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For New EB-5 Regulations, What Data Should Be Used for TEA Calculations?

Michael Kester

By Michael Kester

Unless something stops them, the new EB-5 Immigrant Investor Program regulations are scheduled to go into effect on Nov. 21, 2019. By now, you have probably heard the main takeaways related to the targeted employment area (TEA)-related changes:

(1) Census tract combination for high-unemployment TEAs would be limited to the project tract(s), plus some or all of the tracts that are “directly adjacent” to the project tract (i.e., you can only use the tracts that touch the project tract for aggregation to try and meet the required threshold). This is a drastic departure from current policy and will significantly reduce the number of locations that qualify as TEAs.

(2) The TEA minimum investment is now $900,000, while non-TEA minimum investments are $1.8 million.

(3) States are removed from the process. The U.S. Department of Homeland Security (DHS) will take over TEA determinations.

While the main takeaways above are making the headlines, the following will dig into another important topic: What data should be used for unemployment rate calculations?

DHS says it will not provide one specific set of data that petitioners can use to demonstrate their investment is being made into a TEA. Rather, the petitioner must provide evidence that the area qualifies as a high-unemployment area. DHS does state that unemployment data provided by the U.S. Census Bureau’s American Community Survey (ACS) and the Bureau of Labor Statistics (BLS) qualifies as reliable and verifiable data for petitioners to use.

In other words, it seems there might be bit of flexibility on the methodology that can be used to calculate unemployment at the census tract level. Most or all states currently use census-share methodology for TEA calculations. Census-share calculations use both datasets mentioned above (ACS and BLS) to arrive at the unemployment rate at the tract level.

Because the overwhelming majority of I-526s are currently filed using a state-issued TEA letter that relies on census-share calculations, I thought that DHS might explicitly say that census-share must be used. However, it looks like they might also accept other methodologies, such as a straight-up ACS calculation (without any census-share application), which in certain areas would be more beneficial in trying to meet the threshold. In fact, USCIS provides specific reference in the final rule notice that indicates a straight-up ACS calculation may be utilized, as long as it is correctly compared to the straight-up ACS national average unemployment rate. Specifically, the new law states: "If petitioners rely on ACS data to determine the unemployment rate for the requested TEA, they should also rely on ACS data to determine the national unemployment area to which the TEA is compared."

While USCIS provides language to seemingly discuss an “ACS only” calculation, the agency does not specifically mention an example with census-share. Census-share is only mentioned once in the final rule notice, referring to a comment submitted. I would have thought that using census-share would still be the safest route, since USCIS is used to seeing that come from the state-issued letters. But the fact that the final rule notice seems to specifically provide language about an “ACS only” calculation, and that it only mentions census-share once, it would appear that an “ACS only” calculation may be sufficient.

It will be interesting to see how the EB-5 industry takes to this lack of clarity and how DHS adjudicates the different TEA methodologies, which unfortunately will be adjudicated along with the I-526 because there will not be a separate application or process for obtaining an early TEA approval. Since it will now be up to the petitioners to provide their own evidence that a project qualifies as a TEA based on the new language (instead of just providing a state-issued letter as is done currently), it will be of the upmost importance that the TEA analysis and supporting documentation be done accurately to meet the new rules.

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