Mike (00:05):
Hi, everyone. Thanks for taking some time today to join us for the targeted employment area webinar. Recently, the government released new unemployment data, so we wanted to take this chance to share some of the information on the updated data and our updated TEA map with a unique combination feature and to give you a bit more context on how TEAs are designated. So, this is Mike Schoenfeld talking, one of the managing partners of EB5AN, and on the line, we also have Sam Silverman and Joseph Girton.

Sam:
Hi everyone, Sam Silverman, managing partner EB5AN. As Mike mentioned, today, we’re going to give a high-level overview of what is a TEA and how to go about exploring if your project location will qualify as a TEA. And we’re also going to spend a bit of time going state by state to talk about some of the differences and nuances that there are across different states in getting official TEA letters issued. And then to wrap up, we’ll spend a few minutes doing a quick demo of our updated TEA map, which includes the most recently released employment data that was just released a few days ago. And we’ll show you how to use the map and combine census tracts together to immediately and quickly and for free determine if your project is located in a targeted employment area. So, with that, we’ll kick it off and move through the slides.

Sam (01:45):
Great. As Mike mentioned, we’ll start with a quick kind of overview. Sam Silverman, managing partner of EB5AN, Mike Schoenfeld—our bios are listed on the page here. Our third partner, Tim Shih, is not available to join us today, but some information about him is on the right-hand side there.

Mike:
So, now that you’ve had a chance to read over some of the information on us, we’re going to shift forward to the TEA basics on the next slide, which really helps to lay out what is a TEA and some of that type of information.

Joe (02:38):
Got it. Thank you, Mike, for that introduction. My name is Joe Girton. I’m a senior associate at EB5AN, and I’ll be walking us through the basics of how targeted employment areas are calculated and qualified, whether your project needs a new targeted employment area letter, and generally how to go about making sure your project is TEA-ready. So, very high level—a TEA is a targeted employment area. It’s a project location that meets one of two tests set by the federal government. So, it can be in a rural area—and I’ll talk a little bit later about what defines a rural area—or it can be in an area that’s experiencing high unemployment when the EB-5 investment is made. So, a TEA does not have to meet both of those. It can be one or the other to be qualified as a TEA. In the EB-5 program, having a site qualified as a TEA means that each as an investor coming into that project and investing their capital only needs to submit $500,000 as their EB-5 investment, as opposed to the normal minimum of $1 million dollars.

Joe (03:54):
So, because the program benefits are the same whether investors are submitting $500,000 or $1 million, most investors want to submit that $500,000 investment as opposed to locking up $1 million dollars of their capital. So, about 95% of EB-5 projects end up qualifying as TEAs. That means it’s especially important to get proper TEA documentation for your project at the beginning of the process to make sure your project will be attractive to investors. The purpose of this is to compensate investors for taking the higher risk of investing in economically struggling areas and to achieve the policy goals of the EB-5 program, which are to incentivize investment in these economically disadvantaged areas.

Joe (04:41):
So, going a little bit more in detail about the differences between a rural TEA and a high-unemployment TEA—a project say can automatically qualify as a rural targeted employment area if it meets both of these two tests here you see in the box with the number one in the bottom left. So, a rural TEA has to be outside of metropolitan statistical area, and those are lists of counties around major cities that are published at the time federal level. Furthermore, the rural TEA has to be located outside a city or town with a population of 20,000. So, in that case, if a project site is located outside of MSA but inside a town with a population of more than 20,000, it could not qualify as a rural TEA. But if it is in a small town outside of metropolitan statistical area, then that project site will qualify as a rural TEA automatically.

Joe (05:42):
The second type of TEA is much more common. It’s what you hear the most about and what most projects qualify—that is a high-unemployment TEA. So, the high-unemployment TEA program targets urban development projects that are located in areas of high unemployment. So, the requirements for high-unemployment TEAs are set at the federal level and are based on the national unemployment rate at the time of investment. So, every year the federal Bureau of Labor Statistics publishes new nationwide unemployment data that updates the threshold for whether a site in an urban area can qualify as a high-unemployment TEA, whether it meets that 150% threshold of the national average or not. So, the reason we’re all here today is because the federal government just published their updated unemployment statistics this past Friday for 2019, and that updated the threshold for what will qualify as a high-unemployment TEA going forward.

