Navigating the EB-5 investment landscape involves understanding key categories such as Targeted Employment Areas (TEAs), non-TEAs, Reserved visas, and I-956F Approved Projects. This knowledge is essential for investors looking to make informed decisions that align with their goals of achieving U.S. residency. Whether investing in dynamic urban areas, underdeveloped rural regions, high unemployment areas, or benefiting from reserved visas, grasping these distinctions helps investors effectively manage their investment strategy within the EB-5 program.
What is a TEA? Why is this important? Who determines a TEA?
A Targeted Employment Area (TEA) is a designation within the EB-5 visa program aimed at encouraging investment in regions most in need of job creation. TEAs are appealing to investors because they offer a reduced investment threshold of $800,000, significantly lower than the $1,050,000 required for non-TEA investments.
There are two types of TEAs:
- Rural Areas: These are defined as areas located outside of a Metropolitan Statistical Area (MSA) and containing a population of 20,000 or more according to the most recent census.
- High Unemployment Areas (HUA): These are areas that have an unemployment rate of at least 150% of the national average.
Under the EB-5 Reform and Integrity Act of 2022 (RIA), the US Citizenship and Immigration Service (USCIS) assesses whether a project area qualifies as a TEA based on geographic and unemployment data in the EB-5 investment project approval request (I-956F) submitted by the Regional Center. This assessment is crucial for authorizing the project and makes Approved Projects preferable to those in the market that have not yet been approved as I-526E petitions are approved after the I-956F receives its approval. This translates to a shorter processing time for EB-5 applicants in projects that have the I-956F approval.
What are Reserved Visas?
As an additional incentive to the lower $800,000 investment, the EB-5 Reform and Integrity Act of 2022 (RIA) created three Reserved Visa Categories as a means to stimulate investment where jobs are needed most.
The Reserved Visas are also known as “Set-Asides” as 32% of all EB-5 Visas are earmarked to align with specific economic development goals as follows:
- 20% for Projects in Rural TEAs
- 10% for Projects in High Unemployment Area TEAs
- 2% for Infrastructure Projects that must be administered by a governmental entity.
The table below summarizes the different EB-5 Visa Categories.
| TABLE I | |||||
| EB-5 Visa Categories | |||||
| Visa Category | Priority Processing | Reserved Visa | Visa Set Asides | Investment | Project Location |
| Rural | ✓ | ✓ | 20% | $800K | Outside MSA or town > 20,000 habitants |
| High Unemployment | ✓ | 10% | $800K | Census tract(s) with >150% national unemployment rate | |
| Infrastructure | ✓ | 2% | $800K | Government project | |
| Unreserved | $1.05M | All other areas | |||
Why do Reserved Visas Matter?
Reserved visas are advantageous for reasons aside from reduced investment amount of $800,000. They also ensure faster processing of Rural I-526E EB-5 Immigrant Investor Petitions within a target timeframe of just 4 months. Rural Project investors are assured Priority Processing compared to the non priority processing goal of 8 months.
Reserved visas are especially beneficial for applicants from high-demand countries like China, Taiwan, and India, providing a safeguard against visa retrogression.
Retrogression occurs when the number of applicants from a country exceeds the 7% cap on annual visas, leading to a backlog and a backward jump in priority dates. This cap is intended to ensure diversity in visa allocations by limiting the number of visas any single nationality can receive to 7% of the total available in specific categories each year.
At the time of writing of this blog post, the July Visa Bulletin shows that priority dates for Unreserved Visas (legacy pre-RIA investors and $1,050,000 investments) are backlogged 9 years for China and 4 years for India. If it were not for Reserved Visas, new Chinese and Indian EB-5 investors would face very long delays.
Retrogression is something to avoid at all costs because it creates substantial challenges and uncertainties for EB-5 Visa applicants: affecting their immigration plans, financial stability, and overall well-being. The good news is that applicants can protect themselves against the risks and effects of retrogression by analyzing which EB-5 categories have the most visas available and will likely remain current the longest.
Concurrent Filing
EB-5 Reserved Visas offer a swift pathway to a Green Card for the numerous H1-B visa holders from India and China who currently face prolonged waits, sometimes spanning decades for EB-2 and EB-3 visas. These reserved visas allow eligible investors to file for adjustment of status while the visa category for their country is marked as “Current” (“C”) in the Visa Bulletin, helping them progress in the immigration process despite potential backlogs and freez their children’s age at the time of filing to prevent aging-out.
With Concurrent Filing, EB-5 investors with legal presence in the U.S. can simultaneously file Form I-526E (Regional Center Immigrant Investor Petition) with Form I-485 (Application for Permanent Residence or Adjustment of Status). This adjustment enables investors to apply for permanent residency status concurrently with their EB-5 petitions, removing the previous necessity to await I-526E petition approval. This reform significantly simplifies the transition from non-immigrant to permanent resident status without requiring departure from the U.S.
Concurrent filing also enables them to file Form I-765 (Application for Employment Authorization) and Form I-131 (Application for Travel Document) and obtain unrestricted work and travel permits in about 3 months, even when their I-526E is getting processed.
As highlighted in a previous blog post, the monthly Visa Bulletin does not adequately reflect potential retrogressions since it bases availability only on the number of visas issued, rather than including all investors who have filed I-526E Petitions and are awaiting processing.
