemic that touted the EB-5 program as an example of the kind of clever thinking that could help to save the economy. They really captured the idea that a program like this one can be used to encourage investment and to direct that investment to have impacts where they are needed most, often with relatively little investment on the part of the government. This kind of win-win thinking is at the heart of what the EB-5 program and maybe others like it, can do for America.
What about you would surprise others?
When I can, I like to go camping in the pristine national parks in northern Canada. Once settled in a remote spot, when the sun is going down and the wind has died, it is sometimes so quiet that you wonder if your ears are working. It is a great way to re-center one’s self: there is no amount of money or achievement that can replace that experience.
Why did you decide to join our verified EB-5 community and what has it done for your business?
Being a verified professional in this community is a sort of seal of approval from one of the foremost authorities in the EB-5 space. Prospective clients see this and they know that we are recognized as a trustworthy supplier, and that matters in EB-5.