Snake River Sporting Club: A Compelling Rural EB-5 Loan Project

Snake River Sporting Club is a master-planned luxury golf community development near Jackson, Wyoming. In addition to its award-winning golf course, this project features a host of other amenities, including a main lodge, 18 lodge cabins, 19 residential units, and four ranch estates.

This article details why Snake River Sporting Club is one of the most compelling rural EB-5 projects on the market today.

Overview of the Snake River Sporting Club EB-5 Loan Project

Rural Targeted Employment Area (TEA) Designation. The Snake River Sporting Club project is in a rural TEA. This means that the project qualifies for the reduced minimum investment amount of $800,000. Moreover, investors in rural TEA projects enjoy priority processing of their Form I-526E and access to reserved EB-5 visas, with rural EB-5 visas making up 20% of all EB-5 visas.

Short Four-Year Loan Term. Many EB-5 loan projects offer a loan term of five years with one or more one-year optional extensions. Snake River Sporting Club offers a shorter four-year term with a single one year extension.

Fully Capitalized and Not Dependent on EB-5 Funds. Snake River Sporting Club is fully capitalized with a senior construction loan and developer equity. Crucially, the project does not rely on EB-5 funds for construction to be completed.

Prime Location Near Jackson, Wyoming. The project’s proximity to Jackson, Wyoming, places it at the center of many major attractions. These include the Jackson Hole Mountain Resort, Grand Teton National Park, and Yellowstone National Park.

Proven Local Market and Strong Sales. The Snake River community is a proven market, with notable new home sales and resales. Additionally, Snake River Sporting Club itself already has a strong sales record.

Significant EB-5 Job Creation. The project has already created over 500 qualifying EB-5 jobs. Ultimately, 747.5 jobs will be created, more than enough for all EB-5 investors in the project.

Remarkable Immigration and Financial Security. The EB-5 loan is secured by both pledges and mortgages. Investors benefit further from an I-526E approval refund guaranty, a completion guaranty, and a job creation guaranty.

Experienced, Independent Regional Center Sponsor. An independent EB-5 regional center prevents a conflict of interest from emerging between the EB-5 fund and the developer. For the Snake River Sporting Club, EB5AN—which is 100% independent from the developer—controls the project’s regional center sponsor and the general partner of the EB-5 fund. This structure helps reduce risk for the project’s EB-5 investors.

Understanding the Risks of an EB-5 Investment

EB-5 investors face two main types of risk. First, they face immigration risk, which is the risk of not obtaining a Green Card when the EB-5 process is complete. Second, they face financial risk, which is the risk of losing some or all of their invested funds.

Immigration Risk

Immigration risk is determined by how likely a project is to meet the EB-5 program’s requirements and lead to investors’ receiving their Green Card.

The first concern is whether enough qualifying jobs will be created for all of the project’s EB-5 investors. Every EB-5 project is going to say it will create more jobs than needed for all foreign investors. The crucial question is whether the project will be able to create jobs as planned. This risk is tightly connected to how the investment is structured and the experience and track record of the developer.

Another aspect of immigration risk is whether the project will comply with all relevant laws, regulations, and policies. Most EB-5 projects on the market today are fairly straightforward and comply with established norms. But some regional center projects take a higher-risk approach when it comes to gray areas or recent policy changes.

For example, some projects have quickly adopted new terms based on an October 2023 policy change related to the two-year sustainment period. But policy changes like this often face legal challenges. True to form, in March 2024, this new policy was challenged. If this lawsuit succeeds and the policy is reverted, projects that changed based on the new policy may no longer be compliant.

Financial Risk

To qualify for a Green Card, an EB-5 investor’s money must be considered “at risk” by the United States Citizenship and Immigration Services (USCIS). To be at risk, the entire $800,000 investment must be subject to loss. This means that, to comply with the EB-5 program, no EB-5 project can be 100% free of risk. The at-risk requirement is one area where many projects go beyond simply complying with the EB-5 program.

To justify this, a project may claim that its level of risk is necessary because of the at-risk requirement. However, meeting the at-risk requirement does not mean the financial risk to EB-5 investors must be high. Many EB-5 projects are much more financially risky than the program requires.

Unfortunately, foreign investors often do not know how risky projects are before they invest. If a project has a high level of financial risk, its EB-5 investors are more likely to both lose their money and fail to secure permanent Green Cards for themselves and their family members.

This is where transparency comes into play.

Every EB-5 project should be fully transparent, but not all are. EB-5 investors must conduct their own due diligence before they invest, as only a small number of EB-5 projects provide real financial safeguards for EB-5 investors.

