TEA designation is critical for any EB-5 project in the market today
In today’s EB-5 market, getting an EB-5 project location designated as a targeted employment area (TEA) is important for successfully attracting EB-5 investors. If an EB-5 project is located in a TEA, the required EB-5 investment amount is only $500,000 dollars as opposed to $1 million for a project not located in a TEA. Since the vast majority of EB-5 investors are primarily motivated to invest in an EB-5 project to acquire a green card, they typically have no compelling reason to risk twice as much capital in an EB-5 investment project.
In order to be officially designated as a TEA, an EB-5 project must be located in either (i) a rural area or (ii) a location experiencing a high unemployment rate at least 50% above the national average. When an EB-5 investor submits an I-526 immigration petition, the official TEA letter is included as an exhibit in the petition to demonstrate that the EB-5 project and the investor qualify at the $500,000 investment level. For EB-5 investors who choose to invest in a USCIS-approved regional center, the available projects will most likely be located in a TEA.
(i) High unemployment TEA designations
To be designated as a high unemployment TEA, an EB-5 project must be located in an area with an unemployment rate of at least 150% of the U.S. national average. Since the U.S. national average unemployment rate for 2018 was 3.9%, the required unemployment rate threshold for a high unemployment TEA today is 5.9% (150% of the 3.9% unemployment rate). Additionally, for an EB-5 project to qualify as a high unemployment TEA, it must be in a county or MSA that has a population of 20,000 or more residents.
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(ii) TEA qualification in rural areas
EB-5 project locations must meet a specific set of requirements to qualify as a rural TEA. The EB-5 project in question must not be located within a metropolitan statistical area (MSA) as labeled by the U.S. Office of Management and Budget. Click here for a map of all MSAs.
Additionally, the EB-5 project must not be on the outskirts of a town or city that has a population of 20,000 or more residents as determined by the most recent decennial U.S. Census. If an EB-5 project location qualifies as a rural area at the time of the EB-5 investor’s I-526 submission to USCIS, then the location will be recognized by USCIS as an official TEA.
Important Note: unlike the high unemployment TEA designation, rural areas have no official TEA designation letter. For an EB-5 project location to qualify as a rural TEA, the EB-5 investor’s I-526 petition must include documentation that demonstrates that the EB-5 project location qualifies as a rural TEA as set forth by USCIS and described above.
USCIS approval of TEA designations
TEA designations are reviewed by USCIS as part of each individual investor’s I-526 application process. TEAs are also reviewed as part of the I-924 project “exemplar” process for EB-5 projects in TEAs seeking pre-approval from USCIS. The EB-5 visa applicant or EB-5 project sponsor must provide sufficient evidence that the EB-5 project in question is located within a rural or high unemployment TEA by submitting third-party evidence. Several forms of evidence can be used to justify that an EB-5 project and associated investments will occur within a TEA.
Acceptable forms of evidence for TEA designation by USCIS:
1. Geographic and population data from the U.S. Office of Management and Budget that demonstrate that an area qualifies as a rural TEA
2. Current unemployment data and statistics from the U.S. Bureau of Labor Statistics Local Area Unemployment Statistics (LAUS) office that justify a high unemployment TEA
3. Other statistical documentation on the local area unemployment situation and population that justifies a high unemployment TEA
Important Note: If an EB-5 project chooses to pursue the $1 million EB-5 investment amount, the TEA designation process is unnecessary. Evidence of a qualifying TEA is only required by USCIS for EB-5 investors and EB-5 projects when a $500,000 EB-5 investment is made.
Key takeaways on TEA designations
TEA designations can be obtained in two distinct ways:
1. TEA designation by an authorized state agency: An EB-5 project or investor can submit a TEA designation letter from an authorized state agency or government body stating that the location of the EB-5 project in question has been formally designated as a high unemployment TEA. This is the easier approach for most EB-5 projects.
2. TEA designation by USCIS: Direct designation by USCIS requires that the EB-5 project or investor submit evidence (see the three bulleted examples above) that the location of the EB-5 project in question is within an area that has an average unemployment rate of 150% of the national average.