Targeted Employment Area (TEA): Essential Information for EB-5 Investors

What is a Targeted Employment Area (TEA)?

Obtaining a Targeted Employment Area (TEA) designation for an EB-5 project is crucial for investors. This designation significantly reduces the required EB-5 investment from $1.05 million to $800,000 if the project is in a TEA. To qualify for this designation, the EB-5 project must be situated either in a rural area or a region with high unemployment. The TEA designation is requested as part of the I-526 petition you're investing through a regional center, it should provide documentation proving that the project is located in a TEA.
Recent Updates to TEA Regulations

There have been notable changes to the TEA qualification process. The EB-5 Immigrant Investor Program Modernization rule, implemented by the Department of Homeland Security (DHS) in November 2019, introduced these key modifications:

• Census Tract Combination: The ability to aggregate census tracts for high- unemployment TEAs has become much stricter. Only the project tract and directly adjacent tracts can now be combined. Previously, census block groups could be used, providing more flexibility.

• State Designations Removed: States no longer have the authority to designate high-unemployment TEAs. Instead, DHS will determine whether a location qualifies during the I-526 petition process. Investors must now provide sufficient evidence (such as a TEA opinion letter) that demonstrates the project’s eligibility for the reduced investment
threshold of $800,000.

What Qualifies as a Rural TEA?

For an EB-5 project to qualify as a rural TEA, it must meet specific criteria. A rural location must:
• Be outside a metropolitan statistical area (MSA), as defined by the U.S. Office of Management and Budget (OMB).
• Not be within a city or town with more than 20,000 residents based on the most recent U.S. Census (currently, the 2010 Census data).
If the EB-5 project is located in a rural area at the time of investment, it can qualify as a TEA. The new regulations have not changed the criteria for rural TEAs.

What is a High-Unemployment TEA?

If the project is not in a rural area, it may still qualify as a high-unemployment TEA. To do so, the location must have an unemployment rate that is at least 150% of the national average.

• Census Tract Analysis: Typically, a high-unemployment TEA is determined based on census tracts. However, counties or MSAs can also qualify if they meet the unemployment threshold.
• City Qualifications: Cities can qualify as high-unemployment TEAs only if they are outside an MSA and have populations greater than 20,000.
The main change here is the new restriction on census tract aggregation, which now only allows for the combination of directly adjacent census tracts.

Required Evidence for TEA Qualification

The TEA designation is determined as part of the I-526 petition. The EB5-LA must provide ample evidence showing that their investment project is situated within a high- unemployment area or a rural area. This evidence should include:
• Location documentation: Information showing where the project will operate.
• Maps: Clear maps demonstrating the census tracts involved, with a focus on directly adjacent tracts.
• Unemployment Rate Calculation: Documentation showing the unemployment rate of the area, backed by reliable sources such as the American Community Survey (ACS) or the Bureau of Labor Statistics (BLS).
• For Rural TEAs: The petition must confirm that the project is both outside of an MSA and a city with more than 20,000 residents.

If an EB-5 investment meets the $800,000 or $1.05 million thresholds, TEA qualification evidence is not required. The TEA criteria are consistent for both Regional Center and Direct EB-5 projects.
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