by Walter S. Gindin, CanAm Enterprises
Capital redeployment is one of the most important issues concerning EB-5 investors today. It impacts both existing investors, particularly those subject to EB-5 visa backlogs, and prospective investors, who in addition to evaluating the merits and suitability of an EB-5 investment must now consider the potential reinvestment of their capital following repayment of the original EB-5 investment. This article provides helpful background information regarding current USCIS policy on redeployment and discusses what redeployment options are suitable for investors.
Redeployment in a Nutshell
Redeployment involves the reinvestment by the qualifying new commercial enterprise (“NCE”) of all or a portion of capital following the repayment or disposition of the original EB-5 investment. The requirement that immigrant investors maintain their capital investment “at-risk” over the two years of conditional lawful permanent residence (LPR) has always been an essential requirement of the EB-5 Program. The concept of redeployment has now been incorporated into the USCIS Policy Manual to address immigrant investors who have not completed their two-year conditional residence period before the original EB-5 investment is repaid to the NCE.
Why Is There a Need to Redeploy EB-5 Capital?
The Immigration and Nationality Act sets an annual limit on the number of EB-5 visas that may be issued at 10,000. Notably, this number includes both the principal investor and his or her spouse as well as unmarried children under the age of 21. Thus, if every EB-5 petition includes three family members, all 10,000 EB-5 visas would be used up by some 3,300 EB-5 petitions each year. In addition to the overall annual limit of 10,000 EB-5 visas, there is also a per-country cap of 7%, or 700 EB-5 visas. When it appears that the 10,000 EB-5-visa limit will be met in a given fiscal year, and also that a country will use up its individual 700 EB-5 visa allocation, the U.S. Department of State will impose a “cut-off” date for the issuance of EB-5 visas to immigrants from that country. Retrogression, or backward movement of visa cut-off dates, also could occur.
