EB-5 ProgramTargeted Employment Areas

What EB-5 Investors Should Know About High-Unemployment TEA Designation


The EB-5 Immigrant Investor Program offers foreign nationals a unique opportunity to obtain U.S. permanent resident status in exchange for a qualifying investment in an EB-5 project. The program has helped thousands of foreign nationals receive U.S. green cards while funneling foreign investment capital into the U.S. economy. To become eligible for an EB-5 visa, investors must meet many key requirements, including the minimum required investment amount.

Prior to November 2019, the minimum investment amount required for EB-5 investors was $1 million, or $500,000 if the project was located in a targeted employment area (TEA). However, in November 2019, the Modernization Rule took effect and increased the minimum investment amount to $1.8 million, or $900,000 for TEA projects. Because of this sudden increase in the minimum investment amount, many foreign nationals could no longer afford to make an EB-5 investment outside TEAs.

When an investor decides to make an EB-5 investment within a TEA, it can complicate the investment process. United States Citizenship and Immigration Services (USCIS) does not declare certain areas TEAs; instead, it is up to the investor to submit the necessary evidence to show that their chosen project meets the requirements for TEA designation. Investors must include all the necessary documentation with their I-526 petition. While this can add extra work for the investor, this process allows investors to have many more options when it comes to finding an EB-5 project in a TEA.

There are two different types of TEAs, and each one has different qualification criteria for TEA designation. High-unemployment TEAs are areas with an unemployment rate at least 150% of the national average, while rural TEAs are areas with a population that is less than 20,000. The two types of TEAs have unique calculation methods, but this article focuses on TEA designation for high-unemployment areas.

Acceptable Data Sources for TEA Designation

When it comes to determining TEA eligibility, USCIS requires calculations to be done with data from reliable, verifiable sources. The first acceptable source is data from the American Community Survey (ACS). Every year, the U.S. Census Bureau releases updated ACS data, which is calculated at the census tract level.

The second acceptable source of data is Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics (LAUS) program data, which is calculated at the county level. BLS data is released monthly, but it is more common to use yearly estimates when performing TEA calculations. This is because USCIS requires the calculations to use the most recent data available at the time that the I-526 petition is being processed. Because annual data is valid for a much longer period, it is more likely to stay valid during adjudication wait times. When using BLS data, it must be combined with ACS data, since the majority of TEA designations are issued at the census-tract level.

How Delays in Data Could Make COVID-19 Impacts Less Visible

Unfortunately, because of the delay in the release of ACS and BLS data, the EB-5 program may not be able to reach its full potential in terms of benefiting the U.S. economy. Following the COVID-19 pandemic, the U.S. economy needs stimulation and job creation more now than ever. And with the massive increase in unemployment that has resulted from the pandemic, many areas could qualify as TEAs that normally would not. This TEA designation would incentivize EB-5 investors to invest in these areas and create jobs where they are most needed.

However, BLS data for 2020 will not be available until April 2021, and ACS data will not be available until December 2021. Even then, the ACS data will include data for 2016 through 2020, so the high unemployment of 2020 will likely be balanced out by the data of other years. This could keep new areas with high unemployment from qualifying for TEA designation in a time when they desperately need EB-5 investment capital.

The Benefits of Each Available TEA Calculation Method

The good news is that EB-5 investors benefit from being able to use different calculation methods, as different calculation methods often result in different unemployment rates, but only one calculation needs to meet the requirements for TEA designation. This means that if one calculation does not meet TEA requirements, the investor can use the other calculation method to attempt to meet the TEA qualifications.

If an investor chooses to use only ACS data to calculate the unemployment rate, then the investor must also use ACS data to find the national unemployment average, which the TEA must be compared to. This is known as the census-tract method. But if this method does not result in TEA designation, the EB-5 investors can use the census-share method, which combines ACS data with the BLS data. This method compares the unemployment rate from the ACS data to the more recent county-based unemployment rate from the BLS data. This usually provides a more current estimate of the local unemployment rate.

Anyone planning an EB-5 investment following the COVID-19 pandemic should be aware of these two different calculation methods and how they could affect their EB-5 project’s TEA designation. Some investors may fear that their project could lose its TEA designation, in which case they should use the ACS-only method, since the five-year data will be less affected by the major changes in 2020. However, if an investor is hoping that a new area will qualify as a TEA after the turmoil experienced in 2020, they should use the census-share method, since the BLS data will accurately reflect the current unemployment rate after 2020. Those involved with an EB5 investment should use this calculation option to make the best EB-5 investment possible so that they have the best chance at securing a better and safer future in the United States.