New TEA Policy from the State of California

By:  James Cormie and Jennifer Hermansky

The California Governor’s Office of Business and Economic Development (GO-Biz) announced yesterday during a conference call on EB-5 immigrant investor visas that investors, starting May 1, may apply for custom certification that their project is in a Targeted Employment Area (TEA). With this new policy, an EB-5 investor or a Regional Center supplies information from the county, city, or local Economic Development Corporation and other details about the project directly to GO-Biz. If the project is located in an area with 12 contiguous census tracts, or less, that have an unemployment rate exceeding 150% of the national unemployment average as determined by the U.S. Department of Labor, GO-Biz will certify a special TEA tabulation. This represents a step in the right direction supplementing the old methodology, which did not allow for custom TEA designations.  It is important to note, however, that the State will only accept a group of contiguous census tracts comprised of 12 tracts of less, which still limits applicants in creating TEAs.

Prior to this announcement, GO-Biz calculated a TEA based its own calculations of areas of high unemployment with the State. Each year, California published a list of pre-certified TEAs containing certain cities, towns, and counties that were certified as areas of high unemployment. Custom certifications where the applicant would select a group of contiguous census tracts were not available in the State. The new customized TEA option will add much-needed flexibility to the program and encourage investment in the State of California.