The November 2019 changes to the EB-5 program include several updates that affect the targeted employment area (TEA) designation process. EB-5 TEA designation can be a complex and intimidating process because of the complexity of the data sets available and the importance of successfully navigating this part of the EB-5 application process. To address some of the confusion surrounding the updated TEA designation process, we examine who the new rules affect, what has actually changed, how to identify potential TEAs, and how to formulate TEA designation requests.
The simplest way to find out whether a project site meets the criteria to qualify as a TEA, whether because of high unemployment or being in a rural location, is to use the EB5 Affiliate Network national TEA map. Doing the complicated calculations yourself or trying to find the right information using other TEA-related resources is time consuming and unnecessarily difficult. The information provided by EB5 Affiliate Network (EB5AN) is based on the current United States Citizenship and Immigration Services (USCIS) rules and the latest available data, and you can have an answer in minutes.
Who Do the New TEA Rules Affect?
Those filing I-526 petitions on or after November 21, 2019.
The rules apply to all I-526 petitions filed on or after November 21, 2019, even if
- other investors in the project filed their I-526 petitions before the cutoff date,
- USCIS approved an exemplar I-526 before the cutoff date, or
- the petitioner wants to retain a priority date that falls before the cutoff date.
The rules do not affect any I-526 petitions filed on or before November 20, 2019, even if at the time of filing investor funds
- had not yet been fully invested in the new commercial enterprise (NCE) or
- deployed to the job-creating entity (JCE).
What Has Actually Changed in the New TEA Rules?
Instead of allowing states to designate geographic areas for TEAs, the Department of Homeland Security (DHS) has set clear criteria an area must meet to be considered a TEA.
The definition of a rural TEA, as per Part G, Chapter 2 (A)(5), of the USCIS Policy Manual, remains unchanged:
- A rural area is any area other than an area within a standard metropolitan statistical area (MSA; as designated by the Office of Management and Budget) or within the outer boundary of any city or town having a population of 20,000 or more based on the most recent decennial census of the United States.
The essential definition of a high unemployment TEA remains the same:
- A high unemployment area is an area that has experienced unemployment of at least 150% of the national average rate.
However, two aspects of the designation process changed. First, the scope of high unemployment TEAs has been expanded to include cities and towns with an unemployment rate of at least 150% of the national average unemployment rate, that have a population of 20,000 people or more, and that are located outside of an MSA.
At this stage it is unclear whether DHS considers census tracts that touch at a single corner point “directly adjacent,” but given the general direction the agency is moving in with TEA designation, it is probably safe to assume it does not. This point will become clearer after the rules have been in operation for a while.
How Do You Know Whether a Project is Located in 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. The easiest solution is to check the EB5AN free national TEA map, but you can also do the research yourself.
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 a Wikipedia 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. This has not changed with the introduction of the new rules.
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
Although the DHS seems to believe that, because the information needed to determine whether a project qualifies as a TEA is readily available, anyone can perform these calculations at little or no cost, this doesn’t hold true in practice. The information isn’t presented in a user-friendly format, and 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 TEA designation request:
- 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.
- ACS data published by the U.S. Census Bureau, which bridges gaps in the BLS data, with the latest five-year data published in December 2019. 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.
- State Labor Market Information programs provide reliable and verifiable unemployment data, but you must remember to consider internal validity if you use this information. Make sure the underlying data sets are the same when comparing the unemployment rate in the potential TEA to the national unemployment rate.
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 latest data set, which covers 2014 to 2018, was released in December 2019, and it sets the unemployment rate at 5.86%. Thus, for an area to qualify as a high unemployment TEA, it would have to have an unemployment rate of 8.79% or higher (at least 150% of 5.86%).
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 for 2019 published by BLS was 3.66%, so the corresponding unemployment rate threshold for TEA qualification using the census-share methodology would be 5.49% or higher (at least 150% of 3.66%).
When using the census-share method, we calculate a single census tract’s (or contiguous 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 total labor force number of each census tract to calculate the total labor force for the TEA.
- Divide the total number of unemployed people by the total labor force.
- Multiply the result by 100 to find the unemployment rate. You can compare this value to the national unemployment rate.
