Where must an EB-5 NCE be located for TEA purposes?

Principally, an EB-5 NCE must be doing business in and creating jobs in a TEA. The statute and regulations governing the EB-5 program defines a “targeted employment area” (TEA) as, at the time of investment, a rural area or an area that has experienced unemployment of at least 150 percent of the national average rate. Congress expressly provided for a reduced investment amount in a rural area or an area of high unemployment in order to spur immigrants to invest in new commercial enterprises that are principally doing business in, and creating jobs in, areas of the greatest need. For the purpose of the EB-5 program, a new commercial enterprise is “principally doing business” in the location where it regularly, systematically, and continuously provides goods or services that support job creation. If the new commercial enterprise provides such goods or services in more than one location, it will be deemed to be “principally doing business” in the location that is most significantly related to the job creation. Factors to be considered in making this determination may include, but are not limited to, (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. A regional center may encompass a large geographic area which may contain a TEA as well as areas that are not TEAs. The regional center&#39s TEA qualifying project must be principally doing business and creating jobs in a TEA.

The general rule is that a new commercial enterprise must be "principally doing business" within a Targeted Employment Area (TEA). For the regional center context, where the new commercial enterprise indirectly creates jobs by investing in or loaning capital to a job-creating entity, it is the job-creating entity that must be principally doing business within a TEA.

The job creating entity needs to be located in the Targeted Employment Area. In an EB-5 regional center project with a loan model, the new commercial enterprise may not be located in the TEA, but the job creating entity is. In a direct EB-5 project, in which the new commercial enterprise and the job creating entity are the same, then the entity should be in the TEA if the investment is $500,000.

The safest course of action is to have the jobs created in the TEA.

Targeted Employment Area (TEA) only comes into play if the EB-5 investment is limited to $500,000. For a $1 million investment, the TEA would not matter. If you have an existing business that you are considering getting an EB-5 investment, it makes sense to find out if it sits within a TEA. The job creation activities are supposed to take place within the TEA. Lastly, TEA is a legal concept. To qualify an area as TEA, you should contact an experienced attorney or an economist.

Regional center determinations are for specific geographic areas. The entire area may have a TEA, or only a part of it. The project itself must be located within the TEA.