Earlier this week, IIUSA sent a memo to U.S. Citizenship and Immigration Services (USCIS) outlining the industry’s concerns and specific areas of needed clarification or changes to USCIS’s redeployment policy. The memo was submitting upon request by USCIS.
In October 2018, members of IIUSA’s Board of Directors met with representatives of USCIS, including the Immigrant Investor Program Office (IPO), to establish an open dialogue about EB-5 policy and the future of the EB-5 Regional Center Program. Many topics were discussed, but one of the most pressing was redeployment of EB-5 investments and USCIS’s policy and guidance on the matter.
IIUSA expressed concern about the lack of guidance to date and requested specificity given the enormous impact redeployment has on the EB-5 industry; the immediate nature of its relevancy to Regional Center operations, deal structuring, and transparency in investment offerings.
IIUSA’s Public Policy Committee drafted the memo and after several months of debate, discussion, and edits, the Board of Directors approved it to be delivered to USCIS. Below is a summary.
At-Risk Redeployment of NCE Investments Is Not Required by Law
The memo addresses the question of the legal basis upon which redeployment of investors’ funds is a requirement. The investment remains at-risk even if the job creating entity (JCE) repays the new commercial enterprise (NCE) so long as the NCE does not repay investors until the end of the investors’ two-year conditional residency period, per the Program requirements.
IIUSA asserted it does not see a legally-based requirement to redeploy investors’ funds if their two-year conditional residency period is not completed by the time the project in which they invested is completed.
If Redeployment is Required, Any NCE Redeployment Investment Should be Acceptable
If USCIS rejects IIUSA’s position that additional and continued at-risk redeployment beyond the NCE level is not required, then any investment (including investment in marketable securities) made after the job creation requirements have been satisfied should be acceptable. The letter goes on to state that the scope of business identified in the approved I-526 record should not be taken under additional review during the post-job creation sustainment period and any subsequent investment undertaken by the NCE in an effort to satisfy the at-risk requirement during this period should be permitted.
Redeployment Investments Should be Allowed Outside of the Regional Center Territory and Outside of TEAs
IIUSA’s memorandum went on to assert that post job-creation redeployment by NCEs should be permitted anywhere within the U.S. There should not be a continued requirement to redeploy investments within the regional center’s territory or within a Targeted Employment Area (TEA).
If, however, additional job creation credit is sought, IIUSA proposes that any regional center in good standing be permitted to sponsor redeployment job-creation, that the TEA character be maintained, and that an economic analysis or other evidence of job-creation for the redeployed investment be provided by the investor. To further facilitate efficient and responsible redeployment opportunities, unless credit for new job-creation resulting from the redeployment is sought, there should not be a requirement that redeployment be made within a TEA.
Clarification in the Redeployment Policy Regarding Material Change and Withdraws is Needed
IIUSA suggested that:
- Revisions to NCE and JCE governing documents should be permitted without material change disqualification to accommodate the Redeployment Policy.;
- Redeployment prior to issuance of conditional permanent residency should not be considered a material change.; and
- Investors should have the right to withdraw at redeployment without violating the requirement to be irrevocably committed to the investment
The letter concludes by stating IIUSA’s eagerness to continue open and productive dialogue with USCIS in order to have sustainable and practical implementation of the Redeployment policy while seeking flexibility in policy interpretation so the industry stakeholders can be responsible and efficient in accomplishing redeployment for both their projects and their investors.
A special thank you to IIUSA’s Public Policy Committee and Best Practices Committee for their diligent work on this letter.