When it comes to these calculations, the simplest option is to consult the EB5AN TEA map. It offers an interactive national map with layers of data for both accepted calculation methodologies for TEA qualification: (i) current ACS five-year data by census tract and (ii) census-share methodology. The map also offers a layer of data for all rural TEA designations so you can instantly determine if a project will qualify as either a high unemployment TEA area, using either of the two calculation methodologies described above, or as a rural TEA.
Examples of Unemployment Rate Calculations
The following two examples show unemployment rates calculated using ACS five-year data and the census-share method for 100 East Las Olas Boulevard, Fort Lauderdale, Broward County, Florida.
In some cases, a target site can qualify as a high unemployment TEA under one of the two accepted TEA calculation methodologies but fail to qualify under the other. A target site needs to qualify under only one of the two methods to qualify as a TEA.
The target site is located in census tract 425; we have included two adjacent tracts (416 and 417) in the calculation. The table below contains the relevant 2014–2018 ACS five-year data for the three census tracts.
|Census tract||Labor force||Employed people||Unemployed people||Unemployment rate (%)|
1. TEA qualification calculation using the ACS five-year data methodology
Tract 425, where the target site is located, has an unemployment rate of 3.31%, but based on the calculation method using only ACS five-year data, the three tracts combined have a weighted unemployment rate of 9.61%. The corresponding unemployment rate threshold for TEA qualification using the ACS five-year data methodology is 8.79%. Thus, based on this calculation method, the target site qualifies as a high unemployment TEA using the ACS five-year methodology.
The weighted average is calculated as follows:
1,035 (total unemployed people) ÷ 10,773 (total labor force) x 100 = 9.61%
2. TEA qualification calculation using census-share methodology
To obtain the percentage share of Broward County’s employed and unemployed populations for the three 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.
|Labor force||Employed||Unemployed||Unemployment rate (%)|
|Census tracts 425, 416, and 417 (total)||10,773||9,738||1,035||9.61|
|Broward County, FL||1,016,959||949,870||67,089||6.59|
|Census tract share||1.025%||1.543%|
To calculate the census-share unemployment estimate for the three 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 since this is the correct corresponding data set for the 2019 BLS unemployment data.
|Labor force||Employed||Unemployed||Unemployment rate (%)|
|Broward County, FL||1,040,519||1,008,814||31,706||3.05|
|Census tract share||1.025%||1.543%||–|
|Disaggregated census tract data||10,831||10,342||489||4.51|
Based on the census-share method, the three tracts that form our target TEA have a combined average unemployment rate of 4.51%. The corresponding unemployment rate threshold for TEA qualification using the census-share methodology is 5.49%. Thus, using the census-share methodology, this project location does not qualify as a high unemployment TEA using the census-share methodology.
How Should You Formulate Your TEA Designation Request?
Although TEA letters from state agencies are no longer a key component of the EB-5 application process, the format used to request these letters remains valid. Instead of presenting a letter requesting TEA designation to a state agency, you can now simply direct the letter and accompanying report to USCIS. The TEA analysis report 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 the USCIS adjudicator handling your case to see the basis of your argument and the factors you consider in requesting TEA designation.
Another important point is that the TEA determination must be valid when the EB-5 investor makes his or her investment or when the investor files the I-526, whichever comes first. This has not changed with the introduction of the new rule. 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 petition should be accompanied by a TEA qualification report with documentary evidence that demonstrates to the USCIS that the project site in question does qualify as a TEA at the time of filing the I-526 petition.
Technically, regional centers can file exemplar petitions to obtain USCIS approval of a TEA in advance of individual investor I-526 petitions. Approval of an exemplar petition would mean that I-526 petitions filed by project investors would receive deference if no material changes in facts occurred between the time of filing and the time of approval. However, as of December 2019, it takes more than five years for USCIS to process I-924 petitions, which means the underlying data will be outdated by the time the exemplar is adjudicated. Unless processing times increase exponentially, material changes will have occurred in all cases.
To navigate the complex TEA designation process, work with EB5 Affiliate Network. Learn more about our EB-5 Project TEA Qualification Report service, which includes a TEA Qualification and Analysis Report and Census Tract Map based on the latest data available.
If Your Project Qualifies as a TEA, The Next Step is to Order a Report
Our TEA Report provides USCIS with a detailed, easy to follow analysis of the census tract assembly methodology and calculation needed to meet the USCIS unemployment EB-5 TEA requirements.