Joe (06:45):
So, currently the threshold is now 5.9%. And I’ll go into a little bit more detail later about how exactly you can get a project site to qualify. But the high-level analysis is that a project site must be in an area with 5.9% unemployment or higher to qualify as a high-unemployment TEA. And I should add, I’ll take this moment just to pause and say, if anyone here on the webinar has any questions, please use the question feature and go to webinar and type out your question, and we will address anyone’s questions at the end of the webinar once we’ve had a chance to go through everything.

Joe (07:22):
So, when it comes to the time to determine whether your project is going to qualify as a high-employment TEA, that qualification happens at the census-tract level. So, census tracts are very small geographical areas around specific addresses, and I’ll go into a little bit more detail later about how those are calculated and how you can take advantage of that to get a project site qualified as a TEA.

Joe (07:49):
Formerly, the way the government determines whether each individual project will qualify as a TEA—first, the federal government has set the broad requirements. So, a project site has to meet that 5.9% unemployment threshold. And the U.S. Department of Labor provides guidance and standards for meeting that. But then, once it comes time to actually certify individual projects, each individual state and Washington, DC, and territories have their own internal process for formally designating an address or a project site as a TEA. So, that process can get a little bit complicated, and I’ll walk through a little bit more detail on that here.

Joe (08:36):
And again, if anyone has questions, please use the question feature in GoToWebinar as we get into some further detail.

Joe (08:44):
As I mentioned on that last slide, every year, the federal government updates the unemployment data used to qualify TEAs. So, Friday, the federal government issued that updated unemployment data from the Bureau of Labor Statistics, and our TEA map that we offer on our website that I’ll walk through later was updated immediately with that new data. So, if you are using our tools to determine whether your project will qualify as a TEA going forward, you can use our tools and then count on their accuracy because they’ve been updated with the latest government data. I mentioned that that high-unemployment threshold is now 5.9%. That’s based on 150% of the national unemployment rate that the Bureau of Labor Statistics just certified, 3.9%. So, there is an ongoing conversation in the EB-5 industry about changing TEA regulations going forward, and it’s very important to note that currently today, nothing about the way TEAs are qualified has been changed at the federal level. All of the discussions around potential regulatory change are ongoing, and as it stands today, the process for getting a project site certified as a TEA is the same as it always has been, but the threshold for what will qualify has been updated based on the wages.

Joe (10:17):
Now, along with this update comes quite a few questions about whether your individual projects need to be updated with a new TEA letter. Now, the marker that you need to consider there is, is your project still actively marketing to potential EB-5 investors? And will any of them be filing their first I-526 petitions going forward? If the answer to that is yes, if you can say, “Yes, you know, in a few months, we think that two or three more investors are going to be filing I-526 petitions on my project”—if you can say that, then you need to get an updated TEA letter for your project that uses this current and most updated unemployment data that was just updated on Friday. However, if your project is done subscribing new investors and everyone who is going to be investing in your project has already submitted their Form I-526, then you do not need to get a new or updated to at letter for your project.

Joe (11:20):
Another big question that we’ve been asked is, “Will the definition of TEA change over time?” Again, this is an ongoing conversation at the federal level, and there is potential pending regulation that may change how TEAs are defined, but right now, nothing has been finalized, and the process for getting TEAs qualified and certified is exactly the same and has remained delegated to the states. Lastly, the most common question we get from clients and potential clients is, “How can I determine whether my project will qualify as a TEA?” We have a very easy-to-use tool on our website that makes it possible to quickly look at the surrounding area near your project and determine whether it will qualify as a TEA and then take steps to get the official designation letter from the relevant state authority and get your project qualified as a TEA.

