The number of approved EB-5 regional centers has grown exponentially over the last several years and one of the many confusing elements of the EB-5 program has to do with the levels of geographic scope with respect to the regional center, impact area and targeted employment area. Our article below explains the differences.
Regional Center Area
A regional center is approved for a specific geographic region. The region must be contiguous and typically includes a combination of counties. The I-924 application details how the regional center plans to create jobs throughout the proposed regional center’s geographic area. In order to include an area in the regional center’s boundaries, the I-924 application must detail how sponsored projects will create jobs in that region. After the initial regional center approval, a regional center may expand their geographic area by presenting additional projects in adjacent, contiguous areas.
Impact Area
An impact area refers to the geographic area covered by a single economic impact analysis or jobs report. The impact area must be reasonable for the specific project and must be defended in the impact analysis. For example, a new fast food restaurant will likely only have an economic impact on its immediate local area. Accordingly, the acceptable impact area for a new fast food restaurant is most likely only a handful of counties. Typically, larger projects result in larger impact areas. Impact areas are typically defended by identifying the geographic area from which the project will draw workers and purchase other inputs. Metropolitan statistical areas, defined by the Office of Management and Budget, are typically well defended as a single economic unit.
A regional center application can include a single project, where then the regional center’s geography aligns exactly with the impact area’s geography. However, a regional center’s application may include multiple projects, requiring multiple economic impact analyses that would result in a regional center geography composed of the combined area of the multiple impact areas. In this way, regional centers can request approval for a large geographic area.
Targeted Employment Area
A targeted employment area is defined for a specific project. The targeted employment area will necessarily be located inside the regional center’s area and inside the project’s impact area but does not need to align with the boundaries of the regional center or the impact area. In practice, targeted employment areas are typically a census tract or combination of contiguous census tracts that includes the area in which the new commercial enterprise is principally doing business.
