With the recent legislative maneuverings occupying the EB-5 world, perhaps lost in the shuffle are some key data items and considerations that will impact TEAs going forward. These updates are important under both the current regulations and also for considering potential legislative changes. For the time being, the current TEA regulations, in which the states have TEA-certifying power for high unemployment area TEAs, are in still in place. As the majority of states perform their annual update from around March to July of each year, and with possible legislative changes on the horizon, it is important to begin looking ahead.
Below summarizes the newly released data related to the multiple moving parts of most TEA calculations.
National Unemployment Rate – the US unemployment rate for calendar year 2015 is 5.3% (down from 6.2% in 2014). Within the next several months, the majority of states will begin utilizing a 150% threshold reflective of 2015 in which TEAs will need to meet a threshold of 8.0% (150% of 5.3%). While it would be nice if this lower threshold meant it was easier to find TEAs, unfortunately that is not necessarily the case due to the other moving pieces, including ACS and BLS data, as described next.
American Community Survey (ACS) Data – most states utilize ACS data in some shape or form for unemployment rate calculations at the census tract level. In December, new ACS data was released (ACS 10-14). The majority of states will be using this newly released ACS 10-14 data as they update over the course of the next several months. While the latest draft legislation language is unclear, there is a good chance that any new potential TEA triggers, such as poverty and income, will also rely on this newly released ACS data.
Bureau of Labor Statistics (BLS) County data – while not quite finalized for 2015, data through November 2015 is available for BLS LAUS county-level data. This is another key component of most states unemployment rate calculations at the census tract level, so it is important to consider the most recent BLS county-level data available for 2015 when looking ahead.
Importance of looking ahead for TEA-eligibility
TEA analysis is often not as simple or cut-and-dry as just looking at one point in time. This is especially true at this time of year as states will be making their annual updates soon.
TEAs come into play at the time of the investor’s I-526 petitions (or time of the investment), and one needs to ensure that each I-526 submission has (or will be able to obtain) a current TEA letter. In many projects it is difficult to anticipate exactly when investors might subscribe. TEA-eligibility for a project can change over time and so there is no guarantee that a site that is currently in a TEA will remain in a TEA in the future. Similarly, a site where you might have been informed that it does not work could potentially become TEA-eligible in the future.
For a thorough TEA analysis, one must take into account not only the timing/methodology differences amongst states, but also the planned timing of the immigrant investment or I-526 filings. As TEA-eligibility for a project site can change over time, understanding when states update their data, and how that new data is looking for TEA purposes, is just one important aspect of the overall TEA picture.
Now we also have an additional wrinkle – with possible changes to TEA regulations on the horizon, and depending on where your project is along the EB-5 timeline, it may also now be important to analyze EB-5 project sites for possible TEA-eligibility reflective of potential new legislation.
As always, and especially at this time of year (and unique period for the EB-5 program as a whole), it is important to have potential EB-5 project sites analyzed carefully, possibly taking multiple scenarios into consideration.
Impact DataSource is equipped with the tools to analyze project locations under the existing TEA regulations, taking into account the data that states are currently using and also what they will be using in the future. Impact DataSource is also equipped with the tools to analyze project locations reflective of the possible changes that may come to be under new TEA legislation.
Please contact Impact DataSource for any general or site-specific TEA questions, or if you would like to discuss economic job studies for your regional center projects.