A targeted employment area (TEA) is a rural area or an area characterized by high unemployment that would benefit from the economic growth brought about by foreign investment. To encourage investment in these areas, the required EB-5 investment amount for projects located in TEAs is lower than for projects located in non-TEA regions. Currently, investment in a TEA project requires only $500,000 instead of the usual $1,000,000.
Most EB-5 investors are driven by the desire to obtain green cards, so the opportunity to risk less capital is attractive. Consequently, it is often easier to find the required number of investors for EB-5 projects located within TEAs. Thus, TEA designation benefits communities, investors, and project developers. Several areas have been designated as TEAs, but investors and project developers can request TEA designation for additional areas that qualify.
Types of TEA Designation
To secure TEA designation, an EB-5 project must be located in either an area characterized by high unemployment or in a rural area. Additionally, each state has the authority to designate specific areas as TEAs to ensure that the program meets the unique needs of its population.
High Unemployment TEAs
To qualify as a high unemployment TEA, an area must have an unemployment rate of at least 150% of the national average. For example, the U.S. national unemployment rate was about 4% in 2018. Therefore, to be designated a high unemployment TEA based on this information, an area would have to have an unemployment rate of at least 6%.
Additionally, the area must be in a county or metropolitan statistical area (MSA), as identified by the Office of Management and Budget, with a population greater than 20,000 residents according to the most recent 10-year U.S. Census.
To qualify as a rural TEA, a project location must not be located within an MSA or on the outer borders of a town or city with a population of more than 20,000 residents according to the most recent 10-year U.S. Census.
Securing TEA Designation
EB-5 investors can submit applications directly to USCIS for both types of TEA designation, or they can apply for high unemployment TEA designation with a state agency acting on behalf of the USCIS.
When requesting a TEA letter from a state agency, applicants must submit supporting data and documentation to show that the area qualifies based on unemployment statistics. This is one of the easiest ways for EB-5 investors and projects to secure TEA approval. When an EB-5 investor submits his or her I-526 petition, the TEA letter obtained from the state agency is included in the application pack to show that both the investor and the project qualify for the lower investment amount.
For rural TEAs, no official designation letter from a state agency is required. Instead, the EB-5 investor’s I-526 application must include documentation that supports the claim that the target area qualifies as a rural TEA.
Three main types of evidence are acceptable for requesting TEA designation by USCIS:
- Geographic data and population statistics obtained from the U.S. Office of Management and Budget that shows that an area qualifies as a rural TEA
- Up-to-date unemployment data obtained from the U.S. Bureau of Labor Statistics Local Area Unemployment Statistics (LAUS) program showing that the area meets the requirements for a high unemployment TEA
- Additional statistical documentation published by a third party regarding unemployment and the population in the target area that supports the request for TEA designation
The USCIS considers the conditions on which the TEA application or designation is based at the time the applicant submits the I-526 petition, so even if the employment rate in the target area has decreased or the population has increased by the time USCIS processes the petition, it will still consider the TEA designation valid.
Key Facts about TEA Designation
1. Projects sponsored by USCIS-approved regional centers typically fall within TEAs. To find out whether a project falls within a TEA, consult the EB5 Affiliate Network TEA map.
2. The TEA designation process is unnecessary for investors who want to invest the full required amount in EB-5 projects (currently $1,000,000). Only those who want to invest the reduced amount (currently $500,000) need to invest in TEAs.
3. TEA designation can be obtained through an authorized state agency for high unemployment TEAs. This is typically easier than requesting TEA designation through USCIS.
4. TEA designation can be obtained directly through USCIS, and this is required for rural TEA designation. Applicants must submit evidence showing that the proposed EB-5 project falls within a qualifying area.