What is a Targeted Employment Area? By Lauren A. Cohen, Esq.
One of the requirements of an EB-5 investor is to invest a certain amount of capital in a new commercial enterprise (NCE). The question is, what amount of capital does the investor need to invest? The answer depends on whether or not the NCE is in a targeted employment area (TEA).
According to 8 U.S.C. § 1153(b)(5)(C)(i), the required capital investment amount is $1,000,000. However, 8 U.S.C. § 1153(b)(5)(C)(ii) and 8 C.F.R. § 204.6(f)(2), allows an exception where the NCE is in a targeted employment area. A “targeted employment area” is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate. “Rural area” is defined as outside of a Metropolitan Statistical Area, or the outer boundary of any city or town having a population of 20,000 or more (based on the most recent decennial census of the United States).
The reason why Congress added this exception was to encourage investors to create jobs in areas that have the greatest need. Logically, this would be in rural and areas of higher rates of unemployment. To qualify, the NCE must be considered to be principally doing business in this location. Several factors are examined to determine whether the NCE is principally doing business in that area, which include:
(1) the location of any jobs directly created by the new commercial enterprise;
(2) the location of any expenditure of capital related to the creation of jobs;
(3) where the new commercial enterprise conducts its day-to-day operation; and
(4) where the new commercial enterprise maintains its assets that are utilized in the creation of jobs. Matter of Izummi, 22 I&N Dec. at 174.
Another important item to note is that even if a Regional Center was previously designated as a TEA, this does not mean that it will automatically be approved as a TEA for all future investments. An investor must hire a professional Team which includes a qualified economist who can confirm that the NCE is still considered to be located in a TEA.
Additionally, the investor may seek to have an area designated as a TEA. To do so, the following evidence will be required:
(1) evidence that the area is outside of a metropolitan statistical area and outside of a city or town having a population of 20,000 or more;
(2) unemployment data for the relevant metropolitan statistical area or county; or