Targeted Employment Areas: An Overview and Updates based on 2018 Unemployment Data
Our firm has represented various projects who have been sponsored by the EB5 Affiliate Network (EB5AN), one of the leading regional centers with designated centers encompassing well more than half of the United States. The following is a blog post written by their company and my firm.
Understanding targeted employment area (“TEA”) designation is essential for making the most of the EB-5 Immigrant Investor Visa Program, which is administered by U.S. Citizenship and Immigration Services (USCIS). Under the EB-5 program, foreign investors can qualify for U.S. permanent residency by meeting several investment criteria, chief of which is investing a set amount in a U.S. business, with the investment creating 10 full-time, permanent jobs for U.S. workers. The investment amount depends on the location of the new commercial enterprise (called an “NCE” in the EB-5 industry). While the minimum amount is usually $1 million, this is reduced to $500,000 for investments made in TEAs.
TEAs are rural areas or areas experiencing high unemployment that would benefit most from the economic growth sparked by foreign investment. To attract more investment to these areas, the minimum investment amount is lower. Rural TEAs are locations that fall outside metropolitan statistical areas (MSAs), as identified by the Office of Management and Budget, and that are not located on the outskirts of towns or cities with populations exceeding 20,000 according to the current 10-year U.S. Census.
High-unemployment TEAs are areas with unemployment rates of 150% or higher than the national average and located within an MSA or county with a population of more than 20,000 people according to the current 10-year U.S. Census. National unemployment rate data must originate from the Bureau of Labor Statistics. Based on the 2018 U.S. unemployment rate of 3.9%, an area is currently deemed to be experiencing high unemployment if the unemployment rate is at least 5.85%.
When an immigrant investor invests in a high-unemployment TEA, a TEA designation letter must accompany the I-526 petition. Designated state agencies certify whether EB-5 projects are situated in TEAs, and these certifications must be based on the most recent data available. Each state typically updates its TEA datasets each year. In several states, multiple contiguous census tracts can be combined, and TEA designations can be based on the unemployment rate in the combined region. Such contiguous census tracts can be supported by commuter traffic data, helping to demonstrate that most U.S. employees do not live within a neighborhood block or area of their employment but must travel to work there.
Notably, while TEAs can also be located in rural areas, this type of designation does not require an official TEA designation letter. However, supporting documentation created by a third party that shows that the area qualifies as a TEA must accompany I-526 petitions. Failure to have a qualified EB-5 immigration law expert document your TEA can cause consequential ramifications.
Furthermore, USCIS reviews TEA designations as part of the I-924 project exemplar process for those seeking preapproval for EB-5 projects. In our past experience gaining exemplar approval for a variety of industries, using the most recent unemployment data to identify TEAs is essential, as failing to do so might result in a Request for Evidence and additional delays.
Although the rules for TEA designation under the EB-5 program have not changed since the 2018 unemployment data was released, the TEA requirements for specific areas may change from one year to the next. Thus, researching whether an EB-5 project site remains within a TEA is a crucial part of the EB-5 investment process.
At our law firm, we use many of the useful tools and resources for EB-5 investors and developers available from the EB5 Affiliate Network including its free national TEA map based on 2018 unemployment data and a list of designated TEAs. The map shows high-unemployment areas by census tract, highlighted in orange, and we encourage you to view its webinar if you wish to learn more about navigating the map and accurately identifying TEAs. For more information, contact me for further assistance.