Investing in a project within a targeted employment area (TEA) offers two primary advantages for EB-5 investors: a lower investment threshold of US $800,000 AND priority processing of Form 1-526E for rural TEAs by the USCIS.
As of March 15, 2022, only the USCIS may determine whether an area qualifies as a TEA, based on its location. Two critical factors are considered: whether the project is located in an area of high unemployment or in a rural area.
High Unemployment TEA
An area qualifies as a high unemployment area if its unemployment rate is at least 150% of the national average. For instance, with a national unemployment rate of 5.00%, the area must have an unemployment rate of 7.5% or higher. Census tract information is used to determine TEA designation. Investors must submit supporting documentation with their I-526 petition, which they can obtain from public records or a qualified state government agency. Typically, regional centers assist investors by providing the necessary documentation.
Acceptable evidence includes geographic and population data from the U.S. Office of Management and Budget and current unemployment data from the U.S. Bureau of Labor Statistics Local Area Unemployment Statistics (LAUS) office.
Rural TEA
A project qualifies as a rural TEA if it is located outside metropolitan statistical areas (MSA) or within cities or towns with a population of less than 20,000.
Rational for Lower Investment in TEAs
Congress aimed to stimulate investment and create jobs in areas with the greatest need by setting a lower investment requirement for TEAs. However, there have been instances where TEAs have been designated in relatively affluent areas, such as parts of New York, due to the inclusion of adjacent census tracts with high unemployment.
Priority Processing for Rural TEA I-526E Petitions
Before the Reform and Integrity Act (RIA) of 2022, most projects were in high unemployment TEAs. The RIA led to a surge in I-526E petitions for rural TEA projects due to the introduction of priority processing and increased visa allocations for these areas.
Background
Each country has a cap on available green cards and high demand, particularly from countries like China and India, has resulted in lengthy waiting lists. Before the RIA, processing times were significant; the USCIS reported pre-RIA processing time for I-526E petitions (excluding China) at 54.5 months, with Chinese petitions taking 90.5 months.
Effects of the RIA
The RIA has significantly reduced processing times by granting priority processing and allocating a higher percentage of visas to rural TEA projects. As of July 2024, there was no waiting list for rural EB-5 applications.
EB-5 petitioners benefit from the lower $800,000 investment threshold in TEAs. Rural TEA investors further gain from faster petition processing times.
As always, Carofin recommends working closely with an established U.S. broker-dealer who can provide due diligence on the project both to improve the chances that the project will meet USCIS requirements — and to ensure each project matches your risk profile and investment objectives.
For a map of currently designated TEA locations, please see IIUSA’s mapping tool here.