Joe (12:28):
As I mentioned, TEA qualification happens at the state level. So, despite the standards being set at the federal level, the authority was delegated to each state to officially certify and designate whether any given address will qualify as a TEA. So, as you can, imagine, some states have different processes for certifying TEAs than other states, and some of them are easier. Some of them are more challenging. So, some of the easier states, and the vast majority of states fall into this category—they’re obviously not listed comprehensively on this slide—but in states like Florida and New Jersey and Utah have relatively relaxed state-level regulations about how TEAs are qualified in their states. Most of this has to do with the combination of census tracts. As I mentioned earlier, a census tract is a small geographic area around a particular address, and each census tract has its own unemployment rate.

Joe (13:32):
So, a question we get from clients frequently is, “Well, I don’t think my site is going to qualify because the census tract in which my project is located has very low unemployment.” And in that case, you can combine your census tract with nearby census tracts, as long as they’re continuous and form a single block, to get the average unemployment rate of that group of census tracts higher until it meets that TEA threshold of 5.9%. So, states like Florida and New Jersey and Utah have no hard regulations about how many census tracts you can combine to get to that required unemployment rate. Generally, what that means for projects is that Florida, New Jersey, and Utah are easier to get project sites certified as TEAs. Some states have slightly more challenging regulations about getting project sites qualified as TEAs, like Illinois, Ohio, and New York. And if you have a project in any of those states, please feel free to reach out to us either by email or by phone after the webinar, or ask a question here, and we can discuss in more detail how that works, but we have quite a bit of experience getting TEAs qualified in each of those states.

Joe (14:41):
And then, the hardest states—mostly California, Texas, and North Carolina, as well as Kentucky—California places a strict limit on the number of tracts that can be combined to reach the required unemployment rate. Similarly, so does North Carolina, and Texas is perhaps the most challenging state of all in part because the certification doesn’t happen at the state level but rather at the local or county level. So, as you can imagine, there are many smaller city and local governments in Texas that are unfamiliar with the EB-5 program and require significant education to get them comfortable with the idea of issuing a TEA designation letter. So, Texas can be challenging, and we specialize in helping projects get those more challenging TEA locations certified.

Joe (15:39):
As I mentioned, we do offer a high-touch service for our clients who have projects in more challenging TEA jurisdictions, whether it’s your first time doing EB-5 capital for your project or you’re simply operating in a smaller town in Texas and you need a team to advocate for you and help educate a local government on EB-5. We are available to perform the full TEA qualification from beginning to end. So, we work with you to pick a good address for your project, if a site has not yet been identified. Then, we would assemble all the required proof that a state or local government needs to issue an official TEA designation letter. And finally, we issue that request to the state or local government and follow through with that institution until we receive the final TEA approval, which we deliver to our client. Lastly, I will walk through our online service, our TEA map, which you can use to, at a glance, see whether your project site will qualify as a TEA and from there, either request a letter through us or use your internal team to request a TEA letter from a state government. So, I will just transition over to the map itself, and we will walk through exactly how to get an address qualified.

Joe (17:45):
Firstly, I’ll walk through how to access our TEA map. You can go to our main website, eb5affiliatenetwork.com, and then scroll down just a little bit. There is a title on our website right here that says “View Free National TEA map.” If you click through to that, you will get to an access page where you can enter your information and then access the TEA map through a link in your email inbox. So, once that’s done and you have access to the free TEA map, this is what you see when you first visit the map. Now, this is a map of the United States, and typically, the best way to start this is to input your address into the search box on the top right of this window. So, as an example, I use an address that does not automatically qualify as a TEA because the census tract in which it’s located is not… the unemployment rate at that hyper-local level is not above the required 5.9% threshold. But it has lots of high-unemployment areas nearby. So, I’ll walk through how to combine census tracts to make sure that that project site will receive official approval from the state agency that manages TEAs in Arizona. So, as an example address, we’ll just type in this address in Phoenix.

