TEAs

New Targeted Employment Area (“TEA”) data will soon be released for 2015. Over the next few months, California and other states will start to use the 2015 data. It will require a TEA to have unemployment at or above 8.0% -- which is 150% above the national average. The investment amount in a TEA is $500,000 instead of $1 million.

The USCIS rules require the EB-5 project to be in a TEA territory which has high unemployment (or a rural area) at the time of the investment. If funds are in escrow and the territory will no longer be a TEA pursuant to the new data, the funds must be moved into the project’s accounts before the I-526 is filed, while it is still a TEA, or the minimum investment may need to be $1 million.

California only allows cities, counties, a census tract, or the combination of up to 12 census tracts for a TEA territory. Other states permit more configurations and also the use of state legislative districts. Some states, and some cities and counties in Texas, also allow “census blocks” to be utilized for the TEA.

Sometimes it is easy to determine whether a project is in a high unemployment TEA by looking at the unemployment rate of the city, county, or census tract in which the project lies. In other cases, it takes considerable time to analyze the unemployment rates of the census tracts or other jurisdictions.

TEAs comprised of a “gerrymandered” group of census tracts are controversial. One RC has campaigned to eliminate such TEAs and USCIS seems to want to take over from the states the authority to determine TEAs. This will be a hot issue with the EB-5 extension bill.

The Senate Judiciary Committee will hold a hearing on Wednesday. The title of the hearing says a lot: “The Distortion of EB-5 Targeted Employment Areas - Time to End the Abuse.”

I believe TEAs along with various types of enterprise zones should be used to stimulate development in urban and other areas where jobs are needed. Billions of investment capital is being invested via the EB-5 program, mostly in TEAs.