According to the United States Government Accountability Office, an economically distressed area is one with a poverty rate of at least 20 percent, coupled with an unemployment rate that is at least 1.5 times larger than the current national unemployment rate. Since the economic downturn that began with the collapse of the housing market in 2007 and 2008, an unfortunately large number of areas across the country can now qualify as economically distressed areas.
What is the EB-5 Program?
The EB-5 program was created in part to combat these types of issues head on. EB-5, now administered by the USCIS, awards foreign investors who invest at least $1 million dollars in a new enterprise in economically distressed areas. In order to qualify, an investor must be responsible for creating at least ten full time jobs in that area on top of their initial $1 million dollar investment. Conversely, entities may also qualify if they are investing $500,000 in a designated targeted employment area.
The ten full time jobs that an investor must create under EB-5 requirements can include those with US citizenship, those with Green Cards and any other person who is lawfully allowed to work within the United States.
Do EB-5 Funds Actually Reach Economically Distressed Areas?
EB-5 funds absolutely reach economically distressed areas, largely thanks to the inner workings of the program itself. Under the law, states are allowed to decide how economically distressed areas are defined and where they are located. Many states allow developers to piece together multiple census blocks, allowing them to reach a much wider area than they would if they were going purely from census tract information.
In many cases, these economically distressed areas (or “targeted employment areas”) can stretch across the entire state or can even wind through a particular area in an irregular grouping of smaller locations. This is typically done to better separate economically distressed areas from high income areas.
State governments often support this method of creating and defining economically distressed areas because it allows for more investment dollars to reach the people who need them the most and to help create jobs throughout needy areas. Many state governments even provide census information, automated tools and other resources to help developers better identify the areas that need EB-5 funds the most.
If you’d like to find out more information about investing under the EB-5 program, contact David Hirson & Partners, LLP today. David Hirson is an immigration attorney that specializes in EB-5 investment. You can reach him at [email protected] or by phone at 1-.