by

TEA for Two? Thoughts on Economic Zone Gerrymandering

The hypothetical:

You are approached by a client who has a solid business in place, a good history of success; the company is looking to expand production to meet export demand.  Although highly invested in the firm, they need money for the expansion, but the banks are saying "no way, Jose", citing their dried up appetite for expansion in this wobbly economy.  They have heard something about this "immigrant investor deal", and you give them the rundown on the EB-5 visa, suggesting either the creation of a new Regional Center for their objectives or, if you know of one, direct them to an established local RC which might be able to accommodate the project.

You're excited, the client is excited, and you jump in to start your homework but, lo and behold, despite the visibly economically-disadvantaged area in which the business is located, it turns out that the area is NOT in a Targeted Employment Area ("TEA").  In fact, the company border is RIGHT ON a dividing line, and it IS a TEA right across the street!  But where your client sits, they are limited to $1 million dollar EB-5 investors…something which, ahem, has not been exactly thriving even during these exciting EB-5 friendly times.

Deal over?

Here's a concept: reread the December 2009 memo, read all the case law, and see if this makes sense…and I am NOT saying that just because something makes sense, you can actually convince the government that it makes sense! Consider:

  1. State determinations of TEA designation, according to USCIS, will be respected.
  2. The objective of state identifications of targeted areas is driven not by politics but, rather, by a real desire to stimulate economic activity…be it via TEA designation, tax credits, whatever.

My theoretical submission for the day, and your food for thought (no throwing of tomatoes please):

Doesn't it make sense that in non-rural and urban areas, where existing TEA lines are to a great extent arbitrary and MSA-driven, that the political imperative for state government should be to work with prospective job-creators in making common-sense adjustments to artificial boundaries if in doing so these adjustments result in new jobs which, but for the logical corrections, would never be created?

My point: look beyond the plat maps, Folks.  Exploring Targeted Employment Areas on behalf of solid prospective EB-5 projects is like Forrest Gump's mom box of chocolates: "you never know WHAT you gonna get…"