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What is an EB-5 targeted employment area (TEA)?

By December 11, 2023EB-5 Visa
targeted employment area

Background on the EB-5 Immigrant Investor Visa (Green Card)

The EB-5 is an immigrant visa that provides permanent resident status (also known as a “green card”) to those who invest at least $1,050,000 into a business in the United States. If the business is located in a rural or high unemployment area (called a targeted employment area), the investment amount can be reduced to $800,000. The EB-5 applicant must show that their investment led to the creation of at least ten jobs for US workers. For an overview of the EB-5 requirements and application procedure, please see here.

Given that an EB-5 visa applicant is able to reduce their investment amount by about 24 percent – from $1,050,000 to $800,000 – it is not surprising that many people want to know what a TEA is, and that most regional center projects are located in TEAs.

What is a Targeted Employment Area (TEA)?

A TEA is an area that, at the time the EB-5 investment is made, is either rural or an area experiencing high unemployment. The purpose of a TEA is to focus foreign investment into areas that especially need it, particularly geographical areas where jobs are scarce.

How does a “rural area” qualify as a TEA?

The term “rural area” is defined in the Immigration and Nationality Act (INA) as any area that is not 1) a metropolitan statistical area (or “MSA,” as designated by the Office of Management and Budget), or 2) inside a city or town that has 20,000 or more people.

How does a “high unemployment area” qualify as a TEA?

The definition of a “high unemployment area” changed on March 15, 2022, as a result of the passage of the EB-5 Reform and Integrity Act. For applications filed before March 15, 2022, a high unemployment area was defined as an area with unemployment of at least 150% of the national average. Before March 15, 2022, a state government could determine areas within the state that qualify as areas of high unemployment. For applications filed after March 15, 2022, it is up to the Secretary of Homeland Security to designate areas of high unemployment.

How does the applicant show in their application that the area where the investment was made is considered a TEA?

The applicant must include documentation with the EB-5 application that shows that the area where the investment was made is a TEA, either by being a rural area or an area of high unemployment.

If the TEA is based on the location of the investment being rural, the application should include evidence that the location is not within a metropolitan statistical area (again, as determined by the Office of Management and Budget), and is also not within a city or town that has a population of 20,000 or more people.

If the TEA is based on the location of the investment being an area of high unemployment, and the application was filed before March 15, 2022, the applicant should include either unemployment data for the county or metropolitan statistical area where the investment was made, or a letter from the state government stating that the area of the investment is outside a rural area but is a high unemployment area. Remember that for applications filed on or after March 15, 2022, only the Secretary of Homeland Security can designate areas of high unemployment.

EB-5 applicants applying on or after March 15, 2022, may also show that the investment was made in an area of high unemployment by submitting with the application a description of the census tract where the investment was made, along with unemployment statistics. The area can include contiguous census tracts (meaning census tracts that share a border) and census tracts that are next to them. The average unemployment rate for the census tracts must be at least 150 percent of the national average. USCIS will make a case-specific determination as to whether the area meets the requirement and is considered an area of high unemployment.

How is the geographical area determined when the enterprise operates in multiple areas?

When the EB-5 enterprise is active in more than one area, the government determines whether it qualifies as operating in a TEA by looking at the area where the enterprise “principally does business.” This is defined as the area where the enterprise “regularly, systematically, and continuously provides goods or services that support job creation.” Specifically, the government will consider the geographical area where the enterprise creates jobs, spends money related to the creation of jobs, locates its day-to-day operations, and locates assets it uses to create jobs.

What happens if the enterprise operates in an area that later loses its designation as a TEA?

Sometimes an area that was a TEA in the past loses that designation, whether by declining unemployment rates or a growing population. In general, the EB-5 investment must be made at a time when the area is designated as a TEA. If the investment was made after the I-526 petition was filed, the geographic area must be designated as a TEA at the time the I-526 petition is filed.

In general, the area does not need to maintain designation as a TEA after the investment is made and the I-526 petition is filed. For example, it is not necessary that the area be designated a TEA when the Form I-829 petition to remove conditions on the green card is filed.

Are there any other benefits to filing an EB-5 petition based on investment in a TEA?

Yes. Not only does an EB-5 petition based on a TEA receive the lower, $800,000 investment amount, but they may also benefit from a reduced backlog due to the availability of additional EB-5 visas that are reserved for TEA applications. 20% of the EB-5 visas made available each year are reserved for projects in rural areas, and 10% are reserved for projects in high unemployment areas.

This can be significant, particularly for applicants who were born in India or China. According to the most recent visa bulletin, released in October 2023, an individual born in China who applied for an EB-5 green card based on investment in a TEA would be able to immediately file an I-485 application to adjust status, which enables them to remain in the United States and apply for work authorization and a travel permit. In contrast, a national of China who applied through the standard EB-5 pathway (requiring an investment of $1,050,000) would need to wait an estimated seven years after filing the I-526 before they can file the I-485 (again, assuming they are within the United States). This is due to the backlog that impacts the standard EB-5 queue, but that does not impact the queue based on TEA applications due to the additional visas that are reserved.

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