EB-5 investors often wonder about how important the location of a regional center’s headquarters or its project is for the success of their immigration process. The location of the regional center’s project is important, but the location of the regional center’s headquarters is not.
Some EB-5 investors believe that they need to live near the project or the regional center’s headquarters. Often, these same EB-5 investors feel a sense of comfort that the regional center’s project or its headquarters is located near to where they will live in the U.S. In reality, living near to the regional center’s headquarters or project may be of psychological comfort, but it serves no legal purpose. The immigration law governing the EB-5 immigrant investor program in now way requires the EB-5 investor to live near the regional center’s project or headquarters. Moreover, the EB-5 investor plays no role in the day-to-day management of the regional center’s project. The EB-5 investor may take comfort in being able to “keep his eye on” the project, in the sense of watching the progress of the construction project, if the project involves construction of a building. However, the EB-5 investor cannot monitor the finances of the project business or count the number of jobs being created by driving past the construction site. All of that information is contained in internal documents maintained at the regional center’s headquarters, and can be obtained by calling the regional center and having the information and documents emailed or faxed.
The location of the project is important from the perspective of the unemployment rate or the population in that location. In order for a project to qualify an EB-5 investor for permanent residence based on a $500,000 investment, rather than a $1,000,000 investment, the project has to be located in a Targeted Employment Area (“TEA”) or in a Rural Area. A Targeted Employment Area is an area that has an unemployment rate that is 50% above the national unemployment rate. A Rural Area is an area that has a small population of less than 20,000, and is not included in the Metropolitan Statistical Area (“MSA”) of a larger city. An MSA is the catchment area for calculating unemployment and other statistics pertaining to the population of a city and its surrounding area. The bottom lines is that a rural area must both have a small population of less than 20,000, and it must be remote from a city large enough to have its own MSA.
The designation of Targeted Employment Areas is a very technical matter that has become very important and contentious in the EB-5 immigration field. Each state’s governor designates the agency or governmental official who will determine which areas qualify as a TEA. In most states, the state department of labor is vested with this responsibility. However, there are some states, like Texas, that believe firmly in the decentralization of government authority, and so Texas has designated local mayors and judges to make these determinations, albeit in reliance on unemployment statistics prepared by the state’s department of labor. One other important point is that most states break their unemployment data down to the level of census tracts, which are areas designated by the federal government when it conducts the census, or counting of the population, every 10 years. Other states, like Texas once again, do not break their statistics down to the level of census tracts, and so whole cities and towns a lumped together without the possibility of having TEA’s designated within them.
The designation of TEA’s has become contentious in the sense that some states have very eagerly designated areas as TEA’s in the interest of supporting the development of regional center projects, while USCIS has questioned the legitimacy of some such determinations. At one point, USCIS had taken it upon itself to question the legitimacy of every TEA designation. However, after much resistance from regional centers, immigration attorneys, and state governments, it backed off from that position, and has reserved for its self only the right to question the state’s methodology for calculating the unemployment rate, but not for designating the TEA. Nevertheless, it is still advisable for the EB-5 investor to examine whether the regional center has obtained a TEA designation which is truly supported by the unemployment data, or else USCIS will challenge the designation, which could, if USCIS prevails in such a dispute, result in the EB-5 investor being denied as not qualifying based on a $500,000 investment in the project at that location. Despite backing off from questioning the TEA designation in every case, USCIS will not let an obviously illegitimate TEA designation go unchallenged.
The bottom line is that the location of a regional center’s project is extremely important, from the perspective of whether the project qualifies the EB-5 investor for permanent residence based on a $500,000 investment rather than a $1,000,000 investment. However, where the regional center’s project and headquarters are located in relation to where an EB-5 investor will live, in the U.S., is completely irrelevant. Therefore, the EB-5 investor should not select a regional center just because it has a project located near to where the EB-5 investor will live so that the EB-5 investor can “keep an eye on” the project, but rather it is far more important for the EB-5 investor to select a regional center program based on that program’s experience, track record, and the quality of the project that the regional center is currently offering to the EB-5 investor.