Since its inception, the U.S. EB-5 immigrant investor program has sought to encourage investments in Target Employment Areas or “TEAs” which are either a.) rural areas; or b.) high unemployment areas, defined as areas with a rate of unemployment that is 150% the national average. Qualifying as a business principally doing business in a TEA is a key consideration for immigrant investors because investors in projects principally doing business in a TEA may qualify based on a capital contribution of $900,000 rather than the investment threshold of $1.8 million which applies to non-TEA investments.
The EB-5 Modernization Rule which became effective in November 2019 changes both the process by which all TEAs will be determined and also the definition of qualifying “high unemployment” TEAs. The definition of a rural TEA remains unchanged and must be both outside a town of 20,000 and outside a Metropolitan Statistical Area (MSA).
TEA determinations to be made by USCIS not by the states
Before the recent rule change, authority to make TEA designations was designated to the various states who were free to come up with their own rules defining the boundaries of TEAs. In an effort to avoid the application of inconsistent rules by different states and create uniformity in the way that TEA’s are determined, the new rule assigns sole authority to make TEA determinations to USCIS based upon data submitted in support of the investor’s I-526 petition.
Limits on “Specially Designated” High-Unemployment TEAs
Some areas will qualify as TEAs based on federally published data showing an unemployment rate of 150% at the level of a county within a MSA, an MSA, or a city or town outside an MSA. Before the EB-5 Modernization Rule was enacted, for projects not located in one of these areas states were also allowed to establish the boundaries of “specially designated” TEA’s in a manner to allow the averaging of employment across areas of relative economic prosperity linked to areas with lower employment. The EB-5 Modernization Rule not only provides that only USCIS may approval specially designated TEAs, but also limits the location of census tracts that can be combined for purposes of qualifying as high-unemployment TEAs. Under the new rule, if the census tract in which the project is doing business does not qualify on its own, the only census tracts that can be combined to form a high-unemployment TEA are the tracts immediately adjacent to the project tract.
The EB-5 immigrant investor program is an attractive option for many qualified investors seeking to become U.S. lawful permanent residents. Law Offices of Robert P. Gaffney has over 25 years of experience counseling immigrant investors from around the world in successfully immigrating under the EB-5 program. Please feel free to contact us if you would like to arrange for an initial consultation.
Please note that this article is written as general information on visa matters. It should not be relied upon as legal advice for any individual’s particular situation.