High Unemployment Area TEA: Step-by-Step Guide
- EB5 investors are given an option to invest either $500,000 or $1 million, to qualify for a US green card.
- The vast majority of investors invest the lower amount of $500,000.
- To qualify for this reduced amount, investors must invest in targeted employment areas.
- A targeted employment area (or “TEA”) is an economically depressed area that stands to benefit from increased investment and business activity.
- The most common form of TEA is a high-unemployment area.
High Unemployment Area TEAs
A high unemployment area, as defined by the EB5 regulations, is an area that has experiences an unemployment rate of at least 150% of the national average at the time the EB5 investor makes their investment or files their EB5 petition.
There are 2 ways for an area to be classified as a high-unemployment area TEA:
- Public Records Approach
- State Letter Approach
Public Records Method
The public records method is a way to classify an area as a TEA by submitting to USCIS publicly available information regarding the unemployment statistics of the area that the new commercial enterprise operates.
The information relied on is publicly available. There is no need to petition for the area to be designated as a TEA.
Public records only cover large geographic areas such as cities and counties. If the city or county, as a whole, does not have the required unemployment rate, it will not qualify as a TEA under the public records approach. The state letter method (discussed later) provides more flexibility.
How to Classify an Area as a TEA Using the Public Records Approach
- The Bureau of Labor Statistics (a division of the U.S. Department of Labor) publishes a monthly report listing the national average unemployment rate.
- Using this report, you can figure out what 150% of national average unemployment rate is. To do this, simply multiply the national average unemployment rate by 1.5.
- Example: The national average unemployment rate for June of 2018 is 4%. Therefore, 150% of the national average unemployment rate is 6%. Calculation: 4 x 1.5 = 6
- In the above example, for your investment to qualify under the high-unemployment area TEA, it must principally be doing business in a defined geographical area with an unemployment rate of at least 6% or higher.
- The next step is to find local unemployment statistics for the area where the new commercial enterprise (the EB5 business) is located.
- To do this, you can visit the Bureau of Labor Statistics Local Area Unemployment Statistics Map
- Using this map, you can get the local unemployment statistics for counties and cities throughout the United States.
- Remember, the local area must have an average unemployment rate of at least 150% of the national average.
State Letter Method
The second way to get an area classified as a high-unemployment area TEA is the state letter method. The state letter method allows you to get an area classified as a TEA by getting a letter from a qualifying state government agency.
The main benefit of the state letter method is that it allows you to classify a much smaller area as a TEA. Unlike the public records method, which is limited to cities and counties, the state letter method allows you to get an area as small as a census tract to be classified as a TEA.
The state letter method requires you to petition to an authorized state government body for a letter. Unlike the public records method, you cannot simply rely on publicly available information.
How the State Letter Method Works
- One of the main issues with the “public records” approach is that the public unemployment statistics for local areas only cover large geographies such as cities and counties.
- However, the EB-5 regulations permit much more flexibility to narrow down the area for which TEA designation is sought.
- Specifically, the EB-5 regulations authorize states to define their own geographic boundaries which can form a high-unemployment area.
- Due to this flexibility, states have put policies in place which make is much it much easier to satisfy the required unemployment threshold.
- One of the policies I’m referring to is that many states allow you to connect multiple areas together and average their respective unemployment rates to achieve the required 150% mark.
- You can request a letter from the authorized state government agency to designate that area as a “high-unemployment” area.
- Through this method an area can be classified as a TEA even though it ordinarily would not be classified as a TEA under the “Public Records” approach.
This is a highly-complex area of immigration law but to oversimplify the concept lets go over the following example:
Let’s assume the following scenario:
- The national average unemployment rate is 4%.
- Your EB5 investment is located in neighborhood A, within City Y, within State X.
- State X allows you to average the unemployment rates for up to 4 bordering neighborhoods.
- City Y has an average unemployment rate of 4%.
- Neighborhood A has an average unemployment rate of 3%.
- City A is bordered by cities B, C, and D which have average unemployment rates of 6, 7, and 8% respectively.
- Because the national unemployment rate is 4%, the geographic area of your EB5 investment must have an average unemployment rate of at least 6% (150% of the national average). Calculation: 4% x 1.5 = 6%.
- City Y’s average unemployment rate is 4%, so City Y does not qualify as a TEA through the public records method.
- Neighborhood A has an unemployment rate of 3%, so it does not qualify as a TEA by itself.
- However, by averaging the unemployment rates for cities A, B, C, and D, (as permitted by State X) this new “geographic area” has an average unemployment rate of 6% which qualifies as a high-unemployment area.
- Calculation (3% + 6% + 7% + 8%) / 4 = 6%
- I know this can be extremely confusing. If you have any questions about whether your potential investment is located in a TEA, feel free to email me directly at Michael@AshooriLaw.com.
High-unemployment areas are how most EB5 investors qualify to make reduced TEA investments. There are 2 ways to get an area classified as a high-unemployment area: 1) public records method; and 2) state letter method.
- Finding the TEA: “Targeted Employment Area” Required to Claim Minimum Investment Amount Under the EB-5 Visa Rules by David M. Moris and Farah S. Abbas