Search results for: NCE Agreement

In a June 14, 2017 policy alert, USCIS updated its Policy Manual to provide further guidance regarding capital at risk requirements. Pursuant to the most recent Volume 6 of the Policy Manual, USCIS has confirmed and clarified that an EB-5 investor’s funds must sustain his or her investment “at risk” throughout the two-year conditional permanent residence period to be eligible to have the condition on permanent residence removed. The Policy Manual also clarifies that further deployment of an investor’s capital may be used to meet the capital at risk requirement under certain circumstances. Given the extended backlogs for mainland-China and Vietnam-born investors, redeployment has become an inevitable reality as the initial investment project is oftentimes completed and the loan repaid from the job creating enterprise (JCE) to the new commercial enterprise (NCE) before visa numbers are available to the investors. Therefore, to continue to satisfy the “at risk” requirement through the end of the two-year conditional permanent residence period, investors’ funds paid back to the NCE cannot sit idly in the NCE’s bank account, but need to be redeployed in a new investment. Given this reality, many projects have announced or will be announcing the news of capital redeployment. Below is a non-exhaustive list of the top 10 items we believe investors should consider when their projects announce redeployment:

  1. Whether the business plan has been followed through for the initial investment as outlined in the EB-5 business plan filed in the I-526 Petition – check the status of the project and make sure the project has moved forward as outlined in the I-526 Petition materials;
  2. Whether the required number of jobs have been created by the initial investment based on the economic methodologies in the Economic Report;
  3. Whether the EB-5 money has been expensed in accordance with the original business plan for the initial investment. The EB-5 funds should be used in accordance with the original business plan and the EB-5 loan agreement (or pertinent equity documents);
  4. Whether the new investment (redeployment) is consistent with the scope of the NCE’s ongoing business;
  5. Whether the proposed new investment satisfies the at risk requirement – the investment funds must be placed at risk (but not necessarily to the same extent of the initial investment), and no guarantees of repayment can be made directly to the investor:
    a. Treasuries may not be considered at riskb. USCIS has stated that certain new issue municipal bonds, such as for infrastructure spending, can be at risk as long as investments into such bonds are within the scope of the NCE in existence at the time Investor filed I-526;c. If the NCE was to loan pooled investments to a JCE for the construction of a residential building, the NCE, upon repayment of a loan resulted in the required job creation, may further deploy the repaid capital into one or more similar loans to other projects;
  6. Whether the investment funds will be deployed by the NCE within a commercially reasonable time following repayment of the initial EB-5 loan. USCIS has failed to define “commercially reasonable time,” but generally a reasonable due diligence period should be fine;
  7. Whether the redeployment would cover the period of the investor’s two-year period of conditional permanent residence;
  8. Investor must not withdraw investment funds from the NCE prior to expiration of the two-year conditional permanent resident card, and filing of the I-829 petition, otherwise I-829 petition would be denied;
  9. Whether the corporate documents would require a vote of investors to move forward with a redeployment;
  10. Whether the other investors may affect or block the redeployment of investors who must continue to meet the at risk requirement.

The considerations outlined above should inform investors of the unfamiliar terrain of capital redeployment and help them understand how redeployment contributes to/affects their attainment of permanent resident cards. However, while USCIS has acknowledged that redeployment may be an option to ensure investments continue to satisfy “at risk” requirement, the Policy Manual lacks clear or detailed guidance on redeployment of EB-5 investment. On April 9, IIUSA sent a memo to USCIS outlining the industry’s concerns and specific areas of needed clarification or changes to USCIS’s redeployment policy. We will closely monitor any developments in regard to USCIS’s policy and guidance on redeployment and provide updates as they become available.

For more on EB-5 investment, click here.

After extended debate, the U.S. Senate set-aside the House-passed Continuing Resolution (CR) and negotiated and passed a CR funding government and programs, including EB-5, until March 23, coupled with a sweeping 2-year budget agreement for FY 18 and FY 19.  The extended debate exceeded the previous CR time extension of midnight Feb. 8, which resulted in a lapse of Appropriations or government shut-down.

Continue Reading Continuing Resolution and Budget Agreement Funds Government and Vital Programs, like EB-5, until March 23rd

The president and congressional leaders reached an agreement earlier this week on a package of government continuance and public safety measures.  This package includes a Continuing Resolution, Debt Extension, Hurricane Harvey relief resources, and extension of the National Flood Insurance Program. The extension maintains and continues government funding and reauthorization until Dec. 8, 2017. The Senate approved the negotiated agreement on a bipartisan 80-17 vote on Sept. 7 with House approval on Sept. 8 by a vote of 316-90.

The continuance provisions include important Immigration measures, such as EB-5, E-Verify, Conrad 30, and Religious Workers. It is expected that the president will sign this agreement.

Greenberg Traurig’s EB-5 Team recently attended the EB-5 Investor Magazine Conference in Las Vegas, NV. The 2016 Las Vegas EB-5 Conference remains one of the largest EB-5 conferences, hosting hundreds of leaders and political figures in the EB-5 legislation field, as well as other professionals.

Laura Reiff, along with U.S. House Representative Jared Polis and other panelists, discussed EB-5 Government & Legislative Considerations. Kate Kalmykov moderated two panels of experts, the first “Project Underwriting: Understanding Borrower Relationships and Inter-Creditor Agreements (Part B)” and the second panel “Urban versus Rural.” Dillon Colucci presented on “Source of Funds: Overcoming Common Obstacles (Part A)” along with other industry leaders.

kate kalmykov & dr winner
Greenberg Traurig Kate Kalmykov with Dr. Winner Xing of Worldway
eb-5 team w immica
Greenberg Traurig’s EB-5 Team with Immica CEO Cam Lý Duong.
laura reiff panel
Greenberg Traurig Laura Reiff on the panel discussing EB-5 Government & Legislative Considerations.
kk panel
Greenberg Traurig Kate Kalmykov moderates two panels at the conference.
eb-5 investor mag
Greenberg Traurig EB-5 Team attends the 2017 EB-5 Investor Magazine Conference in Las Vegas, NV.
dillon colucci
Greenberg Traurig’s Dillon Colucci sits on the panel discussing “Source of Funds: Overcoming Common Obstacles (Part A)” along with other industry leaders.

We are often called in to speak to developers, private equity funds and other organizations that have an interest in having one or more projects adopted by a regional center. For many companies it often does not make sense to seek their own regional center designation for a variety factors including the time and cost involved in obtaining a USCIS designation, the company’s projects are geographically diverse and could not be located in a single regional center, the company does not wish to be in the “business” of being a regional center because of the administrative and compliance related obligations, etc…

As the EB-5 program continues to grow in popularity for its ability to source funds at low rates, project adoption has become more and more common. However, there are many pitfalls for the unknowing. Many regional centers are simply seeking designation in order to “sell” that approval to projects in return for exorbitant fees- often in the millions- with little provided to the project in return. Other regional centers are good faith actors and are willing to take a fee to adopt a project in return for providing the project with access to a pool of investors, conducting marketing efforts on behalf of the project and tracking investors and job creation or some other EB-5 program related services. Having experienced immigration and corporate counsel on hand to guide your organization is critical to ensuring an equitable agreement is reached and that the immigration and business objectives of both the project principals and regional center are reached.
The following list of due diligence questions can serve as a starting point when exploring the option of EB-5 project adoption.

1. What fee would the regional center take for adopting the project?
2. What are the fees associated with having the project adopted by the regional center? Do they take fees up front to review the project proposal and business plan? Do they require an equity stake in the project? Does the regional center impose a success fee once an exemplar filing or individual I-526 petitions are approved? How high is the success fee?
3. Does the regional center take any portion of the administrative fee paid by the investors?
4. Does the administrative fee include the cost of I-829 materials?
5. If the I-526 is denied can the investor recoup their administrative fees?
6. Does the regional center require that the project principals retain their immigration and securities/ corporate counsel? What is counsel’s experience?
7. When was the regional center approved by USCIS, and has it gone through any amendments?
8. Has the regional center received any I-924 denials on amendment or project proposal requests?
9. Has the regional center’s designation ever been the subject of a Motion to Reopen?
10. Has USCIS ever issued a notice of intent to terminate or has a formal termination ever been issued for the regional center?
11. What type of infrastructure does the regional center have to ensure compliance? Ex. management software, a team of dedicated professionals employed to administer the EB-5 program, a team of outside consultants, etc…
12. Has the regional center completed any EB-5 projects?
13. What is the regional center’s success rate with I-526 and I-829 petitions including approvals, denials and withdrawals?
14. Has the regional center been the subject of any Requests for Evidence or Notices of Intent to Deny? Has its projects?
15. Have any of the regional center’s projects been reviewed by the AAO?
16. Has the regional center complied with the I-924a reporting requirement?
17. Is the regional center affiliated with any government entity?
18. Will the project be able to avail itself of the regional center’s relationships with municipal or state officials?
19. How many years of experience does the regional center have in EB-5 projects?
20. What is the regional center’s economic model?
21. Does the center work with a specific economist?
22. How much experience does the regional center’s economist have in EB-5 projects?
23. How is job creation tracked by the regional center?
24. What is the regional center’s system for tracking investors once they receive Conditional Lawful Permanent Resident Status through until the time that they need to file their I-829 petitions?
25. What is the regional center’s area?
26. Are the job creating project and the new commercial enterprise located in a Targeted Employment Area (TEA)?
27. Does the TEA designation rely on the use of contiguous census tracts?
28. Does the regional center use an escrow account?
29. How much of the investment amount is refunded if the I-526 is not approved?
30. Does the regional center require that individual EB-5 investors use their designated counsel for filing of I-526 and I-829 petitions? Can the project designate its own counsel?
31. Has an action for securities violations/ fraud ever been filed against the regional center?
32. Has the regional center’s website been reviewed to ensure SEC compliance?
33. Does the regional center provide quarterly, biannual or annual reporting of the status of the investment to the investors?
34. Does the regional center maintain direct contact with the investors?
35. Will the regional center assist the project with marketing and sourcing of investors?
36. How successful have other capital raises been? How much capital has the regional center raised in aggregate?
37. What screening process does the regional center have in place for potential investors?
38. What are the regional center’s relationships with overseas migration agents/ brokers?
39. Are the regional center’s U.S. based broker/ dealers licensed?
40. Does the regional center offer U.S. immigration attorneys referral fees?

Congratulations! You have subscribed EB-5 investors, closed your offering, and provided the EB-5 funds to the project. Now what? As a general matter, EB-5 investors are either non-managing members of a limited liability company or limited partners of a limited partnership. In either situation, the EB-5 investor has limited managerial and voting rights, yet does have protections under either the Operating Agreement or Limited Partnership Agreement (the “NCE Agreement”), as may be applicable. The rights provided to EB-5 investors under the NCE Agreement must be adhered to as a binding contract between the new commercial enterprise (the “NCE”) and the EB-5 investor. Likewise, under state law, the EB-5 investor has rights and protections under the limited liability company act or limited partnership act. Finally, under federal and state law, the NCE will have ongoing securities law obligations, which may require supplements or updates to the offering documents.

To read the full GT Alert, click here.

For more on NCE Agreements, click here.

Late on Feb. 13, 2019, House and Senate Conferees on the Department of Homeland Security (DHS) Appropriations announced an agreement on DHS Appropriations for FY 2019 and the remaining six other outstanding FY 2019 Appropriations measures. The measure, HJ Res 31, or “the Omnibus,” is over 1,000 pages and deals with many areas of government, ranging from agriculture to transportation, among others.

Of particular importance to our readers, the EB-5 Immigrant Investor Program is extended until Sept. 30, 2019, in the following passage:

DIVISION H-EXTENSIONS, TECHNICAL CORRECTIONS, AND OTHER MATTERS TITLE I

IMMIGRATION EXTENSIONS

SEC. 104. Section 610(b) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 B.SC. 1153 note) shall be applied by substituting “September 30, 2019” for “September 30, 2015”.

The Conference agreement and legislative package must now be presented and passed by the Senate and House and agreed to by the president before midnight on Feb. 15 to avoid a government shutdown.

Please check back, as we will continue to provide updates on significant developments. For more on the government shutdown, click here.

˘ Not admitted to the practice of law

Congress returns from recess in 2024 facing a daunting task: approving crucial supplemental funding while navigating the contentious terrain of immigration and border security. This delicate dance threatens to trigger a government shutdown, jeopardizing aid for Ukraine and Israel.

Funding Fallout: Immigration Intersects with Global Aid

President Biden’s $105.9 billion supplemental funding proposal aims to bolster international allies like Ukraine and Israel. However, Republican support hinges on finding common ground on immigration and border security. Senate Republicans envision tying an immigration agreement to the funding package, while House Republicans prefer separate legislation, potentially pushing HR 2, the House-passed border bill, as a prerequisite.

Failure to pass the supplemental funding could jeopardize aid to allies, while a Jan. 19 government shutdown looms if funding for four key agencies is not secured. This upcoming deadline, in addition to the tension surrounding potential impeachment proceedings against Homeland Security Secretary Mayorkas, make the atmosphere in Washington increasingly volatile.

Important Upcoming Deadlines

Past shutdowns remain top of mind. Congress narrowly avoided shutdowns twice in 2023, highlighting the ongoing budget struggles. Two upcoming deadlines may test bipartisan resolve.

There will be a partial shutdown Jan. 19 unless funding for the Agriculture, Energy & Water, Military Construction-VA, and Transportation-HUD departments is secured. Speaker Johnson (R-LA) proposes a full-year extension, but this approach may cause greater uncertainty. The deadline for the remaining eight appropriations bills is Feb. 2, at which point a wider shutdown may occur if congressmembers are not able to agree.

A government shutdown would cause non-essential personnel to be furloughed, thus disrupting national park access, delaying passport issuance, and inhibiting scientific research. Economic uncertainty would ripple through businesses and consumer confidence. In short, a shutdown would hinder both national security and domestic well-being.

Uncertain Future

With much at stake, finding common ground is paramount. Senate negotiators strive to bridge the partisan divide and craft a workable immigration agreement. Yet the question remains: will the House follow suit, or will fragmented legislation jeopardize the entire funding package? The coming weeks will test bipartisan cooperation.

On April 25, 2023, U.S. Citizenship and Immigration Services (USCIS) hosted a stakeholder engagement webinar regarding the Immigrant Investor Program (EB-5), during which they discussed regulations being drafted to comply with the EB-5 Reform and Integrity Act (RIA). USCIS planned three discussion topics for the call, including the “winding up” of regional centers no longer operating under the RIA, updates to the “at risk” requirements for investors who filed Form I-526E Petitions after the RIA passage, and Form I-956K applications for migration agent registrations. At the outset of the stakeholder engagement, however, USCIS stated they were not prepared to discuss the winding up of regional centers or the new “at risk” requirements. Instead, the call only focused on clarifications of Form I-956K, Registration for Direct and Third-Party Promoters, and other EB-5 related issues.

The Form I-956K was published in response to the RIA requiring all direct and third-party promoters to register with USCIS. On the stakeholder call, USCIS clarified the following for I-956K completion:

  • Who must file I-956K? The person or entity that entered into the written agreement with the new commercial enterprise or regional center to market the project must file the form. In addition, certain employees of the third-party promoter or migration agent also must complete the form and file it with USCIS:
    • Executives or officers, or those who are actively promoting the EB-5 Program, should file Form I-956K. Based on this guidance, marketing staff at migration agents may need to complete this form and file it with USCIS.
    • Personnel not involved in the sale of EB-5, such as document processing specialists, are not required to file Form I-956K.
  • USCIS also stated on the call that if any agent commits fraud or material misrepresentation on the I-956K, USCIS can deny associated I-526E Petitions.
  • Filing of the I-956K is based on the promotion of the project; if the project is no longer being promoted because it was sold to investors who filed before the passage of the RIA (even if payments to agents are ongoing), the migration agents do not need to register on the basis of those older projects.
  • USCIS will publish lists of agents and promoters registered through I-956K on their website in the future.

USCIS also stated on the call that an EB-5 investor’s capital must be at risk and remain invested during the two-year period of conditional residences for those investors who filed I-526 Petitions before the passage of the RIA. This requirement did not change for investors who filed prior to March 15, 2022. USCIS did not comment on the new “at risk” requirements for investors who filed Form I-526E Petitions after the passage of the RIA.

USCIS also made the following general comments:

  • If USCIS terminates a regional center, they will notify all investors with a pending I-526/I-526E.
  • All regional centers must pay the Integrity Fund fee regardless of when they are designated.
  • USCIS does not encourage the submission of project documents along with I-526E Petitions, as the complete project documents were already included in the Form I-956F Application.
  • USCIS is taking steps to transition to electronic submission of Form I-526E and Form I-526.

USCIS did not discuss IPO operations, adjudication trends, or processing times during this call.