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Redemption and Redeployment of EB-5 Capital

Posted by Kurt Reuss on April 26, 2020

Redeployment of EB-5 Capital

An important consideration facing EB-5 investors, especially those from countries that don't have EB-5 visas currently available, is how they can maintain their investment at risk, in order to satisfy their 'at-risk' program requirement, when the job creating enterprise (JCE) is ready to repay the loan made to them by the entity representing investors. Failure to do so would jeopardize their I-829 approval for permanent green cards.

EB-5 Green Card process: from investment to approval

Posted by Kurt Reuss on January 07, 2020

   

There are 4 steps in the EB-5 petitioning process that an immigrant investor should be prepared to complete to become a U.S. permanent resident, along with their spouse and unmarried children under the age of 21.

The upcoming EB-5 modernization rules: increased investment amounts, stricter TEA designation, Priority Date retention for some investors

Posted by Rupy Cheema on September 27, 2019

U.S. Citizenship and Immigration Services (“USCIS”), on July 24, 2019, published the “EB-5 Immigrant Investor Program Modernization.” The new regulation rules will take effect for all I-526 investors and I-924 petitioners as of November 21, 2019.

Increased investment amounts

The most significant change to the EB-5 Program will be the raising of the minimum investment requirement from $500,000 to $900,000 (for Targeted Employment Area investments, aka, TEA’s) and the increase of $1 million to $1.8 million for non-TEA investments.

The majority of the EB-5 investments in the market today would not qualify for the $900,000 investment amount since they would not qualify under the new TEA rules. Therefore, many petitioners  who would under today’s rules invest in a $500,000 TEA project would have to invest $1.8 million in the same project, with non-TEA designation, as of November 21, 2019. (See the TEA section below for more on this.)

Making an EB-5 investment? Discover 7 key considerations

Posted by Kurt Reuss on September 16, 2019

1. Real estate projects had advantages historically — what’s changed

Real estate construction projects often require a substantial investment with abundant job creation that EB-5 investors can rely on. 

EB-5 regional center projects are allowed to count direct, indirect and induced jobs based on the construction budget; an economic study will determine how many total jobs will be created. One needs only spend the project budget to ensure jobs will be created.

EB 5 projects due diligence checklist

Posted by Kurt Reuss on August 14, 2019

Making an investment of $900,000 - $1,800,000 in one of the EB-5 projects that ultimately fails, jeopardizes both the investor’s funds and the U.S. residency of the investor’s family, therefore every investor would be wise to know as much as possible about the investments they’re considering.

What is EB5 due diligence?

Due diligence is an investigation of an investment prior to signing a contract. Due diligence contributes significantly to informed decision making by enhancing the amount and quality of information available to the investor allowing him or her to better understand the benefits and risks.

What is included in an EB-5 Immigrant Visa due diligence review?

Due diligence begins with a thorough analysis of the investment documents including the capital structure, project viability, exit strategy and job creation potential as it relates to the the EB5 green card program.

The due diligence review should also identify risk mitigation strategies that have been implemented by the Manager or General Partner to protect investors. These include use of a fund administrator to oversee all transfers of investor funds, and construction monitoring to ensure transfers to the Developer are in-line with construction progress.

How big a Job Cushion do you need? Well, it depends…

Posted by Rupy Cheema on February 07, 2019

The EB-5 program requires that each EB-5 Investor create ten (10) jobs. Job cushion refers to the percentage of jobs exceeding the requirement. Having a Job cushion is important so that the job creation estimates are above the minimum required by all investors in a project.

So, what is a sufficient job cushion? Is there a magic number that is acceptable and anything lower than that is rejected? Generally speaking, a higher job cushion provides some assurance that job creation estimates will be met — but EB5 investors need to look deeper than just the job cushion numbers.

Job Cushions from 155 EB-5 offerings

Based on our review of 155 EB-5 offerings, job cushion has ranged from 0% to 900%. Seventy five percent (75%) of the projects have a job cushion of 25% or more and thirty percent (30%) of the projects have a job cushion of 100% or more. The median job cushion is 51%.

EB-5 visa: requirements & best practices

Posted by Kurt Reuss on January 10, 2019

To obtain permanent residency status — a Green Card — through the through the EB-5 program, an investor must meet specific requirements as per United States Citizenship and Immigration Services (USCIS). 

Loan Administration Checklist

Posted by Kurt Reuss on May 18, 2018

The Manager of the NCE (EB-5 investors) should consider the following loan administration checklist. 

    1. Retain Independent Counsel. The loan documentation should be in accordance with industry standards and consider the EB-5 Immigration program's unique requirements.
    2. Undertake the same due diligence as a financial institution.  This includes obtaining a feasibility of current market conditions, appraisers, title reports and potentially title insurance, a survey, zoning and environmental reports.

House Hearing on Investor Visa Reforms (3/8/17)

Posted by Kurt Reuss on March 10, 2017

On Wednesday, March 8, 2017, the Judiciary Committee of the United States House of Representatives held hearings on the Department of Homeland Security (DHS) in reforming the Investor Visa program.

For those not familiar with U.S. legislation, rule-making through regulation is often utilized by agencies that oversee particular programs to implement changes that would not necessarily require a bill to be passed by the House and Senate on to the President. With that in mind, several areas of interest to both market participants and EB5 visa investors were discussed.

Several members acknowledged the importance and appreciation of the recent “Notice of proposed rulemaking” put forth by Jeh Johnson and DHS.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comments related to Department of Homeland Security and Jeh Johnson 

The overall theme of the hearings was concern that the EB-5 program has “strayed further and further from Congress’ intent”, which is to attract high-net worth individuals to immigrate to the U.S., which has been determined by Congress to be in the national best interest, to attract entrepreneurial talent, and to create jobs especially in hard hit rural and depressed areas.

Takeaways from USCIS Stakeholder Meeting - March 3rd, 2017

Posted by Kurt Reuss on March 03, 2017

USCIS held a stakeholder meeting today (03/03/2017) in Washington, DC on EB-5 matters.  According to USCIS personnel, over 900 people registered to attend the stakeholder meeting, whether in-person or by telephone.

According to Rana Jazayerli and Bob Cornish of the Phillips Lytle law firm offices in Washington, DC, there were several major “take-aways” from this meeting of crucial importance to those involved in projects connected with EB-5:

• The May 30, 2013 USCIS Policy memorandum on EB-5, which explicitly stated that formal I-924 amendments are not required for a Regional Center to expand its geographic boundaries was represented by USCIS, to the surprise of many, as superseded by their new policy. This policy, effective December 23, 2016, states that any Regional Center wishing to sponsor a project outside of its geographic area must file a formal I-924 amendment application. Further, any I-526 petition filed by an investor based on such a project before USCIS approves the I-924 amendment will be denied on the grounds that it was not approvable when filed.

Some audience members expressly objected, stating that (a) USCIS did not provide adequate notice of this very significant change in policy, and (b) that the adverse impact on Regional Centers, developers and EB-5 investors that have already filed I-526 petitions may be severe.