Sam (00:08):
This is Sam Silverman. Thank you for joining today’s webinar. Today, we’re going to be talking about our TEA map and the latest employment data that’s been released, the American Community Survey, or ACS, five-year data for 2015 through 2019. A recording of this webinar will be available on our YouTube channel in the next few days if you need to watch it again in the future or share it with someone, and if you want a copy of the slides, just email us at info@eb5an.com, and we’re happy to share a PDF file of the slides during the webinar. If you have any questions, please use the chat box on your screen to submit any questions, and we’ll try and cover as many questions as we can at the end of today’s webinar.
Sam (01:05):
So before we jump in, a quick reminder that our new EB-5 guidebook is now available for free at eb5guidebook.com as a free download, or if you want a hard copy, you can also get one on Amazon as well.
Sam (01:21):
A little overview of what we’re going to discuss today. First, a little bit about EB5AN, or EB5AN. We’ll talk a little bit about what is a targeted employment area, for those who are not familiar with the EB-5 program. We’ll talk about how to use the TEA map, and we’ll do some analysis and show you why our map is the number one TEA resource available. We’ll talk about the sample TEA qualification report that our map autogenerates for free. Then, we’ll open it up for questions at the end. So, first, about EB5AN: as I mentioned earlier, I’m Sam Silverman, managing partner. On the left side, a little bit about my background and experience is listed there in bullets below. I’m joined today by my partner, Mike Schoenfeld. And I’ll let Mike jump in and introduce himself.
Mike (02:22):
Hi everyone. Thanks for taking some time to join us on the webinar today. As Sam mentioned, we founded EB5AN about eight years ago at this point. Both of us come from more of an institutional background, working with the Boston Consulting Group. And then I was in a private equity firm after that. And we’ve worked hard to bring more of an institutional lens to the EB-5 program.
Sam (02:52):
For additional information about EB5AN, we’re a consulting company and regional center operator and fund manager. So, we touch on all aspects of the EB-5 value chain, and, to date, across all of our regional centers, we’ve had more than 1800 investors join projects across all of our regional centers. And the next slide is a quick map overview of where some of our regional centers are located and where we can immediately sponsor qualified EB-5 investments. And then, another map showing, just generally, the scope of our investor base from more than 60 different countries around the world.
Sam (03:46):
So, we’ll jump right in and talk generally about targeted employment areas. So, as you may know, there are two different types of targeted employment areas. One is rural, and the other is a high-unemployment area. So there’s two types: rural or high unemployment. And why does it matter if you’re in one of these areas? In either a rural or high unemployment TEA, the minimum investment amount for an EB-5 investor in your project is $900,000 instead of $1.8 million. And so, because that is a very significant difference, $900,000 less, almost all projects are located in TEA areas. And the idea, of course, is that the lower investment amount compensates investors for taking additional risk by investing in economically distressed areas.
Mike (04:45):
And historically, TEAs were actually designated by the states prior to November of last year, or of 2019. And USCIS has changed the policy, where now these designations are done purely by math, and the states do not have control over TEA designation.
Sam (05:10):
So now, diving into the details of the two different types: rural versus high unemployment. So, first, rural on the left side, number one. An rural area is an area outside of an MSA, and it must also be outside of a city or town with a population of 20,000.
Sam (05:29):
Then, separately, high unemployment. Comparing the national average unemployment rate, multiplying that by one and a half, and then confirming that your project location has at least that amount of unemployment, one unit, 1.5, or 150% of the national average unemployment rate at the time. And it’s important to note that under the new rules, that area where your project is located must either be a single census tract or a combination of directly adjacent tracts that are immediately next to each other. You can no longer combine many, many tracts in like a string. It’s the tract where your project is located and any directly adjacent tracts if needed. And, again, as Mike mentioned, previously, TEA designations were issued by individual states. Now, the EB-5 project provides the unemployment rate calculations to justify a specific project site’s eligibility, and then USCIS reviews and actually confirms or rejects the TEA status for that particular project.
Sam (06:53):
So now we’ll shift gears a little bit and talk about how to use the TEA map. Quickly, just a few quotes about our map and its helpfulness for those looking to quickly and freely determine TA eligibility using our map—it’s completely free. So it has really easy functionality. First, to access the map, go to eb5affiliatenetwork.com, click on “TEA Map.” Then, once you’ve got the map page pulled up, you’ll enter in the address of your project site. And then, on the right side, it will pull up information on that particular site and tell you if it qualifies or not. So, zooming into the map, you’ll see the location of your project—in this case, it’s the red dot, and it’s located in the blue census tract, and then, orange shading, individual tracts. Orange indicates that those tracts individually do qualify as a TEA. Light gray indicates that they do not.
