RCBJ Perspectives: “Regional Center Considerations Under New TEA Regime”

By Walter S. Gindin, Director, Legal Affairs, CanAm Enterprises 

The EB-5 Program changed significantly on November 21, 2019 when the Department of Homeland Security’s (“DHS”) final EB-5 Modernization Rule (the “Final Rule”) took effect. The Final Rule made several major revisions to the EB-5 regulations for the first time since 1993, most notably, increasing minimum investment amounts and tightening the procedures and certain of the criteria for designating targeted employment areas (“TEA”). Barring any superseding legislative reforms, the regulatory changes occasioned by the Final Rule are here to stay. It is therefore incumbent that all EB-5 stakeholders understand and adapt to the new regulatory landscape if the EB-5 Program is to continue its mission of facilitating economic development and job creation throughout the United States. This article examines some of the adjustments that regional centers, in particular, may need to make to their project selection and offering practices in light of the changes applicable to the determination and designation of TEAs.

Changes to TEA Standards

The Final Rule made several prominent changes to the process and certain of the criteria for designating TEAs.

From a process standpoint, the Final Rule indicates that for EB-5 applications and petitions filed on or after November 21, 2019, USCIS will directly review and determine the designation of TEAs and will no longer defer to TEA designations made by state and local governments. USCIS also indicated in its response to comments to the Final Rule that it does not intend to establish a separate application or process for obtaining TEA designations from USCIS prior to filing EB-5 applications or petitions and will not issue separate TEA designation letters for areas of high unemployment. Rather, USCIS has stated that it intends to make TEA determinations as part of the existing adjudication process.

Substantively, the Final Rule did not make changes to the regulatory definition of “rural area” and also maintained the ability to demonstrate that the entire Metropolitan Statistical Area (“MSA”) and a specific county within a MSA qualifies as a TEA. The Final Rule did add cities or towns with a population of 20,000 or more which is outside a MSA as a distinct TEA designation criteria.

The Final Rule also made fundamental changes to the scope of high unemployment designations for sub-county regions. Prior to the Final Rule, it was possible to aggregate any number of contiguous census tracts (inclusive of the project census tract) to reach the requisite average unemployment rate threshold of 150% of the national average unemployment rate. The Final Rule limited the geographic scope of a sub-county area to the census tract or contiguous census tract(s) in which the project is located/principally doing business, and any or all census tracts directly adjacent to such census tract(s), provided that the weighted average of the unemployment rate for the subdivision (that is, the area comprised of multiple census tracts), based on the labor force employment measure for each census tract, is at least 150% of the national average unemployment rate.

The foregoing procedural and substantive changes to TEA designations are likely to impact regional centers’ operations in a number of ways as discussed below…



    Your Cart
    Your cart is emptyReturn to Shop