I am a mainland China-born EB-5 investor with an approved I-526 and a priority date that is not current. The initial EB-5 real estate development project I invested in has completed its construction and is available in the market for sale. I estimate that I will have to deal with the redeployment situation next year. However, I do not want to go through the entire due diligence process again to select another project. Are there any alternative ways that investors can redeploy their capital yet keep compliant with USCIS rules?
More likely than not, you signed securities offering documents with the project when you invested your EB-5 funds. These documents would have stated an exit strategy when you could possibly see a return of capital and the timeline, and your agreement regarding redeployment.
Redeployment is highly complex and depends on the facts in each case. The June 14, 2017 revisions to the USCIS Policy Manual provide some guidance but are still unclear. If the project is complete and the loan has reached maturity, then that is relatively straightforward as opposed to situations where there is incomplete job creation or prepayment. The Policy Manual describes redeployment in terms of maintaining the "at-risk requirement" although this may not be the correct standard. The Policy Manual says that EB-5 capital has to be kept at use "in a manner related to the engagement of commerce ... consistent with the scope of the new commercial enterprise''s ongoing business." The Policy Manual only gives two examples. One example involves where the NCE originally loaned EB-5 funds for residential building construction. Here the NCE may further deploy the repaid capital to "one or more similar loans to other entities." In the second example, the NCE may redeploy into "certain new issue municipal bonds". Therefore you need to review the NCE''s ongoing business in the operating agreement or limited partnership agreement. Finally, this redeployment must occur in a "commercially reasonable" time. Again, it is undefined.
You can invest in your own project.
Redeployment is neither compulsory nor non-avoidable. Advisably, consult your subscription agreement. Also, consult with an EB-5 attorney on this issue to avoid unnecessary further delay.
I commend you for thinking ahead on this issue. At the time of redeployment, the investment will not come back into your control, so you will not be going into the marketplace to look for a new project. Instead, USCIS policy will require that your funds remain in the possession of the new commercial enterprise (NCE) in which you invested until after the two years of "sustainment period," which does not begin until you become a U.S. resident. After completion of the project in which you originally invested, your NCE may place the money in a new investment, which may be another project or another kind of "at-risk" investment. The NCE is usually set up as a fund organized as a limited partnership or limited liability company (LLC). To see what rights you have when the original project is sold, you will need to check the limited partnership agreement or LLC operating agreement for the NCE in which you invested. For most recent projects, it will describe the authority of the manager or general partner to decide how funds are redeployed after a liquidity event. Sometimes the investors will have a vote on where the NCE places funds, and in other cases, the manager or general partner has the authority to redeploy the money in specified types of projects. Even when there is no vote by the investors, some NCEs are offering a few different choices to their investors at the time of redeployment.
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