Sam (08:04):
And so, when we look at this group, we’re going to be combining the blue tract and all the orange tracts, but not that light gray tract in the bottom, right? And so, the map will do this calculation automatically. And we’ll tell you, if we go back to the previous slide, you’ll see that those tracts, the five orange tracts and the one blue tract, all the data for those tracts has been pulled up here in the chart. And the total resulting unemployment rate has been calculated. And the map has confirmed that using ACS, one of the four methods here, using this method, ACS here, and census share, one and two, that this site does qualify as a TEA.
Mike (08:56):
And this is one of the best features of the map, that it is fully automatic. So as long as you have your address and you type it in, all of the data does show on the screen and you can click around, but the map is fully automatic, where all you need is the address and you’ll know whether or not the site qualifies.
Sam (09:12):
Exactly. And not only is it fully automatic, but it’s automatic across all four methodologies. So, there are four different ways a site can qualify as a TEA. One is rural, which we talked about, which is reflected here in number four, and the other three are based on unemployment data. And so, under unemployment data, there’s three different ways a site could qualify: ACS data, the census share method, or the county level method. And so, those three different methods utilize different data sets with some overlap. And so, all you need is your project to qualify using one of the four. If it qualifies using more than one, that’s great, but you only need one. And more than one doesn’t really help or hurt. But if with all four, you don’t qualify, then, you know, sorry, but your project’s not going to qualify as a TEA. And so, you want to look at one through four, and as long as one of those four is marked green, then you’re good, and your project is going to work as a TEA at the $900,000 investment level.
Sam (10:22):
Our map also indicates whether or not one of our regional centers covers the area where you’re looking to sponsor and to set up your EB-5 project. Historically, more than 90% of EB-5 projects use an EB-5 regional center. Using a regional center gives the project significantly more job creation, which allows the project to raise more EB-5 capital. And it also lowers the immigration risk for the investors because there’s more job creation, and it’s job creation that’s easier to prove at the end of the immigration process. And so, knowing whether or not the project can immediately be sponsored by a regional center with transparent fixed terms is really helpful to putting the project together and getting it to market for EB-5 investors to subscribe quickly. All right, now we’ll just spend a few minutes talking about why we think our map is the best available TEA resource in the market today.
Sam (11:31):
So, just quickly, going down the different specific functions. So, first, our map is the only map that provides an instant TEA qualification report. All you have to do is type in your address and your email, and not only do you get yes or no, and why, but you get a full, detailed PDF report, a map that explains exactly how and why the site qualifies using whichever of the four methods is applicable. The map also automatically considers cities that have more than 20,000 inhabitants in rural areas. So if you were in Oklahoma, in a rural part of the state, but there was a city there that had 20,000 people, that would actually not be a rural area because there’s a city exception. And so, our map takes into account all of those exceptions. Third, we auto-display TA eligibility. So, if you just scroll through the map and you don’t even put in an address, you can see all of the areas that automatically qualify as a TEA highlighted in orange.
Sam (12:41):
Then, fourth, all of the four qualifying USCIS methodologies are all detailed on the site. So, you can see all four, and you don’t have to go to any other data source or site to see maybe if there’s some other way your site could have qualified. Then, regional center sponsorship. Our map tells you whether or not you can get immediate sponsorship at a fixed price, which can save you a lot of time and research. And very importantly, marked here with a red star, our map calculates data thresholds and all the employment calculations to two decimal places. USCIS specifically allows for that. And so, other maps that we’ve seen have only gone to one decimal place. And it’s just, it’s better to go to two because it gives you more, you know, a higher chance of qualifying because you’re taking it down to the exact hundredth place.
Sam (13:44):
And so, in many cases, it doesn’t matter. But in some cases, it’s the difference between qualifying and not. So, you know, why not go to the more exact number if you can. Boundary display—all the census tracts have boundaries and are all labeled with mouseover. So, you can immediately see what a tract is when you’re looking at the data table on the side of the map. Then, we optimize census tract selection. So, if a site requires more than one tract, then the combination that gives you the best possible weighted average is shown. But using the least number of tracts that you need, right? So if you could do it with, you know, with 10, but you also could do it with seven, then our map is going to show you the seven. It’s not going to just combine everything just because it’s there, right? So, it’s kind of a little bit of second-order thinking there. Then, mobile-friendly, very easy to use on an iPhone, iPad, and generates all the results that you’re looking for.