The following are some key safeguards to look for in EB-5 projects:

Financial Transparency

A project should give proof of its financial claims. It should provide balance sheets, sales data, executed loan agreements, and all other applicable financial documents. If an EB-5 project will not share its key financial documents, it is hiding information, and this is a massive red flag. EB-5 investors should not accept any claim without proof.

Loan Security

EB-5 loans are rarely secured by collateral. Collateral can include equity pledges and first and second liens or mortgages. A lower-risk EB-5 loan, however, will be secured by enough collateral to cover the loan’s entire balance.

I-526E Approval Refund Guaranty

If an EB-5 investor’s Form I-526E application is denied by USCIS, the investor will not be able to secure a Green Card through the EB-5 regional center program. But Form I-526E denial does not mean the investor’s $800,000 will be returned right away. The return of an EB-5 investor’s money depends on the terms of the investment. The investor’s money may remain invested for many years, regardless of the status of their Form I-526E application. Through safeguards like refund guaranties, the best EB-5 projects allow investors to be repaid sooner than normal if their immigrant petitions are denied.

Understanding the Rural TEA Designation

At a basic level, to be a targeted employment area (TEA), an area must be rural or have a high unemployment rate. Below is a more detailed overview of what qualifies as a new commercial enterprise located in a rural TEA and the risks and benefits of rural projects.

What Qualifies as a Rural TEA?

To be a rural TEA, an area must not be within or border any city with a population of over 20,000. Locations within metropolitan statistical areas (MSAs) are also ineligible for rural TEA designation. Projects that rely on a rural TEA status must include proof from the most recent decennial census data that the area meets these standards.

Comparing Risks in Different Types of Rural EB-5 Projects

EB-5 projects that are in rural areas have different risks than urban and high-unemployment TEA projects. To make fully informed choices, EB-5 investors should understand these risks.

As stated above, to comply with the EB-5 program, all EB-5 investments must carry the risk of financial loss. While each project has its own unique risk profile, certain types of projects tend to be riskier than others.

Some types of rural projects can be riskier than similar projects in urban areas, while others may be better suited to rural locations. The following is an analysis of three common types of rural EB-5 projects.

1. Risks in Rural EB-5 Hospitality Projects

Hospitality businesses depend on consumer travel and economic stability. An economic downturn tends to reduce travel and spending, as many people seek to save money in such times. Such factors can have a big impact on rural hotels and restaurants.

Additionally, rural projects may not have access to sufficient market data to understand the local economy. Without this data, it may be difficult to accurately predict market absorption. EB-5 investors are at greater risk when a project has insufficient data to support its financial projections.

Moreover, projects like hotels often cannot scale back operations because they must be fully staffed to operate. With limited options for reducing overhead costs, operating at a loss can quickly lead to project failure. In such an event, people will lose their jobs, and this outcome would be disastrous for foreign investors who rely on those jobs for their immigration applications.

Another critical factor is that hotels and restaurants must often spend large sums of money upfront, years before they start to operate. Crucially, though, development could then become delayed, or market conditions when the project becomes operational may be different from when the project was being planned. In these kinds of projects, the financial risks to EB-5 investors can be high.

However, not all hospitality projects are high risk. For instance, high-quality projects that cater to a wealthier clientele are less vulnerable to changes in the economy since people with disposable income, such as retirees and high-net-worth individuals, are not as likely to stop traveling and spending, even if the economy slows down.

Some rural hospitality projects are also a combination of different asset types. Instead of just a hotel, a project may consist of a hotel plus condominiums or residences. Having diverse assets and a source of revenue during construction can significantly reduce risk.

2. Risks in Rural EB-5 Manufacturing Projects

Over the past few decades, manufacturing job growth has been declining compared to overall job growth. Data from the U.S. Department of Agriculture shows that, from 2001 to 2015, total employment increased by nearly 7%, while manufacturing growth decreased by 21%. In particular, many rural plants closed permanently during this time.

Manufacturing plants are often profitable only when operating at full capacity. For most plants, scaling back production is not an option. As a result, rural plants are highly vulnerable to economic downturns.

The time and cost to build a manufacturing plant are far greater than many other types of real estate common within EB-5 projects. The long development phase means EB-5 investor funds will be subject to various risks, such as rising costs, funding shortfalls, changes in the market, and more. Raising more capital through loans or other investments may take a long time. Construction delays are also somewhat common and can be unpredictable. Any delays can have a negative impact on the EB-5 job creation requirement.

