The Regional Center
EB-5 Regional Center
Indirect Job Creation
An important advantage to obtaining Regional Center designation is the “indirect” nature of the job creation, which is less difficult to achieve than the “direct” creation of 10 new jobs. The requirement of creating at least 10 new full-time jobs may be satisfied by showing that, as a result of the investment and the activities of the new enterprise, at least 10 jobs will be created indirectly through an employment creation multiplier effect. To show that 10 or more jobs are actually created indirectly by the business, reasonable methodologies may be used, such as multiplier tables, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and other economically or statistically valid forecasting tools which support the likelihood that the business will result in increased employment.
Targeted Employment Area (TEA)
A TEA is a geographic area or political subdivision located within a metropolitan statistical area or within a city or town with a population in excess of 20,000 with an unemployment level at least 150% of the national unemployment rate. TEAs within a state are identified and designated by the governor (and for a TEA within the District of Columbia, designation is made by the Mayor). Typically a Regional Center seeks to encompass one or more TEAs. One example of a TEA is a Regional Center, which encompasses a large city which contains clearly delineated census tracts that have been designated as a TEA by the State based on the measured unemployment rates for the population residing within those locations.
Rural Area
A Rural Area (RA) is a geographical area that is outside a metropolitan statistical area, or part of the outer boundary of any city or town having a population of 20,000 or less as shown by population indicators. In certain areas involving a sparsely populated state, an approved statewide Regional Center likely encompasses both TEAs and RAs.
Required Amount of Investment
Depending on the location of the commercial enterprise to be invested in, the required amount of the investment may be either $1 million or $500,000. If the investment is located within a TEA or RA, the required minimum threshold for investment is $500,000. Otherwise, an alien must invest a minimum of $1 million to qualify.
Required Commercial Enterprise
In order to qualify under the Pilot Program, an investment of the requisite amount ($500K or $1 million) must be made in a new commercial enterprise located within an approved Regional Center.
New Commercial Enterprise
The law and regulations require that the commercial enterprise in which the investment is made must:
Risk
The regulations and precedent decisions require an alien to incur a reasonable risk for purposes of generating a return on his or her capital investment.
As such there should be no guarantees, buy back arrangements, unsecured promissory notes, other agreements or arrangements that in effect merely structure or organize the investment for appearance sake only for purposes of obtaining the permanent resident status without the alien’s capital being fully invested and at risk in the investment in the new commercial enterprise to create or spawn the required 10 jobs .
Engagement of the Alien Investor in the Enterprise
The regulations require that the alien investor is or will be engaged in the management of the new commercial enterprise, either through day-to-day managerial control or through participation in policy-making decisions for the commercial enterprise.
A Regional Center
The requirements for an investor under the Pilot Program are essentially the same as in the basic EB-5 investor program except the Pilot Program adds the option of using econometric job creation models which allow for the counting of “indirect” as well as “direct” job creation. The capital investment requirement for any EB-5 investor, inside or outside a Regional Center is $1 million. The capital investment requirement for an EB-5 investor in a Targeted Employment Area (TEA) or a Rural Area (RA) is $500,000.Indirect Job Creation
An important advantage to obtaining Regional Center designation is the “indirect” nature of the job creation, which is less difficult to achieve than the “direct” creation of 10 new jobs. The requirement of creating at least 10 new full-time jobs may be satisfied by showing that, as a result of the investment and the activities of the new enterprise, at least 10 jobs will be created indirectly through an employment creation multiplier effect. To show that 10 or more jobs are actually created indirectly by the business, reasonable methodologies may be used, such as multiplier tables, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and other economically or statistically valid forecasting tools which support the likelihood that the business will result in increased employment.
Targeted Employment Area (TEA)
A TEA is a geographic area or political subdivision located within a metropolitan statistical area or within a city or town with a population in excess of 20,000 with an unemployment level at least 150% of the national unemployment rate. TEAs within a state are identified and designated by the governor (and for a TEA within the District of Columbia, designation is made by the Mayor). Typically a Regional Center seeks to encompass one or more TEAs. One example of a TEA is a Regional Center, which encompasses a large city which contains clearly delineated census tracts that have been designated as a TEA by the State based on the measured unemployment rates for the population residing within those locations.
Rural Area
A Rural Area (RA) is a geographical area that is outside a metropolitan statistical area, or part of the outer boundary of any city or town having a population of 20,000 or less as shown by population indicators. In certain areas involving a sparsely populated state, an approved statewide Regional Center likely encompasses both TEAs and RAs.
Required Amount of Investment
Depending on the location of the commercial enterprise to be invested in, the required amount of the investment may be either $1 million or $500,000. If the investment is located within a TEA or RA, the required minimum threshold for investment is $500,000. Otherwise, an alien must invest a minimum of $1 million to qualify.
Required Commercial Enterprise
In order to qualify under the Pilot Program, an investment of the requisite amount ($500K or $1 million) must be made in a new commercial enterprise located within an approved Regional Center.
New Commercial Enterprise
The law and regulations require that the commercial enterprise in which the investment is made must:
- Have been created/established after November 29, 1990; or
- If the investment is made in a pre-1990 enterprise, the alien’s investment must have created a 40% or more increase in either the enterprise’s net worth or number of employees; or
- The pre-1990 enterprise has been restructured or reorganized so that the result is a new commercial enterprise
Risk
The regulations and precedent decisions require an alien to incur a reasonable risk for purposes of generating a return on his or her capital investment.
As such there should be no guarantees, buy back arrangements, unsecured promissory notes, other agreements or arrangements that in effect merely structure or organize the investment for appearance sake only for purposes of obtaining the permanent resident status without the alien’s capital being fully invested and at risk in the investment in the new commercial enterprise to create or spawn the required 10 jobs .
Engagement of the Alien Investor in the Enterprise
The regulations require that the alien investor is or will be engaged in the management of the new commercial enterprise, either through day-to-day managerial control or through participation in policy-making decisions for the commercial enterprise.