Mike (14:56):
Overall, there’s a few different resources online for TEAs. And what we’ve tried to do is build the most comprehensive and accurate map available.
Sam (15:09):
Exactly. And when we dive into that two decimal point calculation, this illustrates what the impact of that difference is when we’re talking about the ACS method or the census share method. And so, for example, on the census share method, taking it to two decimal places, our qualification threshold is 5.49, whereas other maps are 5.6. And so, if your site had an unemployment rate of 5.51, or 5.55, then it would work on our map, and you would get a yes, but on another map, you would get a no, right, because the threshold was 5.6. It was rounded just to one decimal point. So, a little bit more information about the data release timing. So, the ACS methodology is updated every December. It was just updated last month. So, that’s the current ACS data on our site. The census share methodology—that data includes ACS and BLS. The BLS is updated every April. And so, that data layer on our map will be updated probably mid-April of 2021.
Sam (16:37):
And so, what I was mentioning earlier, again, you know, sites that are going to qualify on our map may not qualify on another map that is not rounding to two decimal points. These are several examples of actual EB-5 project sites where that actually matters and where those sites are not going to qualify on a competitor map, but they will using our map. Okay. The other major difference between our map and others is the qualification report. So, most other maps will just tell you, yes, it should work, or no, it shouldn’t work. Our map additionally allows you to generate a formal TEA report with all the backup calculations in it and a map and summary table. So, if you’re looking at a project site where our map tells you that the site does qualify as a TEA, then you can just enter your email and immediately get this free TEA qualification report. So, what competitors used to charge hundreds of dollars for and would take a few days, you can get completely free using our map. And that’s an example of the map and then the data table as well.
Sam (21:02):
We’ll now shift over to questions that people have, and I’m gonna leave the contact information up on the screen. If people have any questions about TEAs, please reach out to us, and we’ll be happy to set up a call and go through any questions that you may have. One of the questions that we got is related to TEA qualification duration. So, if my project qualifies as a TEA today, how long is that going to be valid for? And the answer is it depends on which data methodology. So, let’s say that your project qualified under as a rural project—then that remains the same pretty much permanently. It updates every 10 years based on the most recent tenure census. And so the most recent census was 2020.
Sam (22:06):
And so, you know, your project would be… the results haven’t come out for that yet. And so, they’re still using the 2010 census as of today. But in the next probably year to two years, once the 2020 results are actually published, then you would have to make sure you were not in a town with 20,000 or more people once the 2020 census results are out. On the unemployment rate side, it’s basically going to be until the new data comes out, so either in December or in April. So, if you use the census method, then, you know, you’d be good until the next April. And if you use the ACS method, then you’d be good until the next December, until that data set is no longer the most current data set that is available. Let’s see. Okay. One another question that we got is can the generated report, can that be used for an EB-5 filing? And we don’t necessarily recommend that, but that report does have all of the backup and the data and the calculations behind how that TEA qualification was determined. So it could be used. There’s nothing additional that a project would need to provide beyond what’s in that report to justify a site qualifying as a TEA area.
Sam (23:42):
Let’s see. One other question that we got is about TEA… like, kind of, continued qualification for an investor. So does a project need to have a new TEA letter every year? The answer to that is no. You just need to show that at the time that the investment has been made, which is usually defined as the money being wired in, then at that time, as long as the project did qualify as a TEA and you could prove that it did at that time, then the investor’s going to be eligible for the $900,000, or for the lower threshold. You do not need to continually certify the project as a TEA on an annual basis. You just need to prove that, initially, when the investment came in, at that point, that it was located in a TEA and in the future, it could change and it could, you know, not qualify, you know, two years later, and that isn’t going to impact the eligibility of the investor to qualify for the lower investment amount.
Sam (24:51):
Alright, I don’t see any other questions. So, with that, we’ll wrap it up. And, again, any questions about TEAs, please reach out to us using the information on this screen. And, again, if you want a PDF copy of the slides we covered today, email us at info@eb5an.com. And if you want to see a video of this webinar or share it with someone, check our YouTube channel, just YouTube EB5AN and look for that in the next few days. So thank you again.
Mike (25:30):
Thank you guys.
