Sam (00:06):
Hi everyone. This is Sam Silverman, managing partner at EB5AN. I’m joined here with my partner, Mike Schoenfeld, and today we’re going to be going through the targeted employment area (TEA) map updates that were just released a few days ago by the Bureau of Labor Statistics. In today’s webinar, we’re going to talk a little bit about what data changes happen annually and how those changes are reflected on the TEA map, and then what the requirements are currently for investors submitting new I-526 petitions, and the different options an investor can qualify [for] using the two different current TEA data sets. If there are any questions during the webinar, please use the chat box and submit them, and we’ll try and adjust address them at the appropriate time during the webinar.
Sam (01:01):
As I mentioned earlier, I’m Sam Silverman, managing partner of EB5AN, joined by my partner, Mike Schoenfeld. We’re a national EB-5 regional center operator and consulting firm. Currently, we have 14 regional centers covering more than 20 states across the country. We work with many project developers and investors to sponsor qualified projects and help structure them for EB-5 investment. To date, across all of our regional centers, we have more than 1800 investors from more than 60 countries around the world. So, for those of you who aren’t as familiar with the detailed requirements for TEA qualification, currently, under the new rules that went into effect after November 21, 2019, there are two ways that a project can qualify for the reduced $900,000 investment threshold. One is if the project is located in a rural area, and that’s defined on this slide, on the left side—“an area outside of an MSA with a population that’s less than 20,000 people”—or it can be via a high-unemployment [rate] in that specific area.
Sam (02:25):
One of the major changes with the November 21, 2019, rule changes was that previously, individual states issued the high-unemployment TEA designations, but now, USCIS itself is the one that approves individual projects as high-unemployment TEAs. That was probably the major change. The other, second important change is that the requirements for how a project qualifies for the high-unemployment became a bit stricter. Previously, you could combine multiple census tracts that weren’t necessarily directly adjacent to where your project was located. Now, the rules are stricter in that you can only combine census tracts that are directly adjacent to the tract where your project is located. So, basically, it minimizes the potential for gerrymandering and makes it harder for individual projects to qualify under the current rules. That’s why it’s really important to understand the two different data sets that can be used to qualify a project for high-unemployment TEA designation. So, moving onto that on the bottom, go ahead, Mike.
Mike (03:43):
And as Sam mentioned, now, there is no state agency designation. USCIS is going to review this at the time they adjudicate the I-526 application. So, it’s very important to make sure you have the right data, because you are instantly able to determine if a site qualifies as a TEA or not by using our TEA map. Historically, you would have to take this data and then work with the local state or the local jurisdiction. Now you are able to know, with 100% certainty, whether a location qualifies immediately, which is a very helpful change that USCIS made.
Sam (04:20):
Exactly. And so, if we look at the bottom-right corner of this slide, there’s two different data sets, two different methodologies, that are used to calculate the unemployment rate at the census-tract level that USCIS has specifically said are acceptable. There’s the American Community Survey, or ACS, five-year data, and there’s the census-share data methodology, which utilizes both ACS and the Bureau of Labor Statistics, or BLS, annual average unemployment. So, the two ways—ACS just standalone, that one file individually, or ACS combined with the BLS data. So, you only need your site to qualify using one of those two methods. That’s the key thing. Those two data sets update each year, once a year, and as we’ll continue, we’ll describe exactly the timing, and that’ll make clear why now is one of those important annual update days. So, to give you a little more information…
Sam (05:35):
So, first, the ACS five-year data. So, both data sets, ACS and the census share, are both at the census-tract level. So, they’re individually telling you, per census tract, what the qualifying rates are. So, today, the five-year period is 2014 to 2018. It’s updated annually every December. And so, currently, using the ACS method, the qualifying hurdle rate is 8.79%. So, if you’re using our map and you turn on the ACS layer, you need to be in a tract or surrounded by tracts that, when combined, have at least an 8.79% weighted average unemployment. Same thing for the census share. So, census share—the hurdle rate is a little bit lower at 5.49%. And so, same thing—you either need to be in a tract where it’s 5.49%, or you need to be in a tract combined with directly touching tracts that, when combined, give you a weighted average of at least 5.49%.
Sam (06:47):
And so, when you look at these two images on the right side, it’s the same project site, but you’ll see that the results are different in one data layer. And the ACS, you’ll see above that it doesn’t automatically qualify. Now, it might qualify if you were to combine the star tract with this tract, and with this track, you might be able to get to a weighted average. So, it might qualify with a combination, whereas if you were just using the census-share method, you wouldn’t have to do a combination because the individual tract here where the red star is located, it automatically qualifies. So, for this, if this was a real project, you would say, yes, no additional work needed, you know—by using census-share data only, you automatically qualify. So, you’re done. You don’t have to qualify using both. You only need one.
