Two members of the Senate introduced The American Job Creation and Investment Promotion Reform Act, S. 1501, in June 2015.  The bill has many provisions seeking to provide reform to the program, including provisions for integrity measures, increased capital investment amounts, and provisions to redefine Targeted Employment Areas (TEAs).

Under current law, a TEA is defined as “an area which, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 per cent of the national average rate.”  The definition of a “high unemployment area” is defined as a “metropolitan statistical area, the specific county within a metropolitan statistical area, or the county in which a city or town with a population of 20,000 or more is located, in which the new commercial enterprise is principally doing business has experienced an average unemployment rate of 150 percent of the national average rate.”  The state is given the authority to designate TEAs.

The new bill proposes to redefine TEAs and high unemployment areas.  Under the proposed bill, a TEA means “a high unemployment area, a rural area, or any area within the geographic boundaries of any military installation closed, during the 20-year period immediately preceding the filing of an application . . .based upon a recommendation by the Defense Base Closure and Realignment Commission.”  8 C.F.R. §204.6.  The TEA designation determination, under S. 1501, shifts the responsibility to the Department of Homeland Security and takes away the designation authority from the state.  In addition, high unemployment area is redefined under S. 1501 as “an area, using the most recent census data available, consisting of a census tract that has an unemployment rate that is at least 150 percent of the national average unemployment rate.”

The new proposed definition of a TEA under S. 1501 limits the word “area” to only one census tract.  This action restricts the EB-5 program’s economic benefits into many mid-sized cities and suburbs across the country, as many areas that currently qualify as a TEA will no longer qualify as a TEA under S. 1501.  The EB-5 Investment Coalition (EB-5IC) has compiled data on select states demonstrating the percentage of census tracts that would be disqualified in certain Metropolitan Statistical Areas (MSAs).  Please refer to the  following documents: 1501’s TEA Proposal: The Economic Consequences Made Clear and Cities of All Sizes Will Lose Jobs Under S.1501.