redeployment investments in its Policy Manual. Specifically,
the guidance from USCIS now states that funds must be
redeployed in a manner “related to engagement in commerce,”
where ”engagement in commerce” is defined as “the exchange
of goods or services” by USCIS. The Policy Manual goes on to
indicate that a NCE may also invest redeployed EB-5 funds in
municipal bonds for infrastructure if those investments fall within
the scope of the NCE’s business.
The Policy Manual also appears to suggest that if the initial
EB-5 investment project created the requisite jobs for a given
investor, the redeployed investment need not lead to the
creation of additional new jobs. It further cautions that the “at
risk” requirement remains and should be considered for the
redeployed investment funds.
CONSISTENT SCOPE
In the Policy Manual, USCIS provides an example where EB-5
funds are initially used to finance the construction of a residential
building and, following repayment of such EB-5 loan proceeds
and required job creation under the initial business plan, the NCE
is permitted to “further deploy the re-paid capital into one or
more similar loans to other entities.”
While not explicitly stated, based on existing EB-5 regulations,
one could infer that the geographic and/or industry restrictions
that applied to the original EB-5 investment may no longer apply,
as long as the required jobs were created by the initial project.
REDEPLOYMENT TIMING
The Policy Manual has further indicated that redeployment of
EB-5 capital must take place “within a commercially reasonable
time” following a repayment/return of EB-5 capital proceeds
to the NCE. In and of itself, this statement provides only limited
guidance because the term “commercially reasonable” can have
different interpretations.
Historically, USCIS appears to have allowed broad interpretations
of vague regulatory processes, though it gradually tightened
its own internal interpretations. That being said, and given the
economic realities of (primarily) the real estate industry, one
would be hard-pressed to interpret a “commercially reasonable”
period to mean less than 30 days. Some may argue that anything
in excess of 90 days would fall short of the aforementioned term.
However, at this point USCIS retains broad discretion on the final
interpretation of this term.
Given that NCEs keep track of when repayments of the EB-5
capital will be forthcoming, one could argue that these NCEs
would be able to plan the redeployment processes and projects
well in advance.
As such, NCEs are advised to begin the due-diligence process
on such potential redeployment projects early on. To better
manage their respective fiduciary obligations, the managers or
general partners of such NCEs should also consider retaining the
expertise of third-party registered investment advisors to assist
in the selection of such redeployment opportunities and prepare
appropriate notifications to the NCEs’ EB-5 investors of any new
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EB5 INVESTORS M AGAZINE