Joe (19:14):
And you can see there’s a little suggestion box that as you start typing, the address suggests the full address. And you can just click on that once you get there. And this is the address that we’ll be looking at. So, the map is very easy to use in that high unemployment census tracts are shaded in orange, and low unemployment census tracts are not shaded, or are shaded in simple white instead. So, you can see the blue pin in this address, and this blue box around that is the census tract in which that address is located. And because it’s white, we can tell that this is not a high-employment area. So, if we zoom out a little bit with the magnifying glass over here in the top right, we can see that there are a lot of high-unemployment areas nearby that will make it relatively easy to qualify this area as a TEA.

Joe (20:08):
So, this is where it gets just a little bit more challenging. Down here in the bottom, right, you’ll see a map legend. The first thing you want to do once you are on that map legend is hover your cursor over this black button on the left edge of that box that says “query tool” next to it. You’re going to click on that button that says “query tool,” and new set of tools pops up here. You want to scroll to the right here, and you’ll see a little icon of a finger pressing a button. That is what you want to click. So, click on that finger right there. And now, you have the ability to select census tracts at once. So, looking at this map, it’s obvious that there are many orange tracks nearby. So, the goal is to select both the tracts in which this address is located and nearby orange census tracts to make sure we can get this address qualified.

Joe (21:04):
So, first, let’s click on the census tract in which the address is located. We can tell that it’s selected because of the dark blue. Now, we do want to keep the total number of tracts selected relatively low, but at the same time, we want to make sure the average unemployment area or unemployment rate in our selected tracts is over the required 5.9% rate. So, let’s start with trying to select four tracts, and we’ll see if this combined group gets us over that 5.9% threshold. It is a requirement that all the tracts connect and touch each other. So, you can see here, it looks like a contiguous puzzle of tracts that we’re putting together. Now, once you’ve selected a group that you think is going to work, go back to that toolbox in the bottom, right, and click the “get results” button under that finger icon that you pressed earlier. That’s going to calculate the average unemployment rate for this group of tracts. You can see that it’s now changed to being highlighted in red, and this toolbox down here has changed to saying “four matching results.” And this top button here, “generate report,” is what you want to click next. So, let’s click “generate report.”

Joe (22:20):
And now, we see the final report for the average unemployment rate for this group of four tracts. You can see that next to the unemployment rate label, there’s a number that says 6.14%. So, because that’s above 5.9%, we now know that this address can qualify as a TEA officially because the combined unemployment rate for this group of tracts is now above 5.9%. So, at this point you can reach out to our team, and we can assist in walking through the entire official process of getting that letter issued by the state authority in Arizona. So, this is how our TEA map works. And again, for more challenging sites, please feel free to reach out to our team, and we can assist with the process.

Joe (23:29):
Now, that is all for our presentation on the TEA map updates. To quickly recap, the federal government recently updated the threshold use to calculate unemployment rates for TEAs, but the underlying mechanisms for TEA qualification remains the same. So, if you or your project are expecting to file further I-526 investors on your project, then you need to request an updated TEA letter with the latest data that is up to date. So, we can help with that. Please feel free to reach out. You can email us at info@eb5an.com, or you can call us at (800) 288-9138. Feel free to email us after the presentation, and we can help you walk through the TEA process. Thank you so much for joining and have an excellent rest of your day.

Mike (24:28):
Excellent. Thanks, everyone. And really appreciate you walking us through everything, Joe. So, again, please contact us with any other questions, and hopefully you found this helpful, and look forward to hearing from you. Thanks.

Sam:
Yeah. And as Mike mentioned, there can be situations where an initial site may look like it does not qualify as a TEA and after playing around with the combination feature, there may be other ways to get it to work. So please don’t give up hope initially if you think your site is closed and the calculation is, you know, 0.1% or 0.2% off. Just reach out to us, and we can take a look at it and see if there’s some way to make it qualify for you. Thanks again.