For EB-5 investors, these factors can mean their funds will remain invested for longer periods than expected. And the longer funds are invested, the longer they remain at risk of being lost, late, or not fully repaid.

3. Risks in Rural EB-5 Master-Planned Community Projects

Like other rural projects, rural master-planned developments tend to be more sensitive to changes in the economy. Changes to local demand for homes, for instance, may impact construction. And reduced construction spending will, in turn, impact EB-5 job creation.

However, while hospitality and manufacturing projects must be complete before they can make revenue, master-planned communities can be built in stages. In each stage, a portion of the total houses are built and sold one by one, which tends to produce a stream of revenue early in development.

For single-family home projects, risk tends to be lower since a smaller amount of funding is used for a shorter period of time before generating cash flow. Also, the pace of construction can be adjusted to match current market conditions.

If costs increase while building a hotel or manufacturing plant, the developer either has to find more funding or change the budget. In housing construction, cost increases tend to be passed on to homebuyers.

With lower upfront costs, ongoing revenue, and a more flexible pace of development, master-planned community developments may pose less risk to EB-5 investors. But even within the same asset class, not all projects are the same. Every project must be evaluated on its own merits.

Benefits of Selecting a Rural TEA EB-5 Project

By investing in rural EB-5 projects, EB-5 investors enjoy several key benefits. First, the EB-5 investment amount for TEA projects is $800,000 instead of $1,050,000. Second, rural TEA investors enjoy faster processing of Form I-526E, the first application in the EB-5 process, which means much faster adjudication times and shorter wait times for U.S. Green Cards. These qualities mean that, even when a rural EB-5 project is higher risk compared to similar urban projects, investing in a rural project still has unique benefits, and these benefits can outweigh the impact of any added risk.

Perhaps the greatest benefit of a rural TEA investment is access to the rural EB-5 visa set-aside category. These reserved visas are essential for investors from countries facing EB-5 visa retrogression, which occurs when more EB-5 visas are needed than are available. With rural EB-5 visas, investors—particularly those from high-demand countries like Mainland China and India, places which are facing backlogs in urban TEA investments—can avoid years of delay caused by retrogression.

The EB-5 Reform and Integrity Act of 2022 set aside 20% of all EB-5 visas for rural TEA investors and their families, giving the rural category the largest supply of reserved visas. Comparatively, the urban high-unemployment TEA category represents just 10% of all EB-5 visas. As stated above, Chinese and Indian investors are already facing visa availability issues in this category—rural EB-5 visas, meanwhile, are still current for investors from these countries.

Evaluating Rural EB-5 Projects

By doing some basic research into several key areas, EB-5 investors can avoid overly risky projects.

Research the Developer’s Track Record

The track record of a project’s developer is one of the most important factors for EB-5 investors to consider. Typically, a strong developer has successfully completed similar projects and has repaid its investors.

One way to quickly assess a developer is to check whether its project is funded by a major lender. Lenders conduct their own careful research to ensure the money they lend is likely to be repaid. If a bank or institutional lender is funding the project, the project is likely to be safer.

Investors should also find out how much developer equity is invested in the project. If a developer has not invested much of its own funds in a project, it does not have much to lose if the project fails. Less developer equity means more risk for the project’s other lenders and investors.

Relatedly, developers sometimes plan to use EB-5 funds to replace or recapitalize their equity. When EB-5 funds are used in this way, the developer transfers its own risk to the EB-5 investors. Such projects should be avoided.

Consider the Project’s Location

Not every rural area is the same. Some rural areas are nothing but empty space that few people even drive through. Other rural areas are major destinations with hundreds of thousands of visitors each year. While different project types carry different risks in rural locations, a project of a given type may do well in one rural area but not in another.

For example, a hotel project in a town with little traffic and no nearby tourist attractions is likely high risk. The exact same project in a tourist hotspot, however, could be very low risk. Each project is different, and EB-5 investors need to consider each project within its location and context to understand how risky it may be.

Evaluate the Regional Center and Its Relationship to the Developer

A project’s regional center sponsor should have a strong reputation as competent, transparent, and independent. The EB-5 industry is complex and constantly changing, and regional centers must be able to keep up with the industry and stay abreast of new information and regulations. Now, more than ever, EB-5 investors need to thoroughly vet regional center sponsors. Inexperienced EB-5 regional centers that do not have a record of success pose a major risk to EB-5 investors.

Good regional centers will be led by knowledgeable professionals with years of industry experience. As mentioned earlier, the regional center should also be 100% independent from the developer to guarantee there is no conflict of interest between them.