Sam (07:49):
Okay. Now, moving on. So, we’ve got a lot of questions recently about the COVID-19 virus and how changes in unemployment currently happening are going to impact TEA designation in the future. So, taking a look at the summary… so we know that the data updates are lagging. So, the current data update that just happened a few days ago for the census-share method. Even though April 2020 is when the file was updated, it’s only for the 2019 full year. And as everyone knows, the virus impacts weren’t seen until February, March, April of 2020. And so, that change in unemployment into 2020 won’t be reflected until April 2021. The ACS data is currently 2014 to 2018. And when it updates in this December in seven and a half, eight months from now, it will be for 2015 through 2019. So, it won’t touch 2020. So, the key high-level thing to remember is that there’s not going to be any TEA change that’s going to account for the COVID-19 virus unemployment rate until April 2021.
Sam (09:08):
Basically, one year from now is when you would first see the change in the unemployment rate, the qualification rate. And in that year, of course, there’s going to be some very odd anomalies in the data because you’ll see an average unemployment rate that will be very high, but then you’ll see areas in the country that will also be very high or very low. So, for example, Las Vegas probably would be very, very high, and probably everything in and around Las Vegas would qualify. But in another area where there weren’t many people working, if it was a TEA before in that area, it probably won’t be because now the average unemployment for the whole country, the bar, will have gone up. So, there will be some kind of weird effects during that update, but that’s not going to happen for another year from now.
Mike (10:05):
And no one knows exactly how that’s going to impact different projects. There’s some people hypothesizing that that’ll mean that New York City will be back and could qualify for TEA, but it’s really unknown at this point exactly how it’s all going to play out. So, we have the next year where the TEAs are very certain, but after that, I think a lot of things are going to change, and we’ll see how it all works out.
Sam (10:34):
So, shifting gears back to our map quickly—to use the map to double-check if a project could qualify as a high-unemployment TEA, you’ll want to first check both data layers. So, start with one ACS or census share, go through the steps, see if it qualifies—if it does great, you’re done, then you can order a TEA report and move on to structuring the project. If it doesn’t, then you should check the other data method and see if it does qualify. There are three different methods. So, you want to just run through each of the three. The good thing about our map is that it’s fully integrated. So, you can immediately combine tracts together using any of the three data layers and see if there’s any possible way to make a combination work. Everything’s public, everything is free, and all the data is current as of two days ago. And it will be current through December 2020, which is when the next ACS update will be. So, using the map itself will give you the definitive answer. If you still have an issue, kind of, figuring out the map, you’re not super adept at the technology side of it, then no problem—reach out to us, call us, text us, email us all the information is on the map, and we can quickly double check and address and tell you if a site is going to work or not.
Sam (12:10):
And, again, once you determine that a project site does qualify using our map, then when you actually submit the I-526 petition and the project documents with that petition to USCIS, you need to include an independent qualification report that explains mathematically exactly how that site qualifies as a TEA, what the underlying data is, what the actual math is behind making it work so that USCIS can see how you’re making that claim and verify that that site does qualify and you’re using the appropriate acceptable data method to qualify it.
Sam (16:39):
So, that’s the conclusion of our formal remarks. So, we’ll now quickly turn to some of the questions that were submitted. So, one of the initial questions—“Do you have a regional center in Pennsylvania?” Yes. We cover more than 20 states, including all of Pennsylvania. Second question—“What’s the cost of one of the independent TEA qualification reports?” It’s $499, and it can be purchased directly through our website—usually takes two to three days to get it completed. Another question we had was, “When does USCIS review if a project is in a TEA or not?” They’re going to evaluate the timing of that based on when the investor’s I-526 is received. So, when the investor files their I-526, that day it’s received by USCIS, on that day that they get it, that’s when the project has to qualify as a TEA using one of the approved methods, either rural qualification or high unemployment, and you have to provide the mathematical supporting data that shows that at the day the investor’s application went in, the project was in a TEA. It doesn’t matter what happens after that, but at the time it goes in, you have to qualify on that day.
Sam (18:08):
Another question we had—“Do you have a regional center in Virginia?” Yes, we cover most of Virginia, but not all of Virginia. And then, another question—“Do we expect a lot of projects next year to qualify as a TEA?” We think that there’s going to be some anomalies in the data. I don’t think that there’s going to be specifically more projects overall. There’s going to be more projects in certain areas where there was the largest swing in unemployment rate. If an area doesn’t really have a change in unemployment, like an area where there’s just not a lot of people working or a lot of retirees, those areas are not going to have a lot of TEA fluctuation, but areas where there were a lot of people working and they weren’t working, those are the areas where there is going to be a lot more qualification for TEAs.
Sam (19: 19:10):
Great. Okay. I think those are all the questions that we had. So, if there are any future questions, please reach out to us. We’ve listed both websites that we have here, email and phone number, and please take a look at the TEA map. It’s a really, really helpful resource. Whenever anyone asks us a TEA-related question, the first thing we do is just pull up our own map and double check the address. So, that is going to be the best resource to determine if a project does qualify as a TEA under any of the potential methods. So, thank you again for your time, and we look forward to working with you in the future.
Mike (19:49):
Thanks, everyone.