As a result, an EB-5 visa category that appears “Current” may actually be heavily oversubscribed. This is particularly evident with HUA visas, which face a demand at least twice that of Rural Visas, despite there being only 10,000 HUA visas available compared to 20,000 for Rural Visas. Although Targeted Employment Areas (TEAs) for high unemployment aim to speed up processing, the high demand in these categories leads to oversubscription. Therefore, applicants need to carefully evaluate subscription levels and processing times in these categories to make informed decisions.
Non-TEA Investment Opportunities
Investing in non-Targeted Employment Areas (non-TEAs) within the EB-5 program might have distinct advantages compared to investments in Targeted Employment Areas (TEAs). Non-TEAs are typically located in economically stable and growing regions with larger markets and higher consumer spending power, which can lead to higher project success rates and revenue growth. Additionally, non-TEAs often feature well-developed infrastructure, access to skilled labor, and a variety of investment opportunities across sectors like high-tech and finance, contributing to property value appreciation and robust business operations.
However, investing in non-Targeted Employment Areas faces several challenges. First, the investment requirement is higher at $1,050,000, compared to $800,000 in TEAs, potentially deterring some investors. Additionally, non-TEAs often present a competitive market with higher operational costs and complex regulatory frameworks, which can hinder new businesses. Finally, non-TEAs do not receive priority in EB-5 visa processing, leading to potentially longer wait times for approvals, estimated to be 8-12 months.
TEA Investment Opportunities
Investing in Targeted Employment Areas (TEAs), whether designated as high unemployment areas or rural areas, presents specific advantages and limitations for EB-5 investors.
High Unemployment TEAs:
Advantages: These areas offer a lower investment threshold of $800,000, potential for significant local economic impact through job creation, access to a larger labor pool, urban infrastructure, and possible local incentives like tax breaks.
Limitations: Challenges include underlying economic issues like reduced consumer spending power, high competition and market saturation, potentially higher property and operational costs, complex regulatory environments, and social issues such as higher crime rates. While Targeted Employment Areas (TEAs) for high unemployment also aim to expedite processing, the high demand for category has led to oversubscription as we have stated in previous blog posts. Therefore, it’s crucial for applicants to carefully assess the pending number of I-526E petitions and processing times in this category to ensure they choose the most effective and timely route to Permanent Residency.
Rural TEAs:
Advantages: Rural projects within the EB-5 program offer a range of benefits, including a lower investment threshold, priority processing, reduced competition for visas, and a notable impact on local economies. They are particularly favorable as they receive 20% of all EB-5 visas, far surpassing the 10% allocated to High Unemployment Area TEAs and the 2% for infrastructure projects. Additionally, these projects are often processed much faster, typically within about four months, significantly decreasing the risk of dependents aging out due to unexpected changes in visa availability.
Limitations: Challenges involve economic viability due to lower population density, lack of infrastructure and skilled labor, limited data for planning, slower growth, less favorable exit strategies, and logistical difficulties related to accessibility.
Information Source: As data centered information on rural areas tends to be scarce, Houston EB5 has published a White Paper titled “Top 10 Qualifying Rural Areas for EB-5 Investments”. The paper provides detailed insights into the most suitable rural areas for EB-5 investments based on information provided by think tank HeartlandForward.com.
The resource emphasizes the strategic importance of selecting rural projects close to large metropolitan areas to reduce costs and enhance the feasibility of the projects. The paper also discusses the challenges commonly faced in rural EB-5 projects, such as limited infrastructure and skilled labor, which are crucial factors for investors to consider.
Key points highlighted include:
- The necessity for rural projects to serve unmet and growing demands rather than seasonal or volatile markets.
- The importance of proximity to large cities for ensuring a low constructions cost thourhg a successful supply chain and access to necessary services.
- Suggestions on conducting due diligence and mitigating risks associated with rural EB-5 investments.
For investors interested in EB-5 opportunities in rural areas, this paper is a valuable resource for understanding the potential and pitfalls of such investments, helping them make informed decisions based on comprehensive research and analysis.
Houston EB5 Approved Projects
Houston EB5 is proud to let you know that we have 2 projects that have received I-956F Project Approval from USCIS. “The Allen” is a non-TEA luxury mixed-use development in Houston featuring a hotel, condominiums, and retail spaces, emphasizing sophisticated design and luxury amenities. “The Frederick” is a Rural project in Fredericksburg, Texas, offering a luxury hotel, condos, retail spaces, and townhomes, aimed at utilizing the last land parcel on Main Street to meet the growing demand for hospitality and residential spaces.
The approval of I-956F is crucial because it confirms that the project’s job creation predictions are both methodologically sound and likely to be achieved. This is key for EB-5 investors, as their success in transitioning from conditional to permanent resident status hinges on the creation of at least 10 full-time jobs, a central requirement for obtaining a Permanent Green Card during the I-829 Petition phase. Thus, the approval of I-956F not only guarantees the approval of an investor’s I-526-E Petition—assuming their EB-5 funds meet approval criteria—but also secures the project’s capacity to meet essential job creation requirements.
Investors considering either option need thorough due diligence to evaluate economic benefits, potential risks, and the overall alignment with their investment goals and the EB-5 program’s requirements. At Houston EB5, we will be glad to provide all the information you need and answer all your questions.
