How do State Agencies Evaluate Combined TEA Areas
- March 1, 2016
- Posted by: eb5-economist
- Category: EB-5 Economics, EB-5 Job Creation, TEA Letters
EB-5 investment projects today that are located in a Targeted Employment Area (TEA) qualify for an EB-5 investment at the reduced $500,000 investment level compared with $1,000,000 for investments not located in a TEA. Areas that have above 50% of the national unemployment rate and those that are designated as rural areas (not located in an MSA or in a town with more than 20,000 people) by the U.S. Census Bureau.
Since this effectively doubles the required amount of investment, it is very important today to understand if your project can qualify as a TEA area. Many project developers initially think that since their project is located in an upscale / gentrified area that it likely will not qualify as a TEA. That is sometimes true, but since the USCIS allows for state agencies to designated TEA areas, there are differences with how the calculations are done on a state-by-state basis.
For example, most states will allow a project developer to combine multiple census tracts together utilizing a census-share-methodology which is accepted by USCIS. The key here is that although almost all states allow this approach, there are variances with how many census tracts different states will allow a project developer to combine in an effort of achieving the minimum required unemployment rate for the combined area to qualify as a TEA.
Specifically California has placed a limit of 12 combined census tracts that can be utilized for a custom TEA designation. Whereas other states like Florida and New York are more flexible and do not have a specific maximum number of census tracts that can be combined to form a custom TEA area. We have seen cases in some states where as many as 60 census tracts were combined to justify the designation of a new TEA area, but such requests will need to be accompanied with a strong argument for why the request/project is in the spirit of the USCIS intention of creating jobs in areas with above average unemployment.