Everything You Want to Know About Targeted Employment Areas

If you are looking for a place to put your EB5 funds that will give you a great return while fulfilling the program requirements, you need to understand how targeted employment area determinations should influence your EB5 project location choices. TEA designation brings some great benefits, including a halving of the initial investment requirement that the U.S. government places on immigrants. That’s not the only thing that you get when you invest in TEAs though.

Benefits of Targeted Employment Area Investments

Since TEAs are determined based on economic need and the community’s economic health, they present a few really important opportunities that investors need to know about.

1. Areas are designated as TEAs when employment rates are low and a skilled workforce is present, encouraging growth in that sector
2. They typically represent underdeveloped economic niches within communities or communities in need of new businesses and services for multiple reasons
3. Investment in areas with identified markets and employee bases means hedging some of the risks inherent in investing in new ventures

Understanding TEA Designations

Areas are designated by the program as targeted employment areas when they are in a location with a population of at least 20,000 and unemployment rates that are at least 150 percent of the national average. This means that the actual designation is prone to change as investors move into areas, and it also means you can petition to have an area designated as a TEA if it is not currently listed as one but you can prove that it fits the definition.

Designation of TEAs by State and Federal Governments

The federal government does not maintain its own list of TEA areas, but it does accept designations from the states and it will review applications for designations for projects. If you are looking for states that have pre-defined TEAs to choose from, these are the states to look at:

• California
• Colorado
• Connecticut
• Florida
• Georgia
• Idaho
• Illinois
• Michigan
• New York
• Wisconsin

There are a few more, but these represent the most populous and business-friendly states participating in this aspect of the program.

How to Apply for TEA Designation

If you are looking to have a new area added to the list of TEA designations, you will need to fulfill the following steps:

1. Contact the Bureau of Labor Statistics or a state/local government to obtain employment statistics.
2. Submit these statistics with your application to argue for TEA designation for your project
3. Await determination along with your application

TEA and Job Creation

Remember, if you are looking to work in targeted employment areas, you will be able to invest far less hard cash that someone looking to work in an EB5 target location that is not a designated TEA. The difference is literally half, $500,000 versus $1 million. You need to keep in mind, though, that the requirement that 10 jobs be created is static no matter what, so your new venture still needs to be able to encourage employment growth once it is up and running. That is important to remember.

Contact us for more information about the EB5 application process.

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