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Here are the main ways in which EB-5 targeted employment areas will change once the EB-5 Immigrant Investor Program Modernization regulation takes effect on November 21, 2019.
First, what are targeted employment areas (TEA) and why are they important to EB-5 investors?
Targeted employment areas are, at the time an EB-5 investment is made, areas that are either designated as rural or areas that have an unemployment population that is at least 150% the national average.
TEAS are important to EB-5 investors because an investment located in a designated TEA qualifies for the lower minimum investment amount of $500,000 instead of $1 million. On November 21, 2019, these minimum investment amounts are set to increase. The TEA minimum investment amount will increase from $500,000 to $900,000 and the non-TEA minimum investment amount will increase from $1 million to $1.8 million.
The three changes the EB-5 regulation will make to TEA designations (The source for the following three changes is the Federal Register):
1. The Department of Homeland Security (DHS) is eliminating states’ ability to designate targeted employment areas. DHS will become the authority on designating TEA according to new requirements outlined in the EB-5 regulation.
2. DHS is adding cities and towns that have a population of at least 20,000 and are located outside of a metropolitan statistical area as a separate and specific area that can qualify as a TEA based on high unemployment.
3. DHS is changing what a TEA qualifications. It’s allowing a TEA to consist of a census tract or contiguous census tracts in which the new commercial enterprise is principally conducting business if it’s located in multiple census tracts and the weighted average unemployment rate for the tract[s] is at least 150% the national average rate.
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