EB-5 Investment & Visa Program - Targeted Employment Areas

  • EB-5 Investment & Visa Program Resources

    In accordance with Title 8, Code of Federal Regulations Section 204.6(i), the Michigan Economic Development Corporation has been delegated the authority by the State of Michigan to calculate unemployment rates and certify or designate a particular geographic or political subdivision located within a metropolitan statistical areas (MSA) or within a city or town having a population over 20,000 (Subdivision), such as, by way of example only, counties, census designated places (CDP), that meet the “high unemployment area” definition and therefore qualify for the $500,000 minimum investment threshold as non-rural TEAs for EB-5 program purposes. Unemployment rates for MSAs, counties, CDPs, cities, and their consisting census tracts are published annually through the U.S. Bureau of Labor Statistics (BLS) or American Community Survey.

    The MEDC uses the most recent calendar year labor force and unemployment estimates to establish high unemployment rates and high unemployment areas; therefore, we are currently using 2010 unemployment data for these determinations.

    In order to be classified as a High Unemployment Area, the Subdivision must have experienced an unemployment rate that was equal to or exceeded 150% of the 2010 national employment rate. In 2010, 150% of the 9.6% average national unemployment rate was equal to 14.40%.

    Census Share Methodology:

    1. Obtain most recent census data on employment and unemployment (2005-2009 averages from the American Community Survey) for the Subdivision (small municipalities or census tracts) and the county or region in which the Subdivision is located;
    2. Calculate the share of census employment in the larger county or region which contains the Subdivision;
    3. Calculate the share of census unemployment in the larger county or region which contains the Subdivision;
    4. Obtain the most recent employment and unemployment data published by the Michigan Department of Technology, Management and Budget, Bureau of Labor Market Information & Strategic Initiatives for the larger county or region. This can be the most recent annual average (2010) or the most recent 12-month moving average;
    5. Multiply the employment share calculated in Step 2 above by the most recent county or region employment estimate obtained in Step 4 above;
    6. Multiply the unemployment share calculated in Step 3 above by the most recent county or region unemployment estimate obtained in Step 4 above;
    7. Add the derived employment and unemployment estimates to calculate labor force for the Subdivision. Divide unemployment by labor force to obtain the unemployment rate; and
    8. Compare the derived unemployment rate for the Subdivision to the U.S. unemployment rate for the same time period multiplied by 1.5.

    Special State Designation of a High Unemployment Area

    If the location of the proposed new business does not fall into a qualifying area described in the map above, justification for high unemployment area qualification might be possible by special designation of a smaller area within the otherwise non-qualifying area.  The state may designate a particular geographic or political subdivision located within a metropolitan statistical area or within a city or town having a population of 20,000 or more as an area of high unemployment and having at least 150 percent of the national unemployment average rate.

    In order to consider special area designations, applicants for such designation must observe the following criteria:

    1.

    The applicant seeking the designation should include a description of the boundaries of the geographic or political subdivision:

     

    a.  

    A geographic subdivision would be an area carved out based on the physical features of the Earth’s surface. (Good examples would be XYZ Valley, XYZ Bay, etc.)

     

    b.  

    A political subdivision would be a division of a state that exists primarily to discharge some function of local government, such as a civil administrative unit of a county or city. (Administrative units of the federal or state government do not qualify for special designation.)

    2.  

    The proposed area must have an unemployment rate equal to or exceeding 150% of the national unemployment average based on the weighted average of the unemployment rate of the contiguous census tracts comprising the desired area or Subdivision.

    Although the decision on claiming that a new commercial enterprise has created or will create employment in the desired designated high unemployment area belongs to the federal government, the state government has to evaluate potential beneficial and adverse impacts of such a designation. To aid such an evaluation, requesters should also provide a logical economic reasoning, one that would be recognized within the investment area or a specific industry, for why the area should be provided with a HUA (TEA) designation. Such reasoning should include any and all information necessary to justify the claim that the establishment of the new business will have a positive and meaningful effect on unemployment in the desired area.

    Please send questions to eb5@michigan.org.