By Marta Lillo
The US government recently changed the status of approximately 100 rural targeted employment areas (TEA) and metropolitan statistical areas (MSA) project designations in the United States.
The update mainly impacts future EB-5 project planning and future investor applications. However, the change should have a limited effect on the status of projects currently being processed. EB-5 stakeholders must consider the new data when planning their next steps in the coming years, says Michael Kester, economist and partner of Impact DataSource, an EB-5 economic analysis firm.
“While the new delineations released by the government have changed the “rural” TEA status for many counties throughout the country (approximately 100), the “rural” status for the majority of counties remains unchanged,” Kester explains.
Changes made to TEA designations for EB-5
The Office of Management and Budget (OMB) released the information in late July for its customary ten-year update. Although this significant update may generate some uncertainty in the EB-5 community, Kester expects it to remain the most relevant change going forward.
The good news is that additional changes for the next several years are anticipated to be very minor. The OMB, which releases the MSA delineations, has said the next update to the county listing won’t be until the end of 2024, with some additional updates at the end of 2025, 2026, and 2027. The OMB says that these annual updates over the next several years will be minor and “would affect a small number of counties,’” he said.
In a video commenting on the update, Kester cites the example of Pike Country in Pennsylvania, which was part of the New York City MSA until the update. “They decided that Pike County did not have enough economic interconnectivity with the other counties in the New York MSA. So, Pike County was removed from the MSA and is now rural,” Kester adds.
Another example Kester mentioned is Bosque County, Texas, which transitioned from rural TEA to Waco County MSA. “The OMB analyzed that Bosque County had enough economic interconnectivity to Waco through commuting patterns, etc., (…) Instead of saying rural like it would have under the previous data, it does not work as a rural TEA.”
Status of EB-5 applications after the TEA and MSA updates
Regarding EB-5 applications, Kester advises that the industry should assume that USCIS will immediately use the new data for assessments.
Also, investors whose EB-5 projects have changed status to MSA can check if their areas still qualify as high-unemployment TEAs and consider filing under that category.
“While the focus of these new data changes is for ‘rural’ TEAs, it is good to check in on what is anticipated next for ‘high unemployment’ TEAs. Recall that most EB-5 projects are not rural and must rely on a census tract analysis (limited to directly adjacent census tracts only) to ascertain whether or not it may qualify as a ‘high unemployment’ TEA. The next new census tract-level data release is scheduled for December,” he concludes.
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