The Bureau of Labor Statistics released the finalized 2014 annual average unemployment data for metropolitan statistical areas (MSAs), cities and counties late last month. These data commonly serve as the basis for high unemployment area calculations to determine qualifying targeted employment areas under the EB-5 program throughout the year.
Annual TEA Data Update: Majority of States are now using 2014 Annual Data
As is typical this time of year (March to June), the majority of state agencies designated to certify TEAs have completed their annual data update. In short, the majority of states are now using 2014 annual data instead of 2013. Included in this list are the states that have historically had the most EB-5 project activity (California, New York, Florida). This update to 2014 unemployment rates is extremely important for EB-5 project stakeholders to be aware of because a state-issued TEA letter should be current. It is recommended that the state TEA letter speak to the most current data that the state is utilizing at the time of the investment or at the time the I-526 is filed. In other words, using outdated or “old” TEA letters leads to possible RFEs. For the majority of states, the most current unemployment data is now reflective of 2014 calculations and TEA letters included with I-526 submissions should be reflective of these recent updates.
Threshold for High Unemployment (Non-Rural) TEAs for 2014 is 9.3%.
Staying on the topic of the 2014 data update, the 2014 annual threshold for non-rural TEAs is now 9.3%: a reduction from 11.1% in 2013. A high unemployment (non-rural) TEA is an area that, at the time of investment, is experiencing unemployment of at least 150 percent of the national average rate. The national average unemployment in 2014 was 6.2% and so 150% of this rate results in the 9.3% threshold. While the overall national average rate has decreased, it does not necessarily make finding TEA-eligible areas any easier (or harder). Multiple data sources involving local area unemployment are utilized in the TEA calculations at the census tract level. As the majority of TEAs must rely on data at the census tract level, each project location should continue to be analyzed on a case-by-case basis for TEA-eligibility, taking into account the most recent data.
For a Few States, Change in Methodology May Result in Significant Changes at the Census Tract Level
As part of their annual data update to 2014, the states of Massachusetts, New York and Nevada are making methodology changes that could result in significant unemployment rate changes at the census tract level. In short, in developing the “shares” as part of the “census-share calculation” utilized to calculate unemployment rates at the census tract level, these three states are transitioning from older 2000 census data to more recent American Community Survey (ACS) data. For these three states, when comparing unemployment rates from 2013 to 2014 at the census tract level, the changes can be significant. While this change doesn’t necessarily mean that a project site that qualified based on the state’s 2013 data will not qualify based on the new 2014 data, it is a possibility. Similarly, locations that previously did not qualify may now be TEA-eligible. As always, each project site should be analyzed on a case-by-case basis and should reflect the recent changes that the state of your project has made related to their TEA methodology.
A clarifying note on TEA timing: once the TEA designation has been accepted by the USCIS as a part of an investor’s I-526 approval, the investor no longer needs to be concerned with the project’s TEA status. However, for investor’s evaluating projects currently in the marketplace, it is important that the state TEA designation utilize the most current data available at the time of the investment or at the time the I-526 is filed.
What about Rural TEAs?
Up to this point, this article has focused on high unemployment TEAs, as the majority of EB-5 projects must rely on this high unemployment designation. However, a project site may also qualify as a “rural” TEA if it is not part of a Metropolitan Statistical Area (MSA) and not located in a city with a population of 20,000 people or more. Based on the data sources that USCIS lists in its definition of a rural TEA, there have been no updates to affect a locations rural TEA status in the last year. Similarly, no changes are anticipated in the near future that might affect a locations rural TEA-eligibility. Based on the USCIS definition, rural TEAs are more stable and long-lasting, and if you have a project location that currently qualifies as a rural TEA, it should continue to qualify in the near future.
Impact DataSource has published a new national TEA map compiling various data elements. The map is intended to be a useful tool in evaluating a potential site and aggregates BLS, OMB and other data to assist in this process.
This map includes the following data:
- 2014 Annual Bureau of Labor Statistics (BLS) Unemployment Data for
- Statewide Data
- Metropolitan Area Data
- County Data
- City and Town Data (with populations over 25k)
- An estimate of 2014 annual unemployment for census tracts using a common census-share calculation that is described in the map details.
- MSA status according to the Office of Management and Budget for each county.
Each state has its own process to obtain an official certification and may use slightly different data points for the census tract unemployment calculation. The map is for informational purposes only and its data cannot be submitted to the USCIS or state agencies for purposes of certifying a TEA.