EB5 Investors Magazine | Page 50

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 Continued on page 50