Snake River Sporting Club Is a Best-in-Class Rural EB-5 Project

Snake River Sporting Club is a compelling rural EB-5 project that offers an array of top features. The project, which is being developed by a highly qualified team in a prime location, offers remarkable financial security, strong sales, and ample job creation. These features reduce the immigration and financial risk to EB-5 investors and make Snake River Sporting Club one of the best EB-5 projects available today.

Short Four-Year Loan Term

The project has a shorter-than-average loan term of just four years. Furthermore, the EB-5 loan is divided into individual tranches representing each investor’s $800,000.

Fully Capitalized

Snake River Sporting Club is fully capitalized. Developer equity makes up a significant portion of project financing, and EB-5 funds will partially replace an in-place construction loan. Critically, EB-5 funds are not required for the project to be completed.

Prime Location Near Jackson, Wyoming

The Snake River Sporting Club is uniquely situated along the Snake River near Jackson, Wyoming. The project is a short drive from Jackson Hole Mountain Resort, a high-end ski resort. Grand Teton National Park, which boasts some of the nation’s most spectacular mountain views, is also only a short drive from the project. Additionally, nearby Yellowstone National Park, the oldest national park in the U.S., offers millions of annual visitors a vast expanse of pristine wilderness. Visitors to Yellowstone can experience wildlife in their natural habitat as they venture around canyons, waterfalls, and geothermal features, including many active geysers, among other natural wonders.

Snake River Sporting Club’s rural Wyoming setting and easy access to these major attractions make the project’s location ideal.

Proven Local Market and Strong Sales

Snake River Sporting Club has already sold 10 of its 18 lodge cabins for an average sales price of $3.3 million. Owners of the lodge cabins will have the opportunity to include their units in the rental pool of the lodge in exchange for a share of rental profits.

The local market for residential units is also strong, with many large real estate brokers marketing and selling homes and lots nearby.

Significant EB-5 Job Creation

To meet the EB-5 program’s requirements, each EB-5 investor must show that their invested capital has created at least 10 new full-time jobs for U.S. workers. Through regional center sponsorship, the project is allowed to count both direct and indirect jobs that result from construction expenses and revenues.

Snake River Sporting Club needs to create only 630 jobs in total to support the maximum number of EB-5 investors. As of June 2024, the project has already created more than 500 jobs. Ultimately, it is expected to create a total of 747.5 qualifying jobs for EB-5 investors, which is far more than needed. As a result, investors in Snake River Sporting Club will enjoy a higher chance of a successful immigration process.

Remarkable Financial Security

While most EB-5 loans are not secured, Snake River Sporting Club is different. This project features several layers of financial security.

The EB-5 loan is secured by multiple equity pledges. The loan also enjoys first and second liens, or mortgages, on the property where EB-5 funds are used. The EB-5 loan will move to the senior position on the lodge component of the project after lodge construction is completed and the Bank of Jackson Hole construction loan is repaid.

EB-5 investors in the project also benefit from an I-526E approval refund guaranty. This kind of guaranty enables investors to be more quickly repaid if USCIS denies their immigrant petitions—as opposed to still having to wait till the project is complete to be eligible to receive their funds.

An Experienced Development Team

Snake River Sporting Club is being developed by Cygnus Capital. Founded in 2010, Cygnus Capital manages six strategic real estate investment funds. Through the life of these funds, Cygnus Capital has acquired over 6,000 assets across 38 unique investments in 22 states. Cygnus Capital targets long-term, absolute returns for investors by applying a differentiated approach to real estate investing.

An Experienced, Independent Regional Center

EB5AN is the regional center sponsor for Snake River Sporting Club. EB5AN is independent from the developer and is focused solely on meeting the needs of its EB-5 investors, free from any conflicts of interest. EB5AN is an experienced EB-5 regional center operator and has been involved in more than $4 billion of real estate development under the EB-5 program, and its high-quality, low-risk investment offerings have served over 2,300 immigrant investors from more than 60 countries.

Snake River Sporting Club: A Unique, Low-Risk Rural EB-5 Project

While no EB-5 project can have zero risk, some projects stand out as being low risk. Snake River Sporting Club is one such project.

Snake River Sporting Club is a high-quality EB-5 project that offers several unique features that reduce EB-5 investors’ immigration and financial risks, including several guaranties, priority I-526E processing, and a short 4-year loan term.

For more information on the Snake River Sporting Club rural EB-5 project, please schedule a one-on-one call with EB5AN or send an email to info@EB5AN.com.