On March 15, 2022, President Joe Biden signed into law the EB-5 Reform and Integrity Act of 2022. This bill made far-reaching changes to EB-5 industry regulations, including a few modifications to the process for designating targeted employment areas (TEAs).

A TEA is either a rural or a high-unemployment area that needs EB-5 investment capital to expand its local economy and generate jobs. Rural TEAs cannot be located within a metropolitan statistical area (MSA) or on the outskirts of a city or town with a population of 20,000 or more. On the other hand, high-unemployment TEAs must have an unemployment rate that is at least 150% greater than the United States’ national average.

Census tracts, small statistical areas whose boundaries are set by the Census Bureau, can be combined to form a TEA. Since census tracts are relatively permanent, they make it easy to compare historical statistics. The Census Bureau delineates the borders of each census tract based on its population, which usually ranges from 1,200 to 8,000. EB-5 investors can examine the unemployment rate of a single census tract or a group of census tracts to determine whether they constitute a high-unemployment TEA.

How TEAs Are Designated

United States Citizenship and Immigration Services (USCIS) has the sole authority to determine whether a location qualifies as a TEA. In Form I-526 or I-526E, investors must submit population or employment data and calculations proving that their project is located in a TEA. (Form I-526 is submitted by direct investors, while investors in regional center projects submit Form I-526E.) Data and calculations demonstrating TEA designation are also submitted in a regional center project’s Form I-956F.

TEA designation is renewable in two-year increments.

Regulations on Census Tract Combination

When calculating whether a project’s area has a sufficient unemployment rate, the census tract in which the EB-5 project is located can be combined only with directly adjacent census tracts (tracts whose borders touch those of the EB-5 project’s tract).

Determining Whether a Project Site Qualifies as a TEA

To determine whether a project is located in a TEA, you have to find out whether the project location can be considered a rural or a high-unemployment area. Therefore, you need to research the geographic area and the population and/or employment levels.

How to Find Geographic Information About a Project Site

To find information such as whether the area falls within an MSA and the census tract number of the project site, start with an Internet search to learn more about the city or town. The entry should indicate the county and MSA, if any, and a rough estimate of the population.

To find the census tract number, enter the project’s address in the FFIEC Geocoding/Mapping System on the Federal Financial Institutions Examination Council website. Here you can also find the census tract numbers of directly adjacent tracts and confirm whether the project location falls within an MSA.

How to Find Population and/or Employment Data About a Project Site

Finding the relevant population and/or employment data to support your request for TEA designation can be difficult. In its Policy Manual, USCIS notes that “acceptable data sources for purposes of calculating unemployment included U.S. Census Bureau data (including data from the American Community Survey) and data from the Bureau of Labor Statistics (including data from the Local Area Unemployment Statistics)” when referring to data sources states used during the TEA designation process. While USCIS points out these potential data sources, it does not automatically approve any specific data set.

When gathering data to support a request for TEA designation, the focus should be on using reliable and verifiable data that is internally consistent and that will remain valid for the desired period. The onus is on the applicant to demonstrate that the area falls within a TEA. While the information publicly available from government departments and agencies is reliable and verifiable, it is seldom internally consistent.

Internal consistency refers not only to the source of the data but also to the period the data covers. For example, if you use American Community Survey (ACS) data to determine the unemployment rate in the project area, you must use ACS data to determine the national unemployment rate. Similarly, if you use the annual national unemployment rate, you cannot compare it to the monthly unemployment rate for the project area. It is also generally better to use annual rates, as this allows you to base the designation request on underlying data with a longer validity period.

Navigating Publicly Available Employment Data

The calculations used to determine whether a project qualifies as a TEA are complicated, and the information is not presented in a user-friendly format. Additionally, it is difficult to find data sets that are reliable, verifiable, and internally consistent. To save time and ensure accurate results, it’s generally best to work with an EB-5 consultant.

If you want to try to find the data yourself, or if you’re simply curious about the data available, start by reviewing the U.S. Census Bureau’s Guidance for Labor Force Statistics Data Users. The U.S. Census Bureau developed this page to “explain which data sources to use and how to make comparisons.”

You can use the following data sources for the data component of a high-unemployment TEA designation request:

1. Bureau of Labor Statistics (BLS) annual unemployment data, which is published at the national, MSA, and county levels. The BLS also publishes monthly data, but this is not particularly useful in the EB-5 context, as you would have to update the information each month as the underlying data changes. The main site contains several useful pages.

• For MSA or county average employment rates, Tables and Maps Created by BLS
• Featured LAU Searchable Databases
• Geographic Information: Economic Summaries

2. ACS data published by the U.S. Census Bureau, which bridges gaps in the BLS data, with the latest five-year data. The BLS data doesn’t include information at the census tract level or for cities and towns outside MSAs. To combine ACS and BLS data, practitioners use the census-share methodology.

How to Calculate Unemployment Rates for TEA Designation

You can calculate the required unemployment rates using ACS five-year data only or the census-share methodology.

ACS five-year data includes unemployment data by census tract. The data set released in March 2022 sets the unemployment rate at 5.4%. Thus, for an area to qualify as a high unemployment TEA, it would have to have an unemployment rate of 8.1% or higher (at least 150% of 5.4%).

Alternatively, you can use the census-share method, which combines ACS five-year data with BLS one-year data. This method yields more current results because BLS data is updated annually for a single year. The national unemployment rate published by BLS in April 2022 was 5.3%, so the corresponding unemployment rate threshold for TEA qualification using the census-share methodology would be 7.95% or higher (at least 150% of 5.3%).

When using the census-share method, we calculate a single census tract’s (or directly adjacent census tracts’) share of a larger geographic area’s employment and unemployment. The annual average unemployment rates the BLS publishes in its Local Area Unemployment Statistics focus on larger geographic areas, but TEA designation involves smaller areas—typically census tracts. Consequently, we must supplement the BLS data to estimate unemployment rates for census tracts.

The census-share methodology requires two data elements: (i) the most recent BLS annual average unemployment data for the larger area in which the target site is situated and (ii) unemployment data for the smaller target area. While census data was initially used for these calculations, in May 2013 USCIS began to accept ACS data.

Finally, when combining census tracts, you have to calculate the weighted average unemployment rate for the group of tracts. Base the calculation on civilian labor force data, not on total labor force data. You’ll need data on the labor force and the number of unemployed people in each census tract.

• To calculate the weighted unemployment rate for the TEA, add together the number of unemployed people in each tract.
• Next, add the civilian labor force number of each census tract to calculate the civilian labor force for the TEA.
• Divide the total number of unemployed people by the civilian labor force.
• Multiply the result by 100 to find the unemployment rate. You can compare this value to the national unemployment rate.

Examples of Unemployment Rate Calculations

The following two examples show unemployment rates calculated using ACS five-year data, and the census share method for 333 1st St. S, St. Petersburg, Pinellas County, FL 33701.

In some cases, a target site can qualify as a high-unemployment TEA under only one of the USCIS-accepted TEA calculation methodologies, but fail to qualify under others. A target site needs to qualify under only one methodology to qualify as a TEA.

The target site is located in census tract 286 of Pinellas County, FL; we have included five adjacent tracts (205, 212, 216, 215, and 287) in the calculation.

The table below contains 2015–2019 ACS five-year data for the census tracts, and the TEA qualification threshold at the time was 7.98%.

1. TEA qualification calculation using the ACS five-year data methodology

Tract 286, where the target site is located, has an unemployment rate of 5.91%, but based on the ACS five-year calculation methodology, the combined area has a weighted unemployment rate of 10.16%. The corresponding unemployment rate threshold for TEA qualification using the ACS five-year data methodology is 7.98%.

Thus, based on this calculation method, the target site qualified as a high unemployment TEA using the ACS five-year methodology.

The weighted average is calculated as follows:

909 (total unemployed people) ÷ 8,943 (civilian labor force) x 100 = 10.16%

2. TEA qualification calculation using census-share methodology

To obtain the percentage share of Pinellas County employed and unemployed populations for the census tracts in our example, we divide the total number of employed people in the census tracts by the number of employed people in the county and multiply the result by 100. We do the same for the unemployed population.

The census and county data in the table below was drawn from the 2014–2018 ACS five-year data.

	CIVILIAN LABOR FORCE	EMPLOYED	UNEMPLOYED
Census Tracts (286, 205, 212, 287)	5,718	5,084	634
Pinellas County, FL	472,955	446,120	26,835
Census Tract Share		1.14%	2.36%

To calculate the census-share unemployment estimate for the census tracts that constitute our target TEA, we apply the shares calculated in the previous step to the 2019 BLS unemployment data, derived from the Labor Force Data by County, 2019 Annual Averages table. For the census-share methodology, we use the 2014–2018 ACS five-year data.

	CIVILIAN LABOR FORCE	EMPLOYED	UNEMPLOYED
Pinellas County, FL	494,185	479,472	14,713
Census Tract Share		1.14%	2.36%
Disaggregated Census Tract Data	5,812	5,464	348

Based on the census-share method, the tracts that form our target TEA have a combined average unemployment rate of 5.99%. For this period, the corresponding unemployment rate threshold for TEA qualification using the census-share methodology was 5.49%. Thus, using the census-share methodology, this project location did qualify as a high unemployment TEA using the census-share methodology.

How Should You Formulate Your TEA Designation Documentation?

The TEA analysis report in your I-526/I-526E petition should include the following information:

• A definition of the geographic area and its suitability for classification as a TEA, with specific reference to the relevant EB-5 policies or regulations
• The sources of the population and employment data used
• An explanation of the methodology used and the steps followed in all calculations
• A justification of why the TEA analysis is reasonable

This information will make it easy for USCIS to see the basis of your argument and the factors you consider in requesting TEA designation.

The TEA determination must be valid when the EB-5 investor makes his or her investment, when the project files Form I-956, or when the investor files the I-526/I-526E petition, whichever comes first. The underlying data must remain valid for the period required, so it’s generally better to use annual data.

Who Should Apply for TEA Designation?

The short answer is that every I-526/I-526E petition should be accompanied by a TEA designation report that demonstrates to the USCIS that the project site in question does qualify as a TEA.

To navigate the complex TEA designation process, work with EB5AN.