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How do census tracts affect a targeted employment area designation in the EB-5 program?

When defining a TEA in the EB-5 program, do census tracts have an impact? If the EB-5 project impacts counties in multiple states, can census tracts be used to achieve a TEA qualification within the approved geographic area?

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    Currently, any lawful political or geographic subdivision can be used to calculate a TEA. A single census tract or a combination of contiguous census tracts can be used to define a TEA. We work with experienced economists and state agencies to determine TEA geography.

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    A TEA ( Target Employment Area ) is designated by an analysis of joining contiguous census tracts. This can occur in one State or occur across State borders. Usually, a qualified EB-5 economist will provide the analysis and determination.

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    Proposed regulations give USCIS the authority to designate TEAs instead of the states.

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    The answer is yes to each of these questions. However, it depends on a host of factors. First, currently what constitutes a "Targeted Employment Area" (TEA) is largely determined by each state''s Department of Economic Development (DEC) and there are little or no agreement among states. The USCIS does want this disparity resolved but it will remain a bone of contention for a long time. In addition, the chance for resolution of this issue even in the new proposed regulation is very slim. There is not going to be a federally imposed resolution on the issue. Secondly, the census tracts may have different impacts or distribution on each adjoining states but the reality is that each DEC does have some impacts. In a situation where a project impacts multiple states, the contention has always been whether you can paint the multiple states with a single brush and generally the answer is an emphatical no. This is because each effect is likely to be defined differently largely by each state in such a circumstance based on state boundary and census without admitting any spillover effect over the state line. Last but not the least, where demographic facts should have produced a homogenized result, other empirical factors may affect the classification of TEA in adjourning counties across state lines.

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    Yes, in order to be in a TEA (Targeted Economic Area), the unemployment rate must be 150% that of the national average. The unemployment rate is determined by census tracks. So, your project must be located in a particular census tract that meets the requirement or in an area where a group of associated census tracts meets that requirement. Please note legislation regarding TEAs may be enacted in the near future. The TEA definition will be significantly restricted so that the project itself must be in the actual census tract and it must meet the definition of a "distressed" TEA.

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    Census tracts are the key aspect used in the analysis. By the way, this is the most contentious issue in EB-5 and the current rules will soon undergo changes.

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    Each state''s Department of Labor (DOL) is authorized to issue TEA designation letters for EB-5 purposes. The State DOL utilizes census tracts for determining whether a project is located in a TEA or not. Also, most state DOLs are amenable to using multiple tracts in considering TEA. The caveat, however, is the proposed regulation changes include language that will take this authority away from the states, giving the power instead to USCIS to designate TEAs.

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