The EB-5 Immigrant Investor Program is a successful U.S. green-card-by-investment program that, since its inception in 1990, has contributed billions in foreign capital to the U.S. economy and funded the creation of hundreds of thousands of new jobs. The foreign nationals who provide the EB-5 investment capital are issued green cards, assuming their investment satisfies the various requirements of the EB-5 program. Requirements include the creation of at least 10 full-time jobs for U.S. workers, proof of the legal sources of one’s EB5 investment funds, the maintenance of the capital in an at-risk status for the duration of the EB-5 investment, and, of course, funds that meet the minimum required investment amount.
All of the above-mentioned requirements can pose problems to EB-5 investors, with the minimum required investment amount constituting the most absolute obstacle. Clocking in at $1.8 million, the minimum required investment amount can nullify an EB5 investment journey before it even begins, since many foreign nationals don’t have $1.8 million handy to infuse into a U.S. new commercial enterprise (NCE). That’s where targeted employment area (TEA) projects come in. With a minimum required investment amount of $900,000, TEA investment allows an EB-5 investor to obtain the same U.S. permanent residency benefits as with non-TEA projects at half the cost.
Complexities of TEA Eligibility Calculation
While the definition of a TEA is clear cut, in practice, calculating whether a project qualifies for TEA designation can be tricky. TEAs come in two different flavors—high-unemployment TEAs and rural TEAs, with high-unemployment TEAs accounting for the majority. Rural TEAs are relatively easy to calculate—using the latest 10-year U.S. census data, an investor must show the area has fewer than 20,000 inhabitants and is not located in a metropolitan statistical area (MSA) or on the outskirts of an area with more than 20,000 inhabitants.
The calculation of TEA eligibility for high-unemployment TEAs is more complicated. To qualify, an area must have an unemployment rate 50% higher than the national average, using reliable and current census-tract-level unemployment data. Those pursuing an EB-5 investment essentially only have two datasets to cull figures from: American Community Survey (ACS) five-year census-tract data and Bureau of Labor Statistics (BLS) annual county-level data. In most cases, EB-5 investors target a census-tract-level TEA, leaving them with two calculation options: using the imprecise five-year estimates from ACS or combining the five-year ACS data with the annual county-level data from BLS to extract a more precise estimate. The latter is known as the census-share method.
Poor Timing Can Lead to Projects Losing TEA Eligibility
United States Citizenship and Immigration Services (USCIS) requires investors to use the most recent available unemployment data when demonstrating TEA eligibility in their I-526 petition. If the unemployment rate decreases and the area no longer encompasses a rate 50% higher than the national average after the investor has submitted their I-526 petition, they can proceed with their lower investment amount, as long as the area qualified as a TEA at the time of submission. However, fluctuating unemployment data throughout the project planning stage can put investors in danger of needing to make a $1.8 million EB5 investment.
Rolling Monthly Calculations of Census Tract Unemployment Data
While ACS figures are only released yearly, consolidated in a five-year chunk of data, BLS releases unemployment data monthly with a two- to three-month lag. Typically, investors use BLS’s annual releases, published in April of the following year, to obtain a more precise estimate of unemployment levels. However, if an investor compiled BLS’s monthly data releases over the most recent 12 months, the calculation would yield the most accurate possible estimate of current unemployment data.
This calculation method is known as the “rolling average” because it provides insight into a 12-month period covering periods in two different calendar years. In the era of COVID-19, such a calculation could be particularly valuable, as it would highlight the debilitating economic effects of the pandemic more quickly than the annual BLS data, expected to be published in April 2021. As of January 2021, the most recent yearly BLS data available covers 2019, thus missing any effects from the COVID-19 pandemic.
If an EB-5 investor opts for the rolling average calculation method—which, it should be noted, is an atypical calculation method that could throw a USCIS adjudicator for a loop—it’s imperative to compare the data to the national unemployment data for the same period. Presenting data from different time periods, even if they overlap, would constitute an invalid TEA calculation. The investor should also ensure they are filing their I-526 petition with the most recent BLS monthly data available. If the next month’s data is released during the I-526 preparation period, the rolling average calculation should be revised to encompass it.
Can You Calculate a TEA with Data Covering Less Than a Year?
An EB-5 investment participant may wonder whether they can calculate TEA eligibility with data covering nine months, six months, three months, or even one month. USCIS has not provided any specific guidance against such a calculation method, but prospective investors should be aware that this constitutes unexplored territory in the EB-5 realm. In a data release in March 2020, the immigration body did indirectly consider a one-month TEA eligibility calculation, with the example calculation in the question only spanning a one-month period and USCIS ignoring the calculation period in its answer to the main point of inquiry. However, this should not be automatically construed as acceptance of such a method.
Since month-to-month unemployment data can fluctuate greatly, a USCIS adjudicator may be reluctant to accept a rolling average calculation of less than one year, as it could be deemed to inaccurately represent the region’s unemployment situation. This danger is magnified during the COVID-19 crisis, since a rolling average calculation over a short period of time could dramatically accentuate unemployment that may not continue long into the post-COVID recovery. Considering that most I-526 petitions are not adjudicated until about two years following submission, it’s unlikely that such a calculation would be effective. The government may wish to exercise more leniency in light of the damage the pandemic has bestowed on the U.S. economy, but foreign nationals hoping to immigrate to the United States are strongly advised to avoid such gambles on their EB-5 investment.