New regulations continue many of the same TEA standards but offer more clarity

  • Posted on December 16, 2019 | Updated on January 2, 2020 | 5 min read

While some EB-5 stakeholders think the new regulations are potentially ambiguous, EB-5 expert Suzanne Lazicki sees the new TEA policy as having a lot of carry-over from before and offering more clarity. One question she sees as being unclear: When it comes to high-unemployment TEAs, does the Department of Homeland Security (DHS) accept census tracts touching only at a point as being “directly adjacent”?

Business writer and EB-5 expert Suzanne Lazicki has spent a considerable amount of time reviewing the current TEA policy. She notes the many consistent elements between the new regulations and the old policy, the differences, and offers some good practical advice for petitioners.

For whom do the TEA rules apply & are there any exceptions?

The new TEA rules apply to all petitioners who filed on or after November 21, 2019. There are no exceptions even if a project had prior investors or exemplar approval before the date of the new regulations. If an EB5 Green Card investor is attempting to retain a priority date prior to November 21, 2019, but filing on or after that date, the new TEA policy still applies.

Conversely, the new rules do not apply to any investor who filed his or her I-526 before that date, even if the full amount of the funds were not invested in the NCE or deployed to the JCE before that date.

What TEA policy remains the same going forward

Despite the fact that many experts believe more than half of the EB5 projects that qualified for TEA designation before the new regulations will no longer qualify, Lazicki points out that much of the previous policy will remain in effect, like the definition of rural areas and the Metropolitan Statistical Area (MSA) TEA standards. Additionally, the job-creating entity must still do its main business and create jobs in the TEA area. She also states that the allowable methodology data will be the same.

Lazicki also observes that the factor of timing remains the same with the new regulations: TEA qualification must be in effect at the time an I-526 petition is filed or at the time the investor’s capital is invested, whichever is earlier.

What TEA policy is different now

Qualifications for a job-creating entity in a high-unemployment TEA have two new revisions: The first is the inclusion as an option of a city or town outside being outside an MSA and having a population of at least 20,000. The second revision is that the census tract where the job-creating entity primarily does its business can only include directly adjacent tracts. This later revision was driven by the political mandate to stop the gerrymandering that allowed for affluent EB5 investments in urban areas to qualify for TEA designation.

The other main point of difference now is who makes the TEA determination. Previously, that authority rested with individual states, but now it resides on the federal level with the Department of Homeland Secuity (DHS).

Different but almost the same

Lazicki brings up that during the period of the previous TEA policy, stakeholders felt a comfortable level of assurance with state TEA-designation letters. But she maintains, “that TEA letter comfort was useful for marketing, but somewhat of an illusion.” This is because TEA qualification was based not on the date of that letter but determined separately for every investor based on the date of investment or petition filing, whichever was earlier. Those state letters, she says, were never given automatic deference because USCIS always had case-by-case discretion to challenge anything; thus, in the past, there was always a degree of uncertainty.

Clarity now

In going over the new regulations that allows for the same methodologies as before, Lazicki opines, “we are not standing on new ground, regarding data…. TEA requirements are, if anything, clearer now than they used to be.” This statement stands out as other EB-5 stakeholders have recently commented on the need for clarity of TEA policy.

New TEA regulations

What are the current challenges?

While Lazicki welcomes the newfound clarity she sees in the new regulations, she doesn’t agree with everything written in them. For example, she cites an example that the new rule suggests the TEA designation process can be “easily navigated by any petitioner — whether associated with a regional center or not — for little or no cost.” She begs to differ. She notes that Bureau of Labor Statistics (BLS) and American Community Survey (ACS) data is difficult for a typical EB5 investor to navigate, interpret and even print out. To this end, she believes the process is challenging enough that most investors will hire an experienced consultant to help with the TEA data they cite in their petition.

Another issue she brings up relates to an EB5 regional center getting exemplar approval. DHS says that approval will receive deference in petitioner filings associated with that exemplar. But Lazicki says this allowance is “100 % useless and void” because of the time it takes to process a regional center’s I-924 application: 62 to 115 months. She points out the error in math here: “No investor can claim TEA status at the time of investment or I-526 filing based on a TEA determination calculated five to 10 years previously.”

Improving your odds: TEA best practices

While letters from state agencies will no longer have the at least perceived power of making TEA designations, Lazicki still feels those interested in EB 5 immigration can benefit from using them to present data to USCIS. It is still acceptable for state agencies to supply employment data. She is not certain if such agencies will still be open to requests from EB-5 investors for particular unemployment reports but she feels it “doesn’t hurt to ask.” She believes that as these agencies work under nationally mandated standards, their presentation of data will be accepted as reliable.

As Lazicki believes that EB-5 economists are still necessary to help petitioners present unemployment analysis, she advises that there be three particular criteria that such professionals must meet in their work:

  1. Define the geographic area of the TEA with specific references to the new regulations
  2. Be specific with sources so that a reader could find online any data referenced
  3. Detail all the steps in the calculation process
  4. Explain, citing both regulation the validity of their data, why their TEA determination is sound

She firmly believes that if a petitioner in the immigrant investor program can find the data and see that the calculations follow policy and statistical guidance, “odds are the USCIS adjudicator will likewise find it reliable and verifiable.” She also suggests that a report from a consultant should have more footnotes than a state letter.

Read Lazicki’s blog on the new TEA rules

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