Does the Location of a Regional Center's Headquarters or the Regional Center's Project Matter?
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 $900,000 investment, rather than a $1,800,000 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. In the past, each state’s governor designated the agency or governmental official who will determine which areas qualify as a TEA. The designation of TEA’s became contentious in the sense that USCIS and members of Congress came to the conclusion that some states were too easily designating areas as TEAs by going to great lengths to qualify prosperous as part of TEAs by combining them to adjacent, or maybe not so adjacent, areas with in the interest of supporting the development of regional center projects.
In its regulations that went into effect on November 21, 2019, USCIS reserved to itself the authority to designate TEAs. USCIS will decide on whether an area qualifies as a TEA when it decides individual investors' I-526 petitions (or project amendments with exemplars from regional centers). Unfortunately, this leaves the question of whether the location of the project qualifies as a TEA unresolved until USCIS decides the investor's I-526 petition 2+ years after investing and filing. Therefore, crucial for the EB-5 investor to examine whether the regional center has located the project in an area that solidly qualifies as a TEA based on that area having a high unemployment rate, not based on the unemployment rate of neighboring areas. If the project's location does not ultimately qualify as a TEA, then the EB-5 investor's I-526 petition will be denied because USCIS will conclude that the investor's investment of $900,000 did meet the required investment amount because it would need to be $1.8 million in a non-TEA area.
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 $900,000 investment rather than a $1,800,000 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, including the project's location in a TEA.