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Advantages of TEA Approval
Projects located within targeted employment areas (TEAs) offer a significant advantage to investors in that the EB-5 investment requirement drops from $1,800,000 to $900,000, posing substantially less risk. For regional centers, this lower amount opens the door to a wider range of investors and can act as an attractive selling point. A TEA is either a rural area or an area experiencing significantly high unemployment, proof of which must be provided with the I-526 petition so investors can qualify at the lower amount.
This article outlines specific criteria for TEA designation and the steps regional centers must take during the petition process to evidence to United States Citizenship and Immigration Services (USCIS) that an area qualifies as a TEA.
TEA Designation Criteria
For a project to take advantage of a TEA designation, it must meet one of the following two criteria:
- It must be located in a rural area. According to USCIS, a project meets this requirement if it is not within a metropolitan statistical area (MSA), which is a geographical area defined by the Office of Management and Budget as having a population of 50,000 or more. The project also must not be located on the outskirts of an urban core with a population of 20,000 or more. The regional center and investor must provide documentation that the project is located in an area meeting these criteria at the time the I-526 petition or the I-924 exemplar petition is filed.
- It must be located in an area with high unemployment. For this designation, unemployment in the area must be at least 150% the U.S. national average. For 2018, this figure was 3.9%, so a TEA would have an unemployment rate of 8.9%. Unlike with the rural area designation, an area of high unemployment must be an MSA or an urban core with a population of 20,000 or more. Evidence of this designation must likewise be provided with the I-526 petition.
Petitioners must provide documentation directly to USCIS for approval along with each I-526 petition. The following documents play an essential role in proving qualification for TEA designation:
- Office of Management and Budget data proving that the area in question qualifies as a rural area, that is, that the project does not fall within an MSA or on the outskirts of an urban core.
- Local Area Unemployment Statistics proving that the area has an unemployment rate of 150% the national average. This figure must be based on data current to the date the petition is filed.
Requesting TEA Designation
Regional centers have two options when pursuing TEA designation for their EB-5 projects: rural area designation and high unemployment designation. The population qualifications for these two designations are contradictory, so no project can qualify for both. Determining which criteria the project meets is therefore crucial to how the regional center should proceed when requesting TEA designation. This section provides some guidelines regional centers can follow in this regard.
- Projects located in rural areas automatically qualify for TEA designation. To verify location in a rural area, regional centers must check with the Office of Management and Budget, which periodically releases bulletins updating the delineation of MSAs. Another invaluable resource is the 2010 Census data, which provides the population counts of U.S. cities. To qualify as being located in a rural area, the project must not be on the outskirts of a city with a population of 20,000 or more.
- If the project is not located within a rural area, it may fall within an area of high unemployment and thus still qualify for TEA designation. In 2018, the national unemployment average was 3.9%. USCIS defines high unemployment as 150% the national average, so based on the 2018 rate, the project must fall within an area with 5.9% unemployment to qualify under this criterion.
- The area must be defined according to 2010 Census data. However, if the census tract in which the project is located does not meet the unemployment criteria, the regional center can combine the contiguous tracts in which the new commercial enterprise will primarily do business, including directly adjacent tracts, to achieve the required unemployment level. For example, a census tract with an unemployment level of 6% would not meet the criteria, but a tract combined with a neighboring tract with a level of 9% may.
The project area must qualify as a TEA at the time the investor makes his or her investment or files his or her I-526 petition. Because employment rates and population levels change over time, regional centers must confirm that project areas still qualify as TEAs before taking on new investors, even if earlier groups of investors qualified for the lower investment amounts.
TEA designation can go a long way in attracting investors to regional center EB-5 projects. The lower required amount of $900,000, meant to encourage investment in areas with the most urgent need for jobs, allows investors to receive permanent residence with less risk. Most regional center projects are thus located in TEAs, and by following the tips outlined above, regional centers can take advantage of this significant opportunity.