The EB-5 Immigrant Investor Program, launched by the U.S. Congress in 1990, allows foreign investors to obtain U.S. Green Cards by investing in projects that create jobs. Investors must invest at least $800,000 in targeted employment areas (TEA)—or $1,050,000 in other regions—into a new commercial entity (NCE) that generates at least ten full-time jobs for U.S. workers. After the investment is made and the jobs are created, investors can apply for a two-year conditional Green Card. To later remove conditions on the Green Card and gain full permanent residency, investors must show that their money remained in the project and maintained the jobs for two years.

However, many EB-5 investors face a challenge called redeployment. This occurs when an investor’s initial EB-5 project is completed, and the jobs are created before the investor receives their permanent Green Card. When this happens, the project must return the investor’s money to comply with EB-5 rules. To ensure the investor can still get a Green Card, the funds must be reinvested into a new project that meets EB-5 requirements.

Redeployment is becoming more common due to government processing times for EB-5 applications, long waiting lists in some countries, and many EB-5 projects finishing ahead of schedule, completing construction and job creation faster than planned. However, redeployment can present significant challenges for EB-5 investors, who must reinvest their money while adhering to strict rules and protecting their investments. This can be a stressful and confusing process.

In this article, we will discuss the problems that usually accompany EB-5 redeployment, and how to deal with them.

Problems for EB-5 Investors

When redeployment happens, investors usually have no control over how their money is reinvested. The EB-5 fund managers or regional centers make these decisions, which might result in new projects that do not align with the investor’s preferences. Additionally, the new project might be riskier than the initial one, placing investors who originally chose safe EB-5 projects into potentially unstable investments. The returns from the new project might also be lower, as regional centers may focus more on compliance than on maximizing investor profits.

Moreover, investors may face longer waits to retrieve their funds, disrupting plans and causing financial difficulties if the funds are needed for other purposes. These problems can be challenging for investors who have invested significant money in the EB-5 program to obtain a Green Card, only to find the process prolonged and uncertain due to redeployment.

USCIS Rules for EB-5 Redeployment

The U.S. Citizenship and Immigration Services (USCIS) has specific rules regarding EB-5 redeployment:

• The money must be reinvested in a new project, ensuring the project continues to benefit the U.S. economy.
• The investment must remain “at risk” for at least two years, meaning the investor could lose the money and their immigration prospects if the project fails.
• Redeployment must generally occur within 12 months of the initial project’s completion. However, if delays are beyond the investor’s control, USCIS may allow for longer periods.
• The regional center must inform investors about the new project and how it complies with EB-5 rules.

However, the rules can be unclear and confusing, leading to different interpretations. This further complicates the situation for investors trying to secure their Green Cards.

What’s Next for EB-5 Redeployment

The enactment of the EB-5 Reform and Integrity Act (RIA) in March 2022 introduced new considerations regarding the definition of the sustainment period for EB-5 investments.

The RIA revised previous EB-5 guidelines, mandating that investor funds must remain invested for a minimum of two years. Before this amendment, the sustainment period was linked to the investor’s two-year conditional residency period. Consequently, under the pre-RIA rules, investors were not eligible for the repayment of their EB-5 investment until they had obtained and maintained their conditional Green Card for two years. This regulation continues to apply to those who made their EB-5 investments prior to the implementation of the RIA.

However, the new provisions about the two-year sustainment period were challenged in court by some industry stakeholders. Invest in the USA (IIUSA), a membership-based 501(c)(6) not-for-profit industry trade association for the EB-5 Regional Center Program, filed a federal lawsuit against USCIS on March 29, 2024, challenging the new policy that shortens the EB-5 investment sustainment period to two years from the date of investment.

In addition to the lawsuit, IIUSA has proposed a new regulation to extend the required sustainment period to five years. If both the lawsuit and the proposed rule are successful, they would impact the sustainment period for thousands of EB-5 investors who filed their immigrant petitions after the RIA.

How to Deal With EB-5 Redeployment

Despite the difficulties of redeployment and the current uncertainty regarding the future of the sustainment period rule, investors can take steps to protect their money and make informed decisions. Here are a few best practices:

• Carefully read all documents to understand the redeployment plans. Look for any red flags or unusual details.
• Maintain regular communication with the regional center to stay informed. Don’t hesitate to ask questions and request
• updates.
• Seek assistance from EB-5 lawyers and financial advisors. They can explain the process and help investors make decisions based on their circumstances.
• Consider investing with regional centers that have a good track record with honest redeployment.

EB5AN understands these challenges and takes a responsible approach to redeployment. We reinvest funds into similar real estate projects with the same risk profile, developer, and returns as the original investment. In Q4 of 2023, EB5AN successfully completed the Saltaire St. Petersburg waterfront condominium project by Kolter, generating over 2,000 EB-5 jobs. Kolter fully repaid the EB-5 equity investment principal. However, as the EB-5 investors were not yet eligible for repayment, EB5AN reinvested the funds into a similar waterfront condominium project by Kolter in Sarasota, Florida.

Redeployment in EB-5 investments can be complex, and each project is unique. To minimize risks, it’s important to understand every aspect of your investment, including the potential for redeployment. Schedule a call with our team today to discuss any questions you may have about redeployment, rural TEA projects, or other EB